ZY '.2 2 ,' *. 1 .--. .., z : --i -: I'. LI '
li., A O' O I A
PREPAnED FOi ?Ho O'r PCt zc W:c:CH Is ..rx.;;r.0ENT. A.I.D.
T. ...: O? CO 7;- :T,
I. !Cv2tj vAD c r. F "..: C'"'.:;>YT?'2z:; A run.'"'' !.1" FOa
L .. C ...................................... .
A. Definition of T rz sa. ....................................
; o an as ic re :' ':: r.. u:: ..................... ... .....2
i. I::M: Z .. -..- -:'..... 5
iA. t-,;.:!_d ;::J ^ C- :.-.';t.- ............................. .5
-:".*.. ly "'.r ,'.i :: and inLsaons to Dato..............
o Local lemt-,nI5 ti? t Inttitutionsa....................77
o ro-''-:t e-A.'- ..................................... 1
o Project EIcentation and !Nonitcring ............15
III. C' Yr-'W:. ,'U) Cx:s:.;zut'Az- C::s.............................. 2
A. Analytical -'ccl .. .....................................28
o ,' .rn Di j-',;':-'".tti., by Se t.........................29
o Analy:tis of Ccnastrnaints that Affect .:omin.........31
B. ti-r Project Cycle: Gender Issues to Consider ...........35
o Design and dibility Pihase........................35
''.-. r =. i ic' .............................. 35
The Pir- and the Production P;:tc:- ...........37
cneficl.ary rcOt ............................. 39
Local zplenmnting Institutions ...............40
o Project rr--lemnttion .............................41
eDaOlivry C2c Le1C..............................41
Resources Provided by the Project:.............42
o Project Evaluation..................................43
Data Collection; Project Performance; Impact..44
IV. OE:.2TrLS OF SSE Pr.OF.:CT TIAT CO:STIDE G CZEDZ1 ............. 45
In the last decade an extensive body of development literature
has evolved on why women should be better integrated into
development planning and programs, and on how best to achieve this
end. Many of the findings and data that have emerged under the
rubric of "women in development" have persuaded planners and
program designers that women represent one of the critical
criteria by which to asses the impact of development programs.
AID's own policy statement, formulated in 1982 as the "Women in
Development Policy Paper" emphasizes that the importance of
integrating women stems from the recognition that at all levels of
society, women and girls are resources whose contribution to
development is alrcudy substantial. However, women's participa-
tion in develo.no'nt effort. would be dramatically enhanced if they
were better educated and had access and control over resources.
The argument is primarily an economic one:
misunderstanding of the gendor differences,
leading to inadequate planning and designing of
projects, results in diminished returns on
invest-ment. Gender, therefore, is a critical
cae:g:-: m' of analysis in AID's work, one which has
not received c-ici-.. attention to date.
The purpose of this document is to provide AID staff in Washington
and in missions with an accessible, easy-to-read guide on how best
to integrate women into programs that focus on small enterprise
development. It is designed to be used by project design teams in
the preparation of Project Identification Documents (PIDs) and
Project Papers (PPs); by staff in the review of Operational
Planning Grants (OPGs) and other unsolicited proposals; by project
managers to assure that program implementation and evaluation
properly considers women; and by other development professionals
interested in formulating more inclusive and effective programs.
The format selected for the guide emphasizes simplicity in
presentation and statement. It is not meant to be a definitive or
final word on the subject, but rather a first step in compiling
information and experiences to date, and presenting them in a
manner useful to program designers and practitioners.
Since regional or country-level considerations were outside the
scope of this guidebook, the approach used is to extrapolate from
current knowledge about women in development, and about small
scale enterprises those observations and suggestions that are
applicable in most settings. Each guidebook user will have to
identify additional factors pertinent to a given country or
culture that must also be addressed.
The guidebook is divided into four chapters:
The first section provides a summary of the reasons why women
should be particularly considered in programs that generate income
and employment through enterprise development. The second section
highlights the key findings and lessons derived from current small
enterprise programs, underlying the "gender issues" relevant to
each set of findings. The third section suggests two analytical
tools, as well as gender-related questions and issues to consider
at each stage of project development. The last section provides a
brief summary of on-going projects that are successfully reaching
This guidebook was commissioned by the Office of Women in
Development in an effort to respond to repeated requests from
regional bureaus and missions for material that provides tools and
techniques on how to build the "women issue" into existing program
development processes. The Office of Women in Development welcomes
feedback on the guidebook's utility and suggestions on how to
improve its usefulness.
WOM E AND C'"L'J1, 11CC..:.7 l .tR 2'Fr.ICC:
A RAT0:IOTla O COCSID32iG3 GENDER
This section presents an argument for considering the gender
question in all aspects of small scale enterprise projects (also
referred to ir this document as SSEs). It provides a summary of
definition of basic terms in SSE projects;
reasons why women are so prevalent among small and
2Dfinition of :rs--
Most smll and micro--enteprises operate in the informal sector,
in urban and rural settings, and are involved in manufacturing,
processing, comme.:-ce and service. Although there is enormous
variation within the sector, several characteristics are common to
Size: The most often used varia-ble in defining SSEs,
measurements of size rely primarily on fined asset
amounts and number of waged employees. Figures vary
widely from country to country, but one can generalize
that micro-enterprises comprise establishments of under
$10,000 of fixed investment, and employ five or less
workers. Terms such as small, emerging out of small,
are used to refer to enterprises further up the
pyramid, whose asset base and number of employees is
greater. As discussed below, women predominate among
the smallest of enterprises.
Location: Micro-enterprises are often home-based operations or
use make-shift quarters, or operate in the street with
no fixed location. They may represent one of several
income streams for the family, and labor and capital
may be allocated based on need and circumstance.
Labor Pool: Most micro-enterprises include family labor or
apprentices who are paid minimal wages, or in-kind.
Management questions related to planning, accounting,
and record-keeping are resolved on a day-to-day basis,
in no planned or systematic way. Low level of formal
education and literacy characterizes microentrepre-
neurs, most of whom have learned their trade on the
Production for Local Markets: Goods and services produced by
microentrepreneurs are generally targeted at local
markets, and generally use locally-produced inputs.
These characteristics help differentiate SSEs .from
subsistence activity at one end, and export-oriented
industry at the other. Further, they highlight the
important backward and forward linkages that
micro-enterprises create within the country's economy.
Low Levels of Capital Inputs: Use of simple and accessible
technology characterizes most SSEs, which as a result
exhibit high labor to capital ratios, and capacity to
generate jobs at considerably less cost chan their
-caen as I-licroantrepreneurs
The factors that govern the economic activity of SSEs make them
particularly attractive to women who need to earn income. Among
the most important t6 consider are:
1. The SSE sector is more flexible and less structured,
in time and space, than other employment sources, enabling women
to combine productive activities with family responsibilities --
domestic chores and child care. This flexibility is even more
important for women who head households, which, studies show are
growing in number throughout the developing world. Overall, women
that retain traditional female roles of homemakers and
childbearers and at the same time assume a growing share of the
income producing function within the family, turn in increasing
numbers to the informal sector to earn income.
2. The barriers to entry into small and micro-
enterprises are few. For example, operating a small firm requires
less education, training and experience than formal sector jobs.
Since women are often at a greater disadvantage than men in these
areas, they are limited to the least remunerative jobs in other
sectors of the labor force. Other barriers, such as initial level
of capitalization, production technology, and wage requirements.
are also lower, since start-up costs for a micro-enterprise
require minimal asset base, and often depend on family rather than
3. SSEs often enable women to build on skills and
knowledge gained through their traditional roles as household and
child care providers. The business becomes a natural extension of
household activity. Textile processing -- garment making,
embroidery,-- and food preparation -- baking, candy making, street
foods -- are areas in which many women utilize traditional skills
to establish successful and growing enterprises. The serious
limitation of these firms, however, is that they tend to be among
the least remunerative and capitalized among small and micro--
enterprises, and yet because of low skill level women are less
able to diversify or engage in more productive enterprises.
4. The location for onera ina a micro-c"nte:rprise _n'
vary. Since women tena to predoiirate in the commerce and street
vending sectors, they run their businesses from shifting or fixed
street locations, rather than from purchased or rented locales,
which require greater capital. Likewise, women involved in the
manufacturing or service subsectors tend to work from home-based
enterprises rather than in workshop or small factory settings. In
both instances, the manner of operation enables a woman to engage
in several different tasks at the same time.
5. Some studies show a correlation between the amount
of emolovment available to women within the small enterprise
sector and the extent or female ownership within this sector. For
example studies cite that in Jamaica and Haiti women predominate
as owners in certain businesses, such as pastry, crafts, candy
making, dress making. It is in these areas that most women find
employment, indicating that female entrepreneurs tend to hire more
female employees than male entrepreneurs. (Dulansey and Austin,
Because of the informality and flexibility of the SSE sector,
access to productive resources -- particularly credit and
technical assistance -- is very scarce, with moneylenders serving
as the monopoly source of capital. And yet these resources, if
provided in an affordable and well-managed manner, can enable a
small entrepreneur to expand production; to hire more workers; and
to increase her/his assert base. In fact, many microentrepreneurs
identify lack of capital as their greatest constraint.
The chapters that follow address how SSE projects can integrate
women more effectively as beneficiaries of project resources.
o The second chapter summarizes lessons learned from SSE
projects. Those findings and lessons are derived from
evaluations conducted in over twenty developing countries
by A.I.D., The World Bank, and other development
organizations, and from the author's field work. Gender
considerations are highlighted at each crucial decision-
making point of design, implementation and evaluation.
o The third chapter provides specific ;:nd.-r guidelines and
tools one can use in project development. These are
presented in chart format and also focus on the three
phases of a project -- design, implementation and
o The final section summarizes some SSE projects that are
reaching women entrepreneurs, emphasizing specific
modifications in design and implementation that may
account for this success.
C TL5T7r.' II
SSTT"G fiGC T, '?'.;C-'
S IALL AND HIC1O-Ii- .~.CP aRS PROJECTS
sCr.-dL-r Project Components
Most projects that reach small and micro-enterprises transfer
resources which can be broadly categorized into financial and non-
o Financial *:~o-r:.'Ces: Almost every SSE project contains a
financial component, and it almost always is in the form
of c.7:i'.t provided to the entrepreneur. Each project
establishes how it will seek out potential borrowers, the
mechanisms it will use to extend credit, the terms of the
loans, the use of the loan -- for working or fixed
capital -- and the type of businesses it will reach.
Some examples of different approaches are:
extending a short-term, very small loan for
working capital to one borrower;
requiring that the borrowers form themselves
into small groups -- sometimes called solidarity groups
-- and extending one loan to the whole group. The group
is responsible for loan collection and repayment;
using different loan application procedures
depending on the size of the loan;
charging the same interest rate to all
borrowers, or graduating it depending on the amount of
the loan. The interest rate may or may not reflect the
real cost of borrowing;
using staff to disburse and collect loans, or
establishing a link with a bank which assumes those
o Non-financial Resources: The majority of projects also
provide some kind of technical assistance or training to
project beneficiaries. This assistance can take several
individual sessions before and after loan
requirement that applicant attend a specified
number of hours of group training prior to the first
assistance in specific management skills, such
as bookkeeping, planning, and prciuction functions;
training in technical skills specific to a given
line of production (furniture making, tailoring, metal
training in related areas, such as literacy,
group formation, laws and regulations, etc.
assisting borrowers to form their own
associations to increase their leverage and access to
institutions and resources.
Some projects charge a minimal fee for the training, which is
provided on request,.while others feature it as a mandatory step
to credit provision. Finally, some projects work with
beneficiaries at the pre-entrepreneurial stage and focus heavily
on training before initiating productive activities.
There are cases where SSE projects also provide a wide variety of
other non-financial inputs. These can include marketing
facilities, delivery of health and family planning services,
improvement of roads or other infrastructural components, and
formation of cooperatives. Since SSE projects that include such
varied components are the exception, this guidebook concentrates
on issues related to provision of credit and technical assistance
related to the borrower's economic activity. The most important
findings and lessons we can extract from experience to date, and
which we can apply to most SSE projects are summarized below.
Sumrnary of Findings and Lessons Frcm
Z31l Scale Enterprise Projects
Findings and lessons are organized into three main headings:
Local implementing institutions: includes type of institutions,
sources and uses of funds, technical and managerial capacity,
and outside technical assistance;
Project design focuses on the feasibility step;
Project implementation: includes outreach and promotion, credit
extension, provision of technical assistance, monitoring and
recordkeeping, and cost-effectiveness issues.
I. LOCAL IrPiT.';: '?T
FININGS: o Most micro-enterprise projects
are designed and carried out by
local private NGOs or by public sector
Although there are exceptions, few private
sector financial/commercial institutions
have projects designed to reach the small
o ExampleL of SSE projects are:
The National Development Foundations
(NDFs), private NGOs operating in the
majority of LAC countries, have
implemented programs for many years;
In Indonesia, the Badan Kredit
Kecamatam (BKK) Program, a govern-
ment effort to reach small and microentre-
preneurs, operates in Central Java;
o In Kenya, dozens of NGOs, such as
the National Christian Council of
Kenya (NCCK) provide credit, technical
assistance and training, primarily in
the rural areas.
G 2DT1,1 i-!'US:
o Hundreds of institutions in
developing countries are implementing
projects of assistance to SSEs. Most
have an existing track record in communi-
ty/cooperative organization, and social
development, and work directly with grass-
o Many SSE projects emerge as
institutions perceive the need to
provide financial and technical
resources to the beneficiaries, in
addition to capacity-building and
o 1Mny institutions begin SSE projects with
liitcd kno dliE of financial and
technical ausltionrs but with- potential
for a strong and trusting relationship
with the beneficiaries.
o Selection of appropriate
institution, as in all development
projects, is crucial to SSE projects.
oThe provailinq agnroach by local
institutions to reaching women with
benefits has been to develop women-
specific "income generating projects"
rather than to integrate them as
beneficiaries in larger SSE projects.
o Local organizations that work
exclusivelZ with women are less likely to
have the necessary technical expertise to
design and implement an effective SSE
project. Many rely on volunteer workers
with little technical knowledge, while
others have focused their work on
training and service provision.
SOURCES & USES
o Most SSE projects consist of credit
and technical assistance, and require
some level of subsidization, usually
through a grant from an international
donor. Most USAID mission portfolios
include "OPGs" and/or other bilateral
projects desigLed to reach SSEs. Grant
funds cover the costs of operation
(salaries, overhead, equipment), and
of project ccmrcnents, usually a
credit fund, training and technical
assistance -- to the institution and to
o In some cases, local institutions also
finance projects through loans from
banks and/or through local fundraising
o Proposals for SSE p-ojects often
include cost recuperation projections
that rely on shaky assumptions or
ignore important cost determinants
(e.g., economic situation, foreign exchange
issues). This is one factor that
contributes to low levels of self-
sufficiency and continued dependence
o Experience shows that achieving
self-sufficiency in SSE projects is
very difficult (i.e., cover programs
costs from interest and other income
earned through thz program).
o The issue to consider is the level of
subsidy that is justified, which
can vary considerably from project to
project. For example, costs of operating
a credit fund (usually include T/A as
a cost) can range from over 100% of
amount lent (Haiti) to 11% of amount lent
o Although institutions fundraise
locally, and the majority of SSE
projects enjoy considerable support,
in monetary terms, this sunnort
represents a small percentage of their
overall budget. Outside financing
continues to be a requirement.
C. TECHNICAL AND
FINDINGS: o Many institutions have strong ties
with the community, and an emphasis on
community participation, which enhance
their capacity to t. promote lasting
social and economic development.
o The financial, business and economic know-
hoCw required to coordinate a suc'- 'r-iil
SSE oc~i-.tis not alwayLs part of the
technical n}:. -Jdce base of the starf,
whose backgrounds tend to be in the
social sciences (sociology, education,
anthropology, etc). In the case of vo-
lunteer organizations, this deficiency
is even more apparent.
o Staff of SSE projects are often
expected to assume a variety of very
diverse responsibilities -- training,
review of credit applications, business
projections, organizational development,
etc. Staff are usually unevenly prepared
to carry out all these functions and tend
to spend most time in the areas they have
most expertise. Allocation of time to
each of these functions is seldom well
o Strong management is particularly
important in SSE projects because of
their complexity -- growing number of
clients, high number of transactions,
financial monitoring -- and the diversity
of the services delivered -- credit,
training, technical assistance.
I~ ___ I____
c Many SSE sroarams are impaired by' noor
-na-ente result na n low staff
morale, poor p-ogram performance,
o SSE projects are more efficient
and _ffective when:
the organization's leadership
provides vision -- a clear mission for
the organization -- and direction --
clear coals and objectives -- to the
the staff is dedicated a?.d committed
to the project's goals and objectives;
the organization has so-ld management
and efficient administrative systems:
decision-makina is decentralized and
involves the staff;
there is a strong component of
staff training in finance/business and
accounting. NGCs administering SSE pro-
jects should be encouraged to hire staff
with business and financial skills;
staff productivity is emphasized and
incentives are built into the program;
the organization has good links with
o Many organizations that work
with women are "volunteer" associations,
some. with limited technicalexpertise in
development. Ties with community
organizations may be established through
"welfare," "hand-out" or service programs
which do not properly prepare the
organization to-implement an effective
o Crganizations that have the technical
capability to implement SSE oro]ects
may prove more appropriate for reaching
women entrepreneurs than organizations
with a "women-only" fccus that lack this
rI!1DI!: I S:
o Many SSE Projects include some form <
outside technical assistance, usually
provided through U.S. based organization
Organizations that provide T/A have
a "model" or approach to SSE
development which they replicate from
country to country.
o Tr'A provided can include all stages of
uro7-ct: daevelopment and implementation
as FiI as s tac- training.. Because ouis
T/A crc'.r.i::.tions can have considerable
input on the way in which a local instit
designs and runs its program, the capaci
and approach of the T/A firm are importa
contributors to project success o
o A full-time outside technical advisor
is not necessarily the most effective
He/she may become too involved in th-
institution and the program to
maintain obtectivity; the salary costs
may be prohibitive for projects that
should emphasize cost-effectiveness;
lessons learned from other countries
may not be available to the available
to the T/A provider.
o When technical assistance is flexible
and responsive to the country and insti-
tutional setting, it can make t
difference between an effective a
o Outside technical assistance is
most useful when the technical advisor:
plays a role that is well-defined,
preferably written as a job description;
develops a systematic way of training
local staff, beyond "learning by doing;"
uses lessons learned from other pro-
jects but does not insist on replication;
participates in institutional policy
issues only when these affect the
project's outcome (e.g., credit review
policy, income level of client group, etc
does not spend all his/her time at
headquarters, but considers field visits
to the entrepreneur's place of zroductioi
part of effective assistance; and
when feasible and advisable,
facilitates communication and
negotiations between program donors and
the implementing institution.
o All technical assistance efforts should
'.d~i': : the following questions:
to whom is the technical advisor
accountable? the founder? his/her organi-
zation? the local institution?
what are the indicators of "success"
i.e., the technical assistance is working?
should the technical advisor, as par
of technical assistance, be expected
to objectively evaluate the program, espe-
cially since assessment of the T/A should
be part of any evaluation?
GENDsR ISSUES: o How to reach women with project
resources is seldom an explicit part of
the technical assistance provided to an
o Because women entrepreneurs are so
prevalent among microentrepreneurs,
technical advisors increasinlsl
acknowledge the importance of
establishing gender specific criteria for
the provision of training and credit; for
the collection of data; and for the
assessment of project impact.
II. PROJECT DESIGN
rFI DIt:GS: Not all SSE projects are designed on tl
basis of an empirical assessment of the
SSE sector in the given region or city
and seldom include data that permits
realistic target setting.
o Most targets established for
the project performance (number of
loans, amount to be ient, recuperation
rates, rollover of capital, etc.) and ic:
impact (number of jobs created, level
of .ncomo/savings enhancement, value addE
firm expansion, etc.) are developed as
estimates -- not projections -- or
based on the performance of projects
in other countries.
LESSONS: o The design phase of SSE projects should
include a sector assessant@/feasibility
stucd that enaci.es planners to deveiop mc
effective projects and compile mo
realistic targets. A feasibility study
should include information on:
the economic context of region or
the beneficiaries and their businesses
the implementing institution;
the services to be delivered; and
the main problems and strengths of the
o Methodoloav on all aspects of dat
collection for the feasibility study
involvement of staff in data
collection; this is an effective way of
training staff that will later adminis-
the project, and establishing a strong
link with the community;
direct input from the beneficiaries,
through individual interviews, local
associations, etc. to assess their needs
and identify leaders;
inclusion of data disaggregated by
a style of presentation that can serve
to educate donors, government agencies
and implementing institutions on the
o Gender-related data is almost never
available and seldom collected for
2rocram design. Gender-related targets,
when tney appear, are often "boilerplate"
statements that have little chance of
being achieved, or else contain
qualifying language such as
"reasonable" and "if possible" that
provide easy excuse for failure to
o Micro-studies, such as project-scecific
feasibility studeias offer the nest
mechanism for gathering accurate gender
data (as opposed to relying on national
statistics or census which tend to
underestimate women's productive roles).
III. PROJECT TVI?L-C':I\.ATTO:"
o Advertising through newspapers or
formal institutions may restrict access
to the project to the "better-off"
o Proec promotion may be time consuming
at ir s t but if the program is
responsive and effective, very little
time investment will be required as the
LESSONS: o In order to reach the neediest with
informationn on the proioct, promotion
shcuid be conducted in the communities
where the beneficiaries live and work.
The feasibility sample can be a good
o In poor communities, information about
available resources spreads through word
of mouth, and through informal
associations or networks. Other
organizations, (churches, schools, social
service agencies, etc.) present in the
corr-unity can also assist in promotion.
GEDEIR I.TS:.: o Women have their ow ,n informal
ascciations through which they exchange
o For womeInn to learn about a Droject
promotion efforts must identify the
channels of information most accessible
to women and include these in all
information dissemination efforts.
o Women may be more relunctant to ask
questions of the p riolct promoter,
eSrpeclai ly if that person is male.
Well-trained staff should have a
sensitivity to this fact and be capable
of eliciting questions and presenting
information in a "non-threatening" way.
B. T"".,.-:: ., C ,EDi
1. LO1 AN x UITr.-T'rS
FINDIZGS: o Many participants in SSE projects have
previous] y borrowed from local
monevielnders or family. Most lack
experience with application procedures
and formal lending requirements.
o Collateral requirements can exclude
many entrepreneurs esnecla!ll the
smallest and neediest.
LESSONS: o Alternative ways of assessinua
person s reliability or potential credit-
worthiness include: character references
from community members; a selection
process that involves the beneficiaries;
formation of small groups that mutually
guarantee each other's loans; small loan
amounts at first to minimize risk; and
a simple economic analysis to verify the
viability of the firm.
o Criteria for selection of proiect
ben f iciar. r i es must be w'ei -derfin:ied f r
tne -t:art (in terms of size of firm,
income level, etc.).
GEUDER ISSUES: o Women are less likely to be able to
meet collateral and nrooerty rcauirements
o Selection criteria that excludes the
poorer groups will most likely exclude a
larger percentage of women than men.
Women -- especially heads of households
-- predominate among the poorest micro-
o In establishing lending targets, some
projects specLfy the number of women they
will attempt to reacn with services.
When this issue is addressed from the
start, it is more likely that mechanisms
will be created to reach women.
2. LOAI RVITMJ
FINDINGS: o Part of the success of micro-enterprise
credit lending projects depends on the
agility with which they move credit.
o In some projects the loan approval
procedure is very cu.mbersome. It
involves many people from diffesnt
departments in the institution; E.nd it
centralizes decision-making in the hands
of board members or a committee.
o In other cases, the loan aoolication
form is complicated and time consuming.
This may require over a dozen visits by
the promoter to the lean applicant, and,
in the final analysis, may not provide
very useful information, or result in
appreciably better repayment rates.
o The above factors:
slow down the movement of credit;
create dissatisfaction among loan
applicants, whose businesses may suffer,
and whose commitment to timely repayment
may flounder; and
increase program costs by not using
staff time in a productive way and by
generating less interest income.
o Project agility in cr ditlendinq and
loan review is often maintained when all
or most of the following systems are
loan application forms are designed
to gather only the needed information,
and are kept short (3-4 pages);
entrepreneurs applying for second and
subsequent loans undergo a more
simplified review process, or are granted
a "line of credit;"
various procedures for reviewing
loans are established, to speed up the
review of the smaller loans;
staff are involved in making
decisions on loans -- whether as teams or
committees-- not just in making
the institution understand s the
importance of striking an appropriate
balance that does not sacrifice speed for
judicious analysis, and is willing to
adapt its systems as the program grows
and the needs of the beneficiaries evolve.
oWomen have less experience in
comoletina applicatlon forms, and need
more technical assistance.
o Women may be unable to travel to a
central office because of child care,
household and other responsibilities,
or cultural constraints.
3. LOAN DISnI-T.sD,,uriT
o In earlier projects, many institutions
assume disbursement ana co L ect on
resoonsibilities, tnrougn a window in
their offices. In other cases, funds for
fixed capital and working capital were
disbursed directly tc the supplier (through
a "purchase order" system), where the
borrower picked up his/her goods, and loan
repayment was made to the institution.
o In more recent projects, -arrangements
are made with banks or other financial
i-nstitutions to facilitate the
disbursement and repayment processes.
o Entrepreneurs require frequent, small
loans, especially for working capital,
and short repayment terms; hence loan
collection and disbursement can require
considerable staff and administrative
o Some projects require that the borrower
ooen a savings account and set a ide a
certain percentage periodically. This
requirement mobilizes savings, familiarizes
the borrower with a formal lending
institution, and gives him/her greater
access to future commercial credit.
o Loan reoavment rates vary considerably
from 1oroject to erolect. The most
"successful" have a default rate (loans
written off) below 10%, and sometimes as
good as 3%.
LESSONS: oAgilit. in disbursement and collection
are just as important as in loan review.
If disbursement is not timely, borrowers
lose interest; if collection is delayed,
the project loses income and has lrss
capital to lend.
o Short payback terms is crucial. It
avoids misuse of loan money, and
over purchasing of raw materials, and
recognizes that the borrower's previous
credit experience from moneylenders
probably required daily or weekly
o Pro-ects that tailor the loan terms and
pavback schedules to the borrower s
experience tend to have fewer repayment
o Built-in incentives for repayment can
include larger loans, simplified
procedures, and individual technical
o When borrowers must deal with a
commercial institution as oart cf the
loan transaction, they become more adept
and capable of directly approaching a
bank for credit.
o Man projects fail to define arrearage
and default and lack simDle mechanisms to
determine the delinquency rate over time.
o Chanqgs in the country's economic
situation (e.g., devaluation, high
in'fat-on, shortage of inputs, etc.) which
affect product supply and demand, tend to
be factors that more strongly impact on
repayment rates than lending criteria, such
as interest rates or frequency of payback.
o Insisting on a "purchase order" system
increases the costs of production for the
entrepreneur who can usually secure
inputs "informally" more cheaply than
through a local supplier.
o Women tend to own smaller businesses
and- require smaller amounts of short-term-
o Because women predominate in the
commercial/service sectors, they tend to
require credit for working capital rather
than fixed capital.
o In most programs where data is
available women have as oojd or better
reayment rates than men, and have proven
to be "good" risks.
o There has been a gradual shift from
projectss that offer subsidized interest
rates to those that charge commercial or
near commercial rates. Most funders and
project implementors are increasingly
interested in supporting programs that:
do not subsidize interest rates which
can lead to dependence and decapitalization;
are able to achieve an "acceptable"
level of self-sufficiency; and
prepare the borrower to assume the
market cost of borrowing.
o In SSE projects, few borrowers identify
l .ih interest rates as a barrier to
oStaincing credit t. Market interest rates
are also not perceived as a key factor in
situations of high delinquency rates (as
explained above, these are most likely to
be affected by a downturn in the economy,
unrealistic sales projections, increase
in costs of production, poor management,
etc). Most small entrepreneurs rely
on moneylenders for short-term credit,
and are accustomed to much higher
o In most cases, interest incor e, even at
the comnmerci.al rate, can on!i coTver -7arz
of the ccst:- of o 3aGratin sn SSE credi-a
and technical ac:ste.nce r~: .. .
o N;GO institutions wei l-ver2 sed in
fi .arnc;i rmtatters are more likely
to insist on charcrina -market interest
ratce. Subsidized interest rates tend to
decapitalize a credit fund and decrease
the potential long-term impact of a program.
o Volunteer and other organizations that
have a social. "welfare" approach to
development and are more likely to work
with women, are also more likely to
subsidize interest rates. This approach:
creates increased dependence by women
does not prepare women to "graduate"
to mainstream programs or to approach
decapitalizes the program's credit
fund, thereby reaching fewer women in the
assumes that the project will
continue receiving grants to cover its
operating costs and its depleting credit
o Credit subsidization may be necessary
when beneficiaries are at the pre-entre-
preneurial stage, as is the case with
B. PROVISION OF
TECHNICAL ASSISTANCE TO
o Provision of technical assistance usually
includes a wide variety of topics that
pertain to the finances, management,
organization and production functions of
the business. Most technical assistance is
provided by the project staff, either on a
one-to-one basis or in small groups.
o Some projects require that potential
borrowers attend a given number of sessions
prior to qualifying for the first loan.
o Most SSE projects offer both crouD
train4.na sessions and individual technical
assistance. Project staff are usually
responsible for conducting both, although
they may lack the training skills needed to
develop curricula, select training
methodologies and conduct sessions.
o The costs of training are often
undercalculated in the project budget;
since most training yields little or no
income, it is one project component that
usually requires total outside funding.
o The direct relationship between technical
assistance/training and project success (in
terms of repayment rates, firm expansion,
job creation, income enhancement, and
"graduation" of clients to other credit
sources) is very difficult to establish and
has not been proven empirically. Many
argue that technical assistance is not
needed for a successful SSE project while
others consider it an essential
investment for long-term impact.
o A training component is most effective
- aligns to the beneficiaries' needs;
- does not demand that all project clients
follow a pre-established set of rules on
how to run their businesses (i.e., builds
on existing knowledge and techniques);
combines one-to-one with small group
clearly differentiates between skills
s ecific to the type of firm (food
processing, furniture making, etc.) and
skills 'necessary for all businesses
(management, planning, accounting,
i: provided parallel to credit;
does not rely exclusively on project
staff to prepare ar.d conduct all training,
but includes experts in non-formal adult
education and training (academics or "big
names" do not necessarily fit the required
qualifications for effective training); and
charges a "fee for service" for the
GENDER ISSUES: o Because women tend to have a lower level
of formal education and business
experience, they~ may require more technical
assistance in all areas of business
o Household and child responsibilities and
transportation. constraints may prevent
women from attending group training
sessions held in the evenings, thereby
decreasing the potential impact of the
o Women may be more reluctant to speak up
in group situations, especially if men are
present. Sensitivity to this issue will
help elicit questions and observations that
will otherwise go unaddressed.
C. MONITCRING AFT)
O SSE pro-ects require a more system
and up-i-o-date record-keeoing mechanis
mo-st development programs. An effee
program must keep track of at leas'
following, some of which change on a
number of applications and transact
loan capital available;
income interest earned;
costs of operation; and
aount lent and number of borrower
In addition, the program staff must
tnis information to:
formulate basic ratios; and
determine overall health of t
o Most SSE 2.ro.ects lack anoroor
conitorina svstems that can provide
institution and the founder with upd
information on the project's performance
o A detailed record-keepinq an
monitoring system should be developed
cart of the Droject deslqn phase.
Funders must review such a syst
carefully prior to funding, to make su
that it is:
- easily kept up- to- date;
- based on data drawn from 1
application, repayment records and o
data collection instruments already
o An effective monitoring system forces
institution to determine what infcrmat
is useful to collect,and what mechanism
it should establish to collect it.
example, indicators of a healthy project
ratio of current assets to liabilitie
debt to equity ratio;
six months' profit calculation;
semi-annual profit and loss statement
quarterly financial summary; and
loan delinquency rates.
GEKDFER ISSUES: o Data collected as part ofrecord-keepi.
and monitoring should be disaaaregated
sex to determine if the program is reach
women, and if gender is an issue in any
the above areas.
D. COST ""C'Tr T.'"'-'
: Cost effectiveness can be defined a!
proec t's ability to cover a substanti
r-c-ion of its salarKies and operating co.
ot_ imnlementi i a credit project fror
incon*nearned on its credit portfolio.
o Major causes for high project costs ar,
1. Fund disbursement from donors oftE
occurs in trenchess" that are not in li
with the credit needs of the project.
the project disburses its original cred
fund faster than planned (often a sign of
healthy project),then it temporary
depletes its credit fund, since repaymer
are slow at first. If the project th
must wait several months for anoth
disbursement from the founder, it los
momentum, discourages potential client
and loses income.
2. Staff responsibilities are defined in
very broad terms; staff is nor encourage
to cut project costs or to be concern
about program cost effectiveness. Sta
productivity -- in terms of amount len
number of borrowers, repayment record
clients, etc. -- is seldom considered
indicator of performance.
In addition, staff is expected to
versatile enough to carry out all function;
related to credit and technical assistance
For example, staff time spent collectii
bad debts may carry a higher opportuni'
costs than if a person is hired for the
3. Movement of credit is hindered by
lengthy application procedures, complicate
review processes, and inefficier
disbursement systems. Turnaround time f:
loan decisions can be as short as one weel
or as long as several months. In th
aggregate, this factor can debilitate the
4.Dependence on concessionary monies
prevails among implemenciing institution!
There is little incentive to aspire toward
improved costs effectiveness if the donor
organizations continue to provide funding
without identifying this issue as a
important factor in their decision.
o Calculations of a project's cost-
effectiveness should not include costs of
training and t.echnicial assistance, which
are almost never self-sufficient
components, but rather study only the
credit delivery system, and its ability
to cover its own costs.
GENDER RELATED CONSIDEriATIONS IN SSE PROJECTS
This section presents issues and questions that should be raised
at different stages of the project process and which help design
and implement an SSE project that integrates women more
The material provided is meant to be an integral part-of the
project process, and should not require separate or "add-on"
tasks on the part of project design teams or implementing
institutions. It is presented as a resource for improved
project planning and implementation.
Two tools for gender analysis arc- suggested and defined:
disaggregation of data by sex, and
analysis of constraints that affect a project's and an
institution's ability to reach wcmen. 1/
The charts provided are divided into the three stages of the
project cycle: design/feasibility; implementation/monitoring;
and evaluation. Each chart outlines a-series of variables to be
considered and provides reasons why the gender issue should be
addressed in each case.
Under design and feasibility, five topics are considered: the
beneficiaries; the firms and the production process: marketing;
beneficiary input; and local implementing institutions. The
section on project implementation is comprised of two main
topics: delivery channels and resources provided by the proJect.
Finally, the last section on evaluation addresses data
collection; impact issues; and project performance.
1/ Based on a gender tool developed by the Harvard Institute for
International Development. See Overholt, et al., eds. Gender
Roles in Development Projects. Connecticut: Kumarian Press, 1985.
DATA DeS^Grl';CATION BY SEX 1/
In every society, there are differences in gender roles.
Depending on cultural, political and economic factors, women
and men may undertake different tasks, face different
constraints, and focus on different concerns. These distinct
gender roles are often overlooked or taken for granted, and
yet they influence all aspects of development, particularly
productive and other income generating activities.
The use of gender as an analytical tool- adds a
whole dimension to the project development process
by lending a unique perspective to analyses or
issues such as labor needs, income sources, use of
household income, and access to resources.
The first ana simplest step in this process is to design data
collection systems that enable the analyst to gather
information along gender lines. These data can then provide
at least the following information:
differences caused by gender among potential
patterns or trends that emerge primarily attritutable
to only one gender;
limitations that may be determined by gender.
Cne can pose three examples to illustrate the acove in an
SSE project. With sex disaggregated data, one can determine,
the types of businesses in which women predominate;
if tne use of business profit -- for consumption or
reinvested'-- is related to gender;
if women approach the institution for credit in
numbers commensurate with their presence in informal
The second and more difficult step in data disaggregation
involves incorporation into the data collection process of
issues that are particularly pertinent to women, and that
will help analyze the project's ability to benefit women.
I/ Adapted from Nadine R. Horenstein, "Factoring Gender
into the Development Equation," Horizons, Summer 1985,
pp. 26 30.
For example, an examination of intra-hcusehold dynamics can
help understand a dimension of the project that directly
affects women. The traditional model of the household assumes
that the man and woman operate as a joint decision-making
unit which allocates resources and spends income according to
mutually agreed upon and similar set of priorities.
Including the household as one unit of analysis may help
identify different and competing demands of individual
members within a household. The division of labor and
income, the resources that individuals can command to carry
cut activities, and the benefits w',hich they derive are all
part of this framework.
1. Feasibility studies and other Laterials used for project
design should disaggregate data by sen. In those cases '-nere
such material has already been developed and conta:.gs no
gender analysis, it is incumbent upon the founder and the
implementing institution to ensure that this step is
completed prior to project implementation.
2. All data collected during the course of the project
should be disaggregated by sex. This practice will enable
project managers and evaluators to assess if gender is a
variable in the wide range of factors that affect a project's
performance and impact.
ANALYSIS OF CONSTRAINTS Ti.'T .rTECT WOMENc
Constraints tITomen Face and T'-ir Manifestation in Projects
and in Implementing Institutions:
For women entrepreneurs, having access to productive resources
is even a greater problem than for men. A variety of micro-
level studies show that there are constraints thalt are strictly
related to gndc-ir, and that the severity of these constraints
can mean that women are excluded from benefiting from projects
that fill the credit and technical assistance gaps.
Many of the obstacles women encounter are rooted in the social,
cultural and economic fabric of the society and require
structural and institutional changes that projects can help
address. Barrier analysis,one to(l for addressing women in
project development identifies five types of constraints:
societal rirms, institutional structures; legal aspects;
economic factors; and political factors.
In each project setting, these must be analyzed to understand
how they restrict women more than men. Some of these
constraints can be tackled at the design and implementation
stages, and can lead to appreciably greater participation by
women in the distribution of available resources.
The two tables below attempt to capsulize the variety of
constraints that are gender related and that affect women
entrepreneurs. When program designers and implementors are more
keenly aware of these factors, they can address them in the
formulation of projects to reach small and microentrepreneurs.
The first table highlights the limitations that the majority of
societies impose on women, particularly poor women. The six
constraints recorded in column one are varied (legal, economic,
societal norm, political, etc.) and affect many facets of a
woman's life -- level of education, ownership patterns, roles
within the family structure and status within society -- and in
the aggregate place women in a disadvantaged position vis-a-vis
The overall effect of these constraints, recorded in column two,
is to make women less attractive as potential clients of
enterprise projects; the result, as column three shows, is that
projects which don't take these constraints into consideration,
respond in a manner that excludes a large number of women from
CONSTRAINTS WOMEN PACE IN SSE
1. Lower levels
of formal edu-
semi or illi-
2. Less likely r to
orsn land or
for legal and
to be :.0'i- the
4. Dual role of
headed by women.
6. Societal norms
types that de-
work and contri-
bution to family
PnOJECT RESPONSE TO
o Greater reluctance
to ppj-'c-h an insti-
tation for credit or
o Greater difficulty in
fornts ancd requirements.
o Loss able to raet
ments that are based
on u:.-)Lhii .
o tClomn borrow smaller
amounts and need loans
more often (working
o Significantly curtails
time and mobility.
o Households depend solely
on female labor for
o Overrepresented among
the poorest sectors of
o Project designers and
planners do not recog-
nize the real value
of women's economic
o Self-selection process
occurs even before
a woman approaches
o Not eligible for
credit or other
through the project.
o Transaction costs are
higher and make it
to lend to women.
o May require that
client travel to
o Least likely among
women to participate
in project benefits.
o Delivery channels
and requirements may
exclude this group.
o There is no relation-
ship between reaching
project targets -- in-
crease income, job
creation -- and inte-
grating women as pro-
I ~I__U_ ___ _I ___I~
There are additional obstacles that women face which stem-from the
above. Local implementing institutions and their staff may held
perpetuate some of the conditions described above. The second
table below focuses on how institutions can ignore the gender
issue and thereby create projects that by design or oversight
Column one outlines the crucial points at which an institution can
err in its approach to women. The philosophy that underlines
project creation, the data used to formulate projects, and the
means selected to implement these projects all can have a negative
effect on whether women are consciously or inadvertedly excluded
from a project, as described in column two. As in the first
table, these factors result in project responses to the gender
issue which are recorded in column three and also tend to
adversely affect women.
With this short synopsis of two tools one can employ to
integrate women, t:".e charts below examine more closely hew
one addresses the gender question at each step of project
design, implementation and evaluation.
INSTITUTIONAL AND) PROJECT" CONSTIN.A.INTS Le'.T ADVERSELY AFFECT
WCiEN'S PArITTICIPAVION iN3 SSE PROJECTS
INSTITUTION/Pl'l "'..7 :T 2 ZI PPJJJECT RESPONSE
CCNSTL-I1 T TO GENDER ISSUE
1. Management does o
gender an import-
ant policy o
2. May use census o
data or national
especially in the
3. Feasibility step: 0
sample selcom dis-
aggregates by senx;
inclusion of women
part of methodology.
4. Less likely to o
accessible to women.
5. Delivery systems o
selected for pro-
ject do not take
into account time
and other cons-
traints women face.
6. Staff lacks capa- o
city to address
Inclusion of gender is
not an institutional
Staff is not rewarded
for addressing cgnder.
Women remain invisible,
or their :rc:1uct:ive
roles are Crossly
Project designers fail
to learn of wcmen's
constraints and needs.
Wmcen do not learn
of project's resources.
Requirements and pro-
cedures may unknowingly
exclude a large number
All technical assistance
is designed in a uniform
o No policy and admi-
are in place to guide
o Design based on in-
and/or on incomplete
the client population.
o Project design does
ror reflect data
pertinent to women
o Project design does
not include effective
systems to reach
o Assumes all entre-
preneurs are reached
with no gender bias.
o Project does not be-
nefit women in a
o Project does not
provide women who
the full benefit of
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t ~ ..n), UJ 124 04
U'UIPLES OP SSE PRECJEZC. THAT CONSIDER GENDER
EA.:;rj-D;:'2!: THE G'T.:;ELEj Cih;l PROJECT 1/
The' Grameen Bank Project (GBP) is a development bank whose
primary aim is to make productive resources available to
Bangladesh's landless rural poor. In four years, the GBP has
operated in 1,250 villages reached through 86 branches which
extended over 115,000 loans to about 58,000 landless rural poor.
The GBP model has two main features:
1. GBP Branches: These are self-managed units of 7-8 staff
which operate at the village level and extend credit to
an average of 14 villages, with each staff member (bank
worker) responsible for 20-25 groups.
2. Group Formation: GBP staff live in the villages where
they work. Their first task is to promote the formation
of small groups of five who attend a week-long course
before being eligible for credit. All groups from the
same village meet together weekly. During these meetings,
the bank worker disburses loans; collects loan payments
and fund and emergency fund deposits; registers groups
savings, monitors attendance, and then deals directly
with the bank to transfer payments and other
On the average, household income has risen about 70% in nominal
terms over 2 1/2 years. Through the program, the beneficiaries
have accumulated over Tk 16 million in savings, and an additional
Tk 3.4. mill:.o in an emergency fund. Average repayment rates
for all branches is about 94% (in a country where over half of
the agricultural credit is never paid back).
1/ For a detailed account of this program see, "Bangladesh
Employment Opportunities for the Rural Poor: A Feasibility
Report," World Bank, 1985.
About 45% of all group members nre landless rural women; their
share of total credit is about 34%. Of those women, the majority
(60 65%) were not previously engaged in income generating
activities, and studies have concluded that the changes in
women's status and inccrme in the program is impressive.
Design :d I Ic plementation -cto:*:.:; that Contribute to GB2"'
L'!c.-: .; in Reaching t"oreOn:
1. Concern with reaching the lowest income groups, where
2. Each branch has at least two females staff as bank
workers who live in the villages and can interact more easily
with village women.
3. Potential borrowers receive scme training prior to loan
disbursncmnt, including learning to sign their names. For women,
this can translate into increased self-confidence and a sense of
being on par with male borrowers.
4. Groups are formed at the village level and conduct their
meetings in the village.
5. Loan procedures do not require that borrowers travel
outside their villages which is particularly difficult for worr.n,
for cultural reasons.
The Ecuadorian Developmenrt Foundation (FED) is a private
development organization, one of :..any National Develoom;ent
Foundations operating in Lastin America and the Caribbean. The FED
initiated its Program for the Eovelorpment of Micro-enternrises
(PRODEM) in 1934 with funds from USAID/Ecuador and technical
assistance from i CZCCN/ATEC, a U.S. based PVO. PPCDEM is
designed to provide credit and management training to
microentrepreneurs in the capital, Quito.
The project has two main cncionents:
1. Micro-enterprises: This component provides loans to
individual micro-n:r.-pnreneurs for working and fixed
capital. FED staff interview the applicants, visit tne
place of production and make loan recommendations.
2. Solidarity Groups: These groups are c:;onrised of five to
six self-selected mzcbers, mostly street vendors. Each
group receives one ican which is divided among its
members. Group members also function as guarantors of
the loan, since all members must repay before a
subsequent loan is extended to the group.
The interest rate charaad includes the maximum legal rate for the
country (1.92% 'per month), plus about 3% fee to cover
administrative costs, capitalization of the fund, and a loan less
reserve fund. Loan disbursement is rapid, sometimes with less
than one week turn-around from application to disbursement on the
first loan. Subsequent loons -which are larger and for longer
terms are made on the day the prior loan is paid off.
In the first year of operation, the FED made over 5,000 loans to
microentrepreneurs and solidarity groups. Loan amounts ranged in
size from U.S. $20 to $1,000 per person for working capital.
1/ For additional information an this program, especially its
work with women, contact the International Center for Research on
Women (ICRW), Washincton, D.C. Through a grant from the USAID
Office of Women in Development, ICRWl is providing assistance to
FED on a study of the impact of shor--term credit on women's
incomes and household welfare.
It is too early to rEcs- .nt in'omne a em ovnament imact data
resulting from tihl cred it nd the technical assistance crovidce.
One third of the clients in ::ne micro-.ent rise component are
c:n. Over t'-ro tue.rcs of thc-, sliidL.r-ty c-rouo members are women.
Spogra hs t oe:pncd he ?h D h's ;maintained its inii"al
prooortion of loans to uo.en, reaching higher numbers through
th 'nr.: C than p""ious i.nnoatiove small loan programs in
3G.icg. cndi I'Epl nticn sato:rs that Contribute to PED's
1. naconitiorn Efol the outset that women comprise a
significant percentage of microentr2 reneurs.
2. The program offers small, shlort-term loans for orkinc
3. 'ere are auic, simple application and disburssment
prccdures in place.
4. FED aqu irzes that sol darity groups include wc.men.
d The pror m trc.ts to increase the nprcntaaoc of
individual bco :rs that areo wo.on (currently 33%)
6. Recognition that the majority C89%) of women borrowers
had never received credit 'rom a bank, a cooperative- or o her
7. ?ED has hired a full-time coordinator whose pri: a.v
responsibility is to design promotion and training for the
program s female beneficiaries, and to coordinate data gth-ring.
*. The rED sought outside technical assistance to enable
t to incrpoorate gencde: into design, implementation and
9. Collection of data disacc:rc.-.ated by sex to assess the
project s performance over time in reaching wo:en beneficiaries.