What happens when carefully crafted laws are not properly or fully enforced?
Back in 2009, CIPE partner the Bangladesh Women Chamber of Commerce and Industry (BWCCI) advocated for a number of local and national level policy reforms by endorsing the first ever Women’s National Business Agenda (WNBA).
The WNBA suggested policy changes concerning social and financial barriers faced by women entrepreneurs. This effort led the Central Bank to start issuing collateral-free loans for women entrepreneurs. The policy was initially a success and helped provide nearly $23 million in loans to 3,000 women.
However, due to the lack of continued monitoring, over time many banks began changing their lending fees or stopped complying with the law all together. This phenomenon is what CIPE calls an implementation gap – when laws on books are not practiced in real life. Since April 2013, with CIPE support, BWCCI has been trying to close this gap for women entrepreneurs in Bangladesh.
BWCCI is working with local government institutions, women entrepreneurs, and financial institutions to improve the implementation of national policies concerning access to finance and barriers to market entry for women entrepreneurs in six regions outside of Dhaka (Barisal, Chittagong, Khulna, Rajshahi, Rangpur and Sylhet). Specifically, the advocacy campaigns are focusing on three main items:
- Increasing the number commercial banks and financial institutions proactively implementing the Bangladesh Bank’s refinancing schemes, including simplifying the loan application process and running dedicated desks for women entrepreneur clients (Women Entrepreneurs Dedicated Desks).
- Enhancing the responsiveness of commercial banks and financial institutions to ensure collateral-free 10 percent interest rate loans for women entrepreneurs and simplifying the lending procedures for them.
- Encouraging public officials in local branches of National Board of Revenues and other local government intuitions to reduce harassment and avoid corruption when women entrepreneurs apply for business registrations.
Thus far, BWCCI has conducted advocacy meetings and private dialogues with key regional stakeholders, involving more than total of 150 participants. In addition, BWCCI has run legal literacy sessions for 195 women entrepreneurs to educate them about market assessment, loan application procedures, and Bangladesh Bank’s refinancing schemes.
Efforts from these advocacy campaigns and educational seminars are already paying off. Between April and August 2013, BWCCI helped 30 percent more women entrepreneurs obtain bank loans and helped add 50 percent more Women Entrepreneurs Dedicated Desks in banks and financial institutions throughout Bangladesh.
As the contribution of women entrepreneurs becomes more important for Bangladesh’s economic growth, it will be critical for all stakeholders – local government institutions, women entrepreneurs, and financial institutions – to work together and make sure that there is no implementation gap for access to credit so women entrepreneurs can flourish.
Maiko Nakagaki is Program Officer for Global Programs at CIPE.