Low ac­cess to fi­nance, a ma­jor hur­dle for mi­cro & small busi­ness­women

Business Bhutan - - Nation - Phub Dem From Thim­phu

Low ac­cess to fi­nance is one of the main chal­lenges faced by busi­ness­women in the coun­try, ac­cord­ing to a re­search re­port re­leased by the Na­tional Statis­tics Bu­reau (NSB) in May this year.

The re­port “Chal­lenges fac­ing mi­cro and small busi­ness­women in Bhutan,” states that 49.3% of the re­spon­dents men­tioned poor ac­cess to fi­nance as one of the big­gest chal­lenges.

Most busi­ness­women are sub­sis­tence busi­ness rather than trans­for­ma­tional. Busi­ness­women avail­ing for­mal fi­nance (27.8%) are rel­a­tively close to those avail­ing in­for­mal sources (22.7%).

A food ven­dor near JDWNRH, Yeshi Cho­den, 37, said she took loan from her rel­a­tives and friends since she was afraid that she would not be able to re­pay on time if she bor­rowed from a fi­nan­cial in­sti­tu­tion. “I didn’t have any eq­uity to process the loan ei­ther.”

Sim­i­larly, the re­port fur­ther re­veals that although mi­cro and small busi­ness­women are in need of money to op­er­ate and ex­pand their busi­nesses, they do not pre­fer com­mer­cial loans mainly be­cause they fear de­fault­ing on loans.

The prob­lem as­so­ci­ated with ac­cess­ing busi­ness loans from com­mer­cial banks are due to high­in­ter­est rates, re­quire­ments of col­lat­eral, com­plex loan pro­ce­dures and loan not suitable to need.

As a re­sult, a huge per­cent­age of busi­ness­women have started busi­nesses with their own sav­ings.

Dur­ing the sur­vey, Bhutanese busi­ness­women pointed out 30 dif­fer­ent chal­lenges they face in­clud­ing lack of fi­nan­cial cap­i­tal fol­lowed by dif­fi­culty at­tract­ing cus­tomers, in­for­mal com­pe­ti­tions, tax rates, la­bor reg­u­la­tions, lack of busi­ness space, skills, fear of fail­ure, and lack of ed­u­ca­tion as the main busi­ness chal­lenges.

The com­pe­ti­tion is not only from the in­creas­ing num­ber of busi­ness­women do­ing sim­i­lar busi­ness but from the in­for­mal sec­tor (un­li­censed busi­ness) such as on­line shop­ping busi­ness.

Be­sides, Yeshi Cho­den added that busi­ness­women com­pete to de­liver sim­i­lar prod­ucts and ser­vices rather than de­vel­op­ing new, in­no­va­tive ones. “The com­pe­ti­tion of sim­i­lar busi­ness is a neg­a­tive chal­lenge.”

Busi­nesses com­pet­ing to pro­vide sim­i­lar prod­ucts and ser­vices can ben­e­fit the con­sumers at large through price cut but can re­duce the prof­itabil­ity and sus­tain­abil­ity of the mi­cro and small busi­nesses.

Women who run their busi­nesses from pri­vately rented houses are re­ported to bear the bur­den of ex­or­bi­tant rents and have poor fa­cil­i­ties. And those op­er­at­ing busi­ness from the non-prime area faces short­age of cus­tomers, hence low in­come.

Women who op­er­ate bars and restau­rants are un­sat­is­fied with the tax rates. Bar op­er­a­tors said that they have to pay high rentals for the bar li­cense be­sides an­nual con­tri­bu­tion to the BCCI.

The re­port cited a busi­ness­woman from Mon­gar who said that she is pay­ing her restau­rant’s li­cense an­nual fee, a sep­a­rate bar li­cense an­nual fee of Nu 15,000 and Nu 15,000 to BCCI. “All my prof­its are wasted on pay­ing taxes and fees.”

Some busi­nesses face short­age of la­bor due to la­bor reg­u­la­tions by the gov­ern­ment. It is com­mon knowl­edge that the short­age of skilled la­bor and un­will­ing­ness of young peo­ple to take up me­nial jobs have many busi­nesses/en­ter­prises in the coun­try re­cruit ex­pa­tri­ate skilled work­ers from nearby coun­tries. The re­stric­tions im­posed on the re­cruit­ment of skilled la­bor from out­side seem to af­fect busi­nesses like ho­tels, fur­ni­ture house, small man­u­fac­tur­ing units, etc.

A fast-food ven­dor, Phub Lham, 58, said that get­ting a good busi­ness space is a ma­jor prob­lem. Though Bhutan As­so­ci­a­tion of Women En­trepreneurs (BAOWE) pro­vides them free space to do busi­ness, it is clus­tered and they have to face a lot of chal­lenges while deal­ing with cus­tomers.

“Eigh­teen reg­is­tered street hawk­ers are clus­tered to­gether and we face prob­lems re­lated to wa­ter short­age and san­i­ta­tion,” she said.

Go­ing by the so­cioe­co­nomic pro­files of busi­ness­women, the ma­jor­ity of them had re­ported ei­ther to be un­e­d­u­cated or just at­tended pri­mary ed­u­ca­tion. There­fore, lack of ed­u­ca­tion or low ed­u­ca­tion seems to im­pact the suc­cess of their busi­ness.

Be­sides, the study re­veals that busi­ness­women have low con­fi­dence in run­ning their trade and it is likely caused by lack of or low ed­u­ca­tion and busi­ness skills, low prof­itabil­ity of the busi­ness, and their aver­sion to tak­ing risks.

How­ever Non Gov­ern­ment Or­ga­ni­za­tions such as BAOWE, RE­NEW and Tarayana are pro­vid­ing fi­nan­cial as­sistance to these busi­ness­women.

The Fi­nance Of­fi­cer of BAOWE, Tashi, said they pro­vide fi­nan­cial as­sistance on the ba­sis of projects and loan through Mi­cro Fi­nance In­sti­tute. “We pro­vide tech­ni­cal ad­vice, guid­ance and sup­port to as­pir­ing women en­trepreneurs.”

Just 0.3% of the busi­ness­women con­sid­ered ‘male dom­i­na­tion in busi­ness’ as a chal­lenge

The re­port high­lights ex­pec­ta­tions of the busi­ness­women from the gov­ern­ment, NGOs and other agen­cies with re­gard to busi­ness ed­u­ca­tion and train­ing, open­ing up more mar­ket space, co­or­di­nat­ing busi­ness sup­port, plan­ning for sup­port schemes, pro­mot­ing women’s ac­cess to as­so­ci­a­tions and vi­tal busi­ness in­for­ma­tion, pro­mot­ing mar­ket­ing sup­port, and pro­mot­ing in­no­va­tive busi­ness.

The re­port sug­gested that there is no lack of pol­icy per­tain­ing to pro­mo­tion of busi­ness and en­trepreneur­ship among busi­ness women, how­ever “there cer­tainly is room to im­prove im­ple­men­ta­tion of pol­icy and pro­grams di­rected at busi­ness­women in mi­cro and small busi­ness sec­tor.”

The quan­ti­ta­tive data anal­y­sis was col­lected from 363 busi­ness­women from Mon­gar, Sam­drup Jongkhar, Gele­phu, Phuentshol­ing and Thim­phu.

The re­search was ap­proached from the per­spec­tive that eco­nomic em­pow­er­ment of women is es­sen­tial for pro­mot­ing their so­cial and eco­nomic sta­tus.

It aims to iden­tify ways in which the gov­ern­ment, donors, NGOs and pri­vate sec­tors can im­prove the prospects for women in busi­ness and en­trepreneur­ship in the coun­try.

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