Women-Run MSE and their Adoption of ICT

CASE STUDY 1: Gender Best Practices and Quality of Business Development Services (BDS)

Gerry Hofstede, INTERCAMBIO[1], Lima Aug 2002

A contest was held to assess gender best practices using seven performance indicators to structure the presentation and systematization of services. These indicators included: design, outreach, effectiveness, empowerment, sustainability, impact, and transfer. Under its gender-oriented principles of design, the study suggested four basic design principles for intermediary business support services:

Gender - Differentiated Demand - Driven Services:

The design should be demand-driven and take into account that women generally find themselves in a disadvantaged position in the MSE sector in comparison with men. Men and women entrepreneurs have different characteristics and, as a result, different business needs and demands for services.

In Latin American countries, compared with their male peers, women are less educated, have less business exposure, are concentrated in the low productive and lowly valued activities, are concentrated primarily in service and trade sectors and less in production, show lower levels of accumulation and business growth, predominate in subsistence activities, and are over-represented in the informal sector.

Knowing Your Client well is a demand-related feature that emerges from the best contest cases.

It is clear from the contest cases that knowing your client is very important. A strong client orientation presupposes that information about the client' characteristics, type of enterprise, and personal and household situation should be collected. This information is most often collected through participatory methods such as focus groups and participatory project-design seminars. It is often argued that a gender-differentiated analysis must be undertaken during project design because it is much more difficult to incorporate such analysis into on-going projects. However, our experience suggests that it is also feasible to carry out participatory diagnostics during program implementation.

Market Orientation of the Services

Markets frequently reflect the inequalities of society at large, including gender inequities. Frequently resellers who market rural handicrafts products exploit the women producers of these products. A gender perspective on the market orientation of services would try to identify market opportunities that women could enter themselves. Banking services is another area where women often face discrimination and are unable to access the financial services that they need.

Household and Family Orientation

The contest cases make it clear that the domestic responsibilities of women have an impact both on the business performance and the scope for growth of women's enterprises. The competing demands for time and resources to meet household and business commitments directly affect women-led businesses. For example the FACES study concludes that the growth of women's enterprises is usually slower because women invest less time in their business than men. As well, women are more likely to make family-oriented investments (in education, healthcare, and housing improvements) than business-oriented investments. When designing business development services with a gender focus, it is therefore important to consider how household responsibilities will affect the amount of time and resources women can invest in their enterprises.

Strategies for Empowerment of Women Entrepreneurs

  Empowering women refers to bridging the gap that exists with men and endowing women with the skills, experience, and capabilities to operate on an equal basis with men. INTERCAMBIO has attempted to operationalize empowerment by differentiating between four key dimensions of empowerment in an enterprise development context as follows:

• Endowment of technical skills and entrepreneurial capacities
• Access to and control over economic resources and bargaining power in the marketplace
• Public image and perception about women's work and women's self-image
• Women's entrepreneurial leadership and organization

CASE STUDY 2: Transforming the delivery of financial services

One of the most exciting applications of ICTs for the direct benefit of MSE is in the arena of extending and managing credit support to businesses. As yet, it is in its infancy. The shortage of affordable capital is one of the most critical constraints for MSE. The World Bank's microfinance program Consultative Group Assist the Poorest (CGAP),[2], was set up in 1995 to respond to the demand from low-income people for access to loans that would help them to establish their enterprises on a firm financial footing. According to Women's World Banking (Barry, 1995),[3] to reach just 10 percent of the low-income entrepreneurs by 2025 requires lending capital of about US$12.5 billion. To reach a target population of about 180 million low-income entrepreneurs by 2025 would require about US$90 billion (current total aid transfers are valued at approximately US$54 billion, and the World Bank Group's total disbursements in fiscal 2002 was US$11.5 billion).[4] Microfinance is serious business. About 1200 institutions worldwide provide microcredit to 13.8 million people for a sum of US$7 billion. Nearly all the loans are repaid, with interest; loan sizes vary, but a mere US$150 is the typical amount borrowed. More than 75 percent of loans are made to women.

Like other international finance institutions, the World Bank Group has found that intermediary service models work best and has concluded that new financial products and initiatives must be designed and made available to MSE (World Bank, 2001). Arguably, communities of business networks have been ingenious in pooling resources and capital. The barter system continues to work for MSE in both industrialized and developing economies, and these models can be further extended and built upon.

The financial intermediary sector that services small business is doing some radical thinking around extending its reach to poorer sections of the economy, and taking its services to those clients who might not otherwise have access. Although it is still early to tell, the potential uses of ICTs and software systems to service the credit and savings expectations of the small entrepreneur are immense. Some of these are:

• Adapting accounting software to service traditional accounting or barter systems;
• Computerizing financial reporting and performance measures to make them cost effective, transparent, and accessible to borrowers and lenders;
• Providing individual borrowers with secure account access;
• Extending credit outreach in creative ways, such as mobile banking.

Mobile banking brings in a number of players together, providing interaction through connectivity and integration with existing financial services. The leading credit and loan agencies are keen to retain and maintain customer loyalty and to improve information flow from their clients to understand local credit ratings and markets.

CASE STUDY 3: Uganda Women's Finance Trust (UWFT)

Clients of Uganda Women's Finance Trust (UWFT) are able to access their accounts at post office outlets across the country using a software package that was customized for UWFT. The Loan Performer program was initially developed as the "Trust Information System" and started in 1995 as a DOS-based program for client data entry. Later, the client module was rewritten for Windows95 and new modules were added. The Kampala Branch now has almost 15,000 clients and has registered over 150,000 savings transactions and 6,000 loans in their database. Development at UWFT took about three years, from 1995 to 1998. Development of the software product continues, and more and more organizations want their requirements incorporated into the program. Toward the end of July 1998, Loan Performer became available as a commercial product. Since then many other Ugandan and non-Ugandan microfinance institutions have started working with Loan Performer. The installed base is now about 50 organizations with more than 100 sites. Loan Performer is now used by CGAP as one of the ten major off-the-shelf software packages for microfinance institutions.

Established as a trust in 1984, UWFT began operations in 1987. Its mission was to economically empower low-income women by providing a consolidated package of products and services that included savings and credit. All of UWFT's clients live below the poverty line and 80 percent live in rural areas. The majority are in commerce (64 percent), with smaller percentages in services (15 percent), agriculture (14 percent), and manufacturing (8 percent).

Among the first to mobilize savings from low-income women in rural and urban areas, UWFT collects savings from its clients and deposits the funds into savings and fixed deposit accounts with commercial banks. For the fiscal year ending June 2001, the portfolio outstanding was US$3,156,515 and the amount of savings mobilized from clients was US$1,704,192. It now reaches 31,656 borrowers and 43,594 savers. Women are able to access their personal accounts at computer terminals in local post offices and banks.

CASE STUDY 4: ICT Tools for Cooperative Business Networking Between MSEs, Tortas Peru

Given the tendency for MSEs to have more restricted access to formal market-supporting institutions than their larger counterparts, networking between MSEs is important. Often in the competitive environment in which MSEs operate, the tendency for a successful enterprise is not to network, to share information publicly, or to consider strategic alliances with potential competitors. Encouraging MSEs to pool resources or to join networks is linked to raising awareness among small-scale entrepreneurs about the globalized climate in which they conduct their business..

Initiated in 1996, Tortas Peru is a woman-owned enterprise that uses ICTs to reach and service a wider market to sell cakes and desserts. A network of housewives takes Internet orders for their cakes and uses the Internet to provide baking tips in Spanish and English. The company covers the major cities of Peru, including Lima, and guarantees delivery within 72 hours. Tortas Peru also targets over 2 million Peruvians who live outside the country. Through their website http://www.tortasperu.com.pe/, clients in San Francisco or New Zealand can send a home-made cake to friends or family in Cusco, Lima, Arequipa, Trujillo, Ica, Juliaca, and Puno. The tortas are prepared and delivered by one of the housewives in the network. Customers can order a cake from a catalog and pay by credit card, check, money order, or electronic payment to the bank. The order is sent by e-mail and depending on the destination a housewife-member of the network is contacted to bake and deliver the cake.

To maintain low prices, the company is based mainly on the Internet, which makes it necessary for the housewife-member to be familiar with computers. Peru has an innovative national network of public computer booths where Internet access is cheaper than phone calls. Before starting in the tortas business the housewives in the project must participate in a course designed to give them basic knowledge of marketing, preparing tortas, and using Internet tools for e-commerce. The most important experience from these courses is computer knowledge. With just three hours of instruction the women learn to use e-mail, find the web site, and interact with clients. After they familiarize themselves with these tools, they can use public computer booths to get the information they needed.

Table 1: Dimensions of ICTs and Training Needs--2002 MSEs Matrix[5]

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