Pick any country in the developing world.
Where are the women entrepreneurs in Pakistan?
They start and manage digital-content creation firms serving international clients. They are sole proprietors of construction businesses bidding for government projects. They supervise tailors and embroiderers in windowless storage rooms that double as stitching units. They export high-end gems and jewelry around the world.
Women entrepreneurs in Pakistan lead cutting-edge, innovative businesses – but there are far too few of them. The recent Global Entrepreneurship Monitor report finds that only 1 percent of Pakistani women are engaged in entrepreneurship – the lowest proportion in the world.
Pakistan is not alone in its dismal ratio of growth-oriented (or indeed any kind of) women entrepreneurs. Even in the developed Asian economies of Korea and Japan, only about 2 percent of women are entrepreneurs. Sub-Saharan Africa does much better in this regard, with 27 percent of women, on average, engaged in entrepreneurship -- but they are mostly involved in low-productivity sectors of the economy.
Women entrepreneurs, in Pakistan and globally, have narrow networks of friends and family who provide them with some initial capital to start their small businesses, with little expectation of further financial support. Their export customers are located wherever they have extended family. And they rarely feature in local chambers of commerce activities.
Banks are often reluctant to extend lines of credit to, provide working capital to or lend to women-led enterprises. This makes it difficult for these enterprises to pursue growth. Perhaps this is why the average growth projections for women-led enterprises are seven to nine percentage points below those for their male counterparts.
Local businesses can create jobs in Pakistan's conflict areas (Credit: Zerega, Flickr)
How can you effectively support areas shaken by years of regional instability? The Western border areas of Pakistan are one such region, where a 2009 insurgency and subsequent military operations in the Khyber Pakhtunkhwa (KP) and Federally Administered Tribal Areas (FATA) led to one of the worst crises in the country's history. More than 2 million people were forced to leave their homes and considerable damage was caused to physical and social infrastructure. The unprecedented floods of 2010 only made the situation worse.
The idea for looking into the issue of microfinance outreach to women in Pakistan had been of interest to the World Bank for some time. Outreach of the microfinance sector to women borrowers had always been extremely low – hovering between 50 to 60 percent of borrowers. Compared to the rest of the region, where we see outreach to women in the 90 percent range in India, Bangladesh, and Nepal, it raised the question as to why similar targets could not be achieved in Pakistan. We reviewed a number of possible explanations, but none of them seemed satisfactory. On top of that, Pakistan is probably one of the most progressive microfinance sectors in the World. The central bank has developed the most enabling regulations possible, Pakistan continues to top the Economist Intelligence Unit list of the most enabling regulatory environment, innovations in branchless banking and new modes of financial service delivery are being incubated here, and the microfinance network in Pakistan continues to be regarded as world class. So, given all the positive attributes around the sector, why was it not possible to more effectively reach this important constituency?