Transcript SECTOR-BASED MULTI-PROJECT PROGRAMME OF …

Regional Cooperation Council
Workshop on Enhancing Women Entrepreneurship in SEE
Sarajevo 1 October 2009
Financing Women Entrepreneurship: Lessons Learnt and
Innovative Practices
by
Siv Hellén, Advisor to the President, Nordic Investment Bank (NIB)
and
Marja Seppälä, Senior Country Manager, Council of Europe Development Bank
(CEB)
Outline of the presentation:
• Brief presentation of the Nordic Investment
Bank (NIB) and the Council of Europe
Development Bank (CEB)
• Description of the loan programmes for
women entrepreneurs
• Lessons learnt
• Conclusions and remarks
NORDIC INVESTMENT BANK
enhancing competitiveness
& the environment
Siv Hellén
|
1 October 2009 |
3
|
Northern Europe’s multilateral bank
•
•
•
•
•
•
•
•
•
Nordic and Baltic countries
as shareholders
Established in 1976 by
Nordic countries
Baltic countries joined in
2005
Headquarters in Helsinki
Balance sheet € 22.6 billion
Loan portfolio € 13.1 billion
Loans disbursed 2008
€ 2.5 billion
AAA credit rating
Lending in member
countries and emerging
markets
Iceland
Norway
Finland
Sweden
Estonia
Latvia
Denmark
Lithuania
Siv Hellén
|
1 October 2009 |
4
|
Mission
NIB promotes sustainable growth
of its Member countries by providing
long-term complementary financing,
based on sound banking principles,
to projects that strengthen
competitiveness and enhance the
environment.
Siv Hellén
|
1 October 2009 |
5
|
NIB’s global reach
Framework agreements outside the member countries
Asia
Africa &
Middle East
China, India, Indonesia, Laos, Pakistan, the Philippines,
Sri Lanka, Thailand, Vietnam
Botswana, Egypt, Jordan, Mauritius, Morocco, Namibia,
South Africa, Tunisia, Turkey
Europe
& Eurasia
Bulgaria, Croatia, Czech Republic, Hungary, Montenegro,
Poland, Romania, Russia, Serbia, Slovak Republic,
Slovenia, Ukraine
Latin America
Argentina, Brazil, Colombia, Dominican Republic, Mexico,
Peru, Uruguay, Venezuela
Siv Hellén
|
1 October 2009 |
6
|
CEB -
COUNCIL OF EUROPE
DEVELOPMENT BANK
7
Marja Seppälä
I
1 October 2009 I
7
CEB Overview
Institution
• Oldest pan-European supranational financial
institution
• Set up in 1956 to strengthen social cohesion
• 40 Member States - members of the Council of
Europe
Key figures
•
•
•
•
•
•
(end-2008)
Total assets: € 21.4 billion
Own funds: € 4.7 billion
Rating: AAA (Moody’s, S&P, Fitch Ratings)
€ 30 billion in projects financed since inception
Outstanding loan portfolio: € 12.4 billion
Loans disbursed in 2008: € 1.5 billion
Marja Seppälä
I
1 October 2009 I
8
CEB Overview
Borrowers
• Member States
• Local or regional authorities
• Financial Institutions
Activities
• Loans
• Guarantees
• Trust Accounts
Sectoral lines of action
• Strengthening social integration
• Managing the environment
• Developing human capital
Marja Seppälä
I
1 October 2009 I
9
Loan Facilities For Women Entrepreneurs
 Idea was born in 1999 at conference in Iceland
 Purpose: to support and increase women's
involvement in business and decision-making
processes in order to promote gender equality
 Projects carried out by SMEs or individuals in the
private sector
 Involve local financial intermediaries
 Priority given to projects creating new jobs and
projects located in rural areas and in regions with
high unemployment
Siv Hellén
|
1 October 2009 |
10
|
The programmes’ objectives
Provide credits to SMEs (women entrepreneurs), for investment
and working capital
Total loan amount (CEB & NIB) EUR10m, extended by each
institution in 6 loans to 5 banks in Estonia, Latvia and Lithuania
Facilitate access of women entrepreneurs to medium/long term
commercial credits with attractive interest rates
Create and maintain jobs
Contribute to the promotion of welfare and equality in EstoniaLatvia-Lithuania through the development of women’s
entrepreneurship
Siv Hellén
|
1 October 2009 |
11
|
Loan Facilities For Women Entrepreneurs
 The 1st loan programme was only 1 million euro
to be divided equally by the three Baltic
countries
 Followed by another loan programme this time
together with CEB in the total of 10 millon euro
 NIB later launched one loan programme in
Russia of 2 million euro, which was less
successful
Siv Hellén
|
1 October 2009 |
12
|
Loan Facilities for Women Entrepreneurs:
Guidelines
 Requests for loans considered on a commercial
basis
 Emphasis put on the strategy of the borrower, the
competitiveness of the project idea and
environmental aspects
 Flexibility in expenditure to be financed
 Maximum tenor: five to seven years
 Interest rate charged by the financial intermediary
individually based on market terms
 Loans must be adequately secured
Siv Hellén
|
1 October 2009 |
13
|
SME Eligibility Criteria
maximum 100 employees
maximum 75 m€ net fixed assets and
maximum 33% held by a large corporation
Plus
owned or managed by women
or
clearly improving women’s opportunities in the
employment market
Siv Hellén
|
1 October 2009 |
14
|
Loan Facilities for Women Entrepreneurs:
Total Figures
Number of projects
ESTONIA
LATVIA
LITHUANIA
TOTAL
66
191
131
388
RUSSIA
5
Jobs maintained*
New jobs*
562
1,346
1,614
3,522
88
363
383
834
* Estimated figures
Siv Hellén
|
1 October 2009 |
15
|
Baltic States
Loan Programmes for Women
Entrepreneurs:
Lessons learnt
NB: The CEB findings presented hereafter are adapted from the results of an ex post
evaluation carried out in 2007 on these programmes.
Marja Seppälä
I
1 October 2009 I 16
Overall a very positive outcome



The programmes performed well and
efficiently
Served the businesses that were
targeted
Good correspondence with CEB’s
social mandate
Marja Seppälä
I
1 October 2009 I
17
The programmes performed well
and efficiently





Objectives largely met
Very satisfactory institutional arrangements
Satisfactory sub-loan performance
Banks and women entrepreneurs satisfied about
management and conditions
Efficiency was satisfactory
 Programmes well documented
 Zero defaulting loans (June 2007)
 Schedule well-respected and lead times
acceptable, short even
 Satisfactory cost-efficiency and cost-control
Marja Seppälä
I
1 October 2009 I
18
The programmes served the
businesses that were targeted



Great variety of sectors, often
services
Half or more were micro-enterprises
Rural focus well-respected
Marja Seppälä
I
1 October 2009
I
19
Great variety of companies
Marja Seppälä
I
1 October 2009 I
20
Rural focus well respected
Marja Seppälä
I
1 October 2009
I
21
In line with CEB’s social
mandate
Women entrepreneurs target represents
specific niche combining…
Commercial aspect
 Credit to companies at market terms
Social aspect
 Specific disadvantaged group, namely
women entrepreneurs
Marja Seppälä
I
1 October 2009
I
22
Relevance was not perfect
 Objectives and eligibility criteria OK
 Label « women entrepreneurs » does lower barrier-to-entry
for women
 Rural area focus gives chance to entrepreneurs with less
collateral
 Start-up finance responded to need
 But
 Relevance of job creation objective rapidly eroded at the
time
 Baltic States: narrow gender gap in entrepreneurship
- Other CEE countries probably more relevant
 Additionality ?
Marja Seppälä
I
1 October 2009
I
23
Impact on individual companies
90%
80%
#responses (N=97)
70%
60%
50%
40%
30%
20%
10%
0%
y
ol
rs
rs
ns
ce
en
en
ali t
ets
ntr
u
m
k
tito
m
iti o
pli e
an
r
o
q
o
e
o
c
d
p
n
a
l
i
p
f
w
n
u
w
a
y
m
r
/
co
nt
fs
er
for
al it
com
s fo
me
no
oth
nt s
qu
i ng
ns
to
e
n
o
i
e
k
i
o
i
t
o
i
r
o
t
i
l
t
d
it
s
ar
v ir
un
wo
le c
wc
nd
en
o rt
se
ces
reg
ne
co
p
c
e
h
p
a
o
g
t
th
in
st
wi
go
ork
on
ces
ki n
i
w
t
r
c
i
o
a
s
w
po
Effects: the credit contributed positively to im proved…
(social im pacts in green/shaded: see next section)
Marja Seppälä
I
1 October 2009
I
24
Differentiating types of impact
 Internationally operating production companies
 Investments in machines, increasing productivity,
efficiency, competitiveness
- E.g. Siauliai textile manufacturers
 Nationally operating companies
 Investment to allow national expansion
- E.g. opening shop in other town
 Locally operating companies
 Increase local client base by increasing attractiveness or
capacity
- E.g. refurbishment/extension beauty salon; new car lift in
repair shop; fitness apparatus…
Marja Seppälä
I
1 October 2009
I
25
Sustainability
 Women entrepreneurs seem to have
become more mainstream clients
 Financed companies are healthy
 But experience lack of skilled labour
 Companies improved their ability to raise
money
 Influence of credit squeeze and
overheating?
 Government support , trust funds?
Marja Seppälä
I
1 October 2009
I
26
General Assumptions:
Women's Point Of View
Women set up their companies still with own capital
Women have equal opportunities to access credit
Women need more encouragement and support
Women want role models
Women need more information on credit possibilities
Women are more careful and take less risks than men
Siv Hellén
|
1 October 2009 |
27
|
Experience Gained
 Women feel that credits for SMEs are in general too
expensive
 Women positively surprised by friendly and helpful
attitude at banks
 Women found it positive that the loans were only for
them
 Government support was considered to be
important
 Majority of borrowers will ask for additional
financing in the future
Siv Hellén
|
1 October 2009 |
28
|
Experience Gained:
Banks' Point Of View
 Difficult to combine profitability and small credits
 Not used to address women’s particular concerns
 Challenge: Banks should not give advice on how to
prepare business plans
 Business plans prepared by external consultants often
not of good quality
 Women in rural areas with start-up projects difficult to
reach
 Loan applicants did not have sufficient collateral
Siv Hellén
|
1 October 2009 |
29
|
Have Micro Loans Reached Their Goal? –
NIB's and CEB's programmes have raised several
questions:
 Why special credits to women entrepreneurs?
 Are special loans for women entrepreneurs in
line with gender equality?
 What is innovative in NIB's and CEB's
programme?
Siv Hellén
|
1 October 2009 |
30
|
Why special credits to Women Entrepreneurs ?
 Women like to be target clients
 Women do not need generally better terms and
conditions
 Women need good advice in preparing business
plans
 Women need information about credit possibilities
 Women as an untapped resource have become a
new target group for the banks
 Loans for women have taught the banks to simplify
their procedures and to understand women's special
needs
Siv Hellén
|
1 October 2009 |
31
|
Are loans in line with Gender Equality ?
Yes because:
 Loans sparked discussion of women's issues and
gender equality
 Credits were not created to distort competition
and they did not contain any real subsidy
 Women got increased access to credit
 Women as an untapped resource have become a
new target group for the banks
Siv Hellén
|
1 October 2009 |
32
|
What was innovative with the loans ?
In fact not so much – back to basics
A few observations:
 Banking in transition countries still very male -dominated,
both clientele and loan officers
 Important to choose the right local intermediaries, e.g. banks
with experience in SME-financing
 Collateral support is needed especially in rural areas and for
start-up projects
 Expedient loan processing essential
 Advisable to enhance programmes with trust funds
 Loans for women have taught the banks to simplify their
procedures and to understand women's special needs
Siv Hellén
|
1 October 2009 |
33
|
Key Points Be Smart
• S - Simplify
• M - Market
• A - Adapt
• R - Respond
• T -Train
Siv Hellén
|
1 October 2009 |
34
|