DEVELOPMENT: Micro-Enterprises Advance Women, Create Jobs

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Sep 11 2002 (IPS) - Small and micro businesses provide women with opportunities to improve their living conditions, but the sector also deserves special attention as a major source of employment, said the fifth Inter-American Forum on Micro- enterprise in its conclusions Wednesday.

In “difficult times, as most Latin American countries are currently experiencing,” it becomes even more important to foment an area of the economy that employs 110 million workers in the region, said Enrique Iglesias, president of the Inter-American Development Bank (IDB), Monday in the Forum’s opening address.

The big challenge is “to expand financial services for small business entrepreneurs,” most of whom do not have access to loans, said Iglesias.

The IDB sees micro-enterprise as playing a key role both in the economy, as a growth factor, and in the social realm, as a powerful tool for reducing poverty.

One of the factors highlighted at the Forum was the leadership of women in self-run businesses, as they represent half of such initiatives in Latin America, according to a study by Marguerite Berger, an expert in micro-financing and social issues at the IDB’s division of small, medium and micro enterprises.

The presence of women is inversely related to the size of the businesses in the region. In large and medium-sized companies, they make up just a quarter of the personnel, while their presence is 30 percent among small companies.

Faced with the discrimination that still exists in the job market, and even more when it comes to executive posts, women opt to try running their own business, according to Berger’s survey of Latin American women entrepreneurs.

The panorama, however, varies among the region’s nations. The highest percentage of self-employed women is found in Central America, nearly equal to the number of self-employed men in that region.

In Brazil, meanwhile, only 25 percent of small companies are in the hands of women. The female population more often chooses to work for large companies, says Berger, adding that this might be explained by the relatively higher level of education among Brazilian women.

Although in Brazil women may become entrepreneurs as a personal choice, in the poorer countries, the small home-based or street vendor enterprise is a matter of survival, often due to the lack of sufficient education or training to enter the formal labour market, said the expert.

The IDB has been making micro-enterprises a higher priority. Since 1978, the regional financial institution has invested more than 800 million dollars in these small-scale initiatives.

The Forum is an annual event that the IDB has sponsored since 1998. This year’s meeting, in Rio de Janeiro, had the backing of the leading Brazilian organisations in fomenting small businesses: Brazilian Support Service for Small and Micro-Enterprise (SEBRAE), Banco do Nordeste and the National Social and Economic Development Bank.

There are 65 million micro-enterprises in Latin America, or nearly half the businesses in the region. Their 110 million employees have an important impact on the economic process and the generation of income for the poor population, says Alvaro Ramírez, head of the IDB’s micro-enterprise division.

In Brazil, SEBRAE calculates the micro-enterprise total at 16 million, most of which were created informally, and employ slightly more than a third of the economically active population, or 30 million people in a country of 170 million. The small business contribution to Brazil’s gross domestic product (GDP) reaches 20 percent.

The Banco do Nordeste is the country’s leading creditor for micro-enterprise through a special small loan programme. Since 1997 it has granted 748,700 loans to small businesses, according to the coordinator of the institution’s “CrediAmigo” initiative, Enildo Vasconcelos.

At this week’s Forum in Rio, the IDB formalised a 30-million- dollar loan to the Banco do Nordeste aimed at expanding CrediAmigo services.

The economy of the Brazilian northeast, the country’s poorest region, depends heavily on its 2.2 million micro-enterprises, as they represent 61 percent of the jobs in the local market.

The micro-credit is a key mechanism for the survival and development of these small businesses. Only two percent would otherwise have access to financial support for their entrepreneurial efforts.

The situation could change, as the last few years have seen a proliferation of initiatives by banks, non-governmental organisations, and municipal governments to provide small businesses with loans, which can range from a few hundred to a few thousand dollars.