Macro Ambiente

In this section, both general and specific policies were assessed. Regarding the general policy issues, key informant interviews were conducted with experts and leaders from Federal MSEs Development Agency, National Bank of Ethiopia, Women and Children Affairs Bureau of Addis Ababa and the three microfinance institutions. The above institutions were purposely selected to examine the efforts made in respective institutions to redress women disparity in the business sector as addressing women issues calls for different stakeholder and institutional intervention. The key informant interview with the National Bank of Ethiopia indicates that the institution pays attention to financial soundness, sustainability and safe management. The Bank, as a regulatory organ of Microfinance Institutions, does not have policy that redresses the concerns of women entrepreneurs owning micro and small businesses.

As an organization for mainstreaming women issues and promoting policy concerns in the public institutions, the Women and Children Affairs Bureau has assigned staff who communicate with various organizations and stakeholders regarding women issues. However, the bureau does not have enforcing mechanisms and legal channels to communicate with formal and non-formal financial institutions. The bureau does not have assessment reports and directions as to what is mainstreamed in institutions on the inclusive mobilization of financial and non-financial resources to women entrepreneurs who own MSEs in Addis Ababa. The situation seems similar in that micro finance institutions disburse more loans to women clients due to their high repayment

rate and being trustworthy creditors rather than based on defined affirmative policies and programs that are aimed at benefitting women. The institutions assessed have no women-focused policies and strategies and have no immediate plans in place towards designing specific and affirmative policies and programmes in all selected microfinance and public institutions.

Gender neutral institutional policies must be equitable to women and men. The polies must consider the diverse needs and situations of women and men. Policies are frequently based on the interest of the male actor and reinforce the prevailing inequalities and discriminations. The research conducted in India using micro data argues that there is significant disparity for women to get access to and control over finance. On average, women are 8% less likely to access formal finance and 6% more likely to access informal finance. Similarly, women use 20% fewer cash loans (Ghosh & Vinod, 2017, p. 60). Again the finding of South Asia using secondary data sources from World Bank Enterprise Surveys supported this result that enterprises owned by female are on average 3% more likely to lack loans (Wellalage & Locke, 2017, p. 336).

In terms of specific strategic level policies and annual plans for implementation, the key informant interview indicates that, except for the National Bank of Ethiopia, all selected institutions indicated women agenda as one of the issues in their strategic and annual plan. However, no institution pointed out women entrepreneurs‘ related challenges in their strategic document, clearly indicating women-specific challenges in a strategic plan helps institutions to allocate adequate resources, plan to address those specific problems in that strategic period and evaluate the change and lessons for continuous management of improvements to women (historically excluded). Moreover, it may help institutions to mobilize resources and evaluate their achievements periodically for further improvement and manage the advancements in women empowerment. From the informant interviews, this study identified that no special attentions was given in the institutional strategic and annul plan documents in all the observed institutions. Therefore there is no mechanism to ensure policy coherence in terms of addressing women disparity in the interventions that are intended to support women entrepreneurs owning MSEs in Addis Ababa.

Regarding the provision of business support services, the understanding exists that financial services alone do not ensure long-term, sustainable development of women- owned enterprises (including women empowerment). Studies constantly show that women‘s higher levels of education, comprising strong numerical skills, contribute to

their ability to understand business issues, their capacity to receive appropriate skills and their ability to move their enterprises to higher levels (ILO, 2008, p. 27). Access to wider range of business support services enhances competitiveness and profitability of enterprises (Sievers & Vandenberg, 2004, p. 1). Moreover, accesses to financial and non-financial packages are essential for the growth of MSEs (Sievers & Vandenberg, 2004, p. ix). However, from observations made and the key informant interviews conducted by this study, the fact that education and expansion in skills not only serves to promote the provision of integrated financial and non-financial business enterprise development services, but also to enhance the productivity and efficiencies of women entrepreneurs. Skill and knowledge acquired through business development service advances women entrepreneurs‘ capability to progress and cultivate their businesses as well. The International Labour Organization report indicates that business support services substantially and positively impact on performance of women‘s business enterprises (ILO, 2007, p. 26). The research conducted in BRAC (the Bangladeshi NGO) comparing clients who received credit service together with BDS as compared with those only receiving credit services indicate that clients who received BDS and credit services together in one package increases average income, on average twice as compared to those who received only credit service (Goppers & Cuong, 2007, p. 33). The evaluation report of SIDA-supported start and improve your businesses (SIYB) project in Vietnam indicated that the business development service program helped the beneficiaries to develop confidence in their business activities and formalize their businesses. Additional achievements indicated in this report are that the integrated loan and BDS support have increased the volume of business products and the profit, employment expansion and market network. This report further revealed that the trainees acquired the knowledge to arrange their jobs and to manage their businesses (Goppers & Cuong, 2007, pp. 31-32) as compared to their counterparts. Performance monitoring result is used to give loans – the performance monitoring often focuses on competitiveness in the market, opportunities and obstacles in the process (UNCTAD, 2001, p. 39).

To assess the institutional policies in place to address women disparity in building businesses skills, the study designed semi-structured questions for the Addis Ababa MSEs development agency. The first question poised to the key interviewee was to state the number of beneficiaries who received business development services and the percentage of women who attended the BDS trainings, if any, in different sectors until the end of 2015. The key informant did not have figures indicating the actual

implementation of business development services and training as a whole and specifically for women. Establishing consolidated data may help the agency to evaluate what is practically happening and the focus area to be addressed in the future. Moreover, MSEs development strategy implementation and periodical evaluation of the strategy depends on actual statistics to advocate policy makers. Therefore, gender disaggregated data is not documented in the bureau.

The other semi-structured question poised to the key informant was to describe special attention the bureau gives (has given) to promote women entrepreneurs owning MSEs in the city. In designing work unit, the following aspects were not in place: entrepreneurs‘ and skill development programs, consultancy and counselling programs, technology development and information dissemination system, tools designed to measure financial and non-financial effects, and the reporting mechanisms of challenges of women-owned MSEs to policy makers and their monitoring and evaluation mechanisms of the growth of women-owned businesses.

The key informant interview results generally indicate that no special attention was given to women entrepreneurs owning micro and small businesses in training and skill development except the general plan to focus on MSEs. Women owning MSEs were small in number in the city. However, there is limited support in building cumulative investment in terms of financial capacity, orientation, coordination and integration (Stevenson & St-Onge, 2005, p. 32). Women entrepreneurs lack working premises, markets for their products and access to finance. Women also have limited access to training, skills and management (ILO, 2008, p. 1). A report written by Stevenson and St- Onge concluded that Ethiopian women entrepreneurs are economically constrained (Stevenson & St-Onge, 2005, p. 11).

One of the bottlenecks to start and expand women businesses is lack of insufficient financial services. Policy support measures and training programmes have often proved useful (UNCTAD, 2001, p. 43). In terms of this, conventional lending practices need revision and affirmative special programs need to be adapted to the particular needs of women to ensure inclusion of women (UNCTAD, 2001, p. 43). Financial institutions are expected to design flexible and well-functioning programs that best suit women entrepreneurs to overcome the deep-rooted financial constraints of MSEs owned by women. These may include revision to collateral requirements as security for loans, financing conditions in interest rates, transaction costs and terms of repayment (OECD, 2005, p. 15; UNCTAD, 2001, p. 39).

The study in this regard evaluated the existence of special financial programs to address the financial constraints of women entrepreneurs owning MSEs and to redress women disparity in this business sector. The semi-structured questions that were designed to evaluate microfinance institutions focused on the presence of loan programs allocated or percentage of loan portfolio dedicated for women-owned MSEs other than women enterprises development programs funded by United Nation (UN), or any Non-Governmental Organization (NGO) programs. The presence of technical assistance, training, consultancy and counselling services designed specifically for women entrepreneurs contributes for women businesses development. The instrument also included the presence of schemes designed to report challenges of micro and small women-owned businesses to policy makers and the presence of special financial services programs designed to help micro and small owner women entrepreneurs in the area of reducing the minimum compulsory saving requirements, adjusting collateral requirements or collateral free loan, the existence of women focused insurance schemes to minimize or avoid vulnerability and failure of women micro and small businesses, women focused loan terms and flexible repayment systems and women‘s legal advisory services.

The key informant interview information reveals that almost all selected microfinance institutions have no special financial policy/program to address women‘s financial constraints in the business sector. Loans channelled to women clients are empirically proved for their high repayment rate being trustworthy borrowers. The practice is consistent with the finding by Aggarwal et al. (2015) that borrowing to women has greater social impact (Aggarwal et al., 2015, p. 55) and women demonstrate better repayment behaviour (Dorfleitner & Oswald, 2016, p. 45). Nevertheless, women tagged financial funds like the women entrepreneurs development program fund and any NGO financed sources were channelled to women as in the framework of the agreement in place. However, these fund sources were beyond my scope. The researcher argues that lack of institutional policy and supportive schemes to redress the gender gap may perpetuate the gender gap in the city. There is gender gap in access to business finance and women-owned MSEs demand more business financing support (Leitch et al., 2018, p. 110). The research conducted in Kenya revealed that interest rate, collateral requirement and repayment period negatively affect financial performance of MSEs (Amsi et al., 2017, p. 48). A research undertaken in Ghana indicated that microcredit may benefits the poor when it addresses the poverty trapping risks; therefore, combining microcredit and micro insurance empowers the poor (Akotey &

Adjasi, 2016, p. 380). However, there is no consensus on the contribution of financial services to women entrepreneurs. The survey research conducted across five microcredit providers in Indonesia, using ordered probit analysis, showed that microfinance has effect microenterprise performance if it is supported by non-financial services (Atmadja et al., 2018, p. 957).