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Forum for South East European Women Entrepreneurs Istanbul 21-22 September 2010 Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices.

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Presentation on theme: "Forum for South East European Women Entrepreneurs Istanbul 21-22 September 2010 Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices."— Presentation transcript:

1 Forum for South East European Women Entrepreneurs Istanbul September 2010 Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices by Siv Hellén, Advisor to the President, Nordic Investment Bank (NIB)

2 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 2/25/20142

3 || | 3 NORDIC INVESTMENT BANK enhancing competitiveness & the environment 2/25/2014

4 || | 4 Iceland Norway Denmark Lithuania Latvia Estonia Finland Sweden Northern Europes multilateral bank Nordic and Baltic countries as shareholders Established in 1976 by the Nordic countries Baltic countries joined in 2005 Headquarters in Helsinki Key figures 2009 Balance sheet 22.4 billion Loan portfolio 13.8 billion Loans disbursed 2.0 billion AAA credit rating Lending in member countries and emerging markets 2/25/2014

5 || | 5 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. 2/25/2014

6 || | 6 NIBs global reach Framework agreements with 39 non - member countries Current focus countries China, India, Vietnam South Africa, Turkey Poland, Russia, Belarus, Ukraine Brazil Asia Africa & Middle East Europe & Eurasia Latin America 2/25/2014

7 CEB - COUNCIL OF EUROPE DEVELOPMENT BANK 7 2/25/2014

8 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 2009 Total assets: 22.7 billion Own funds: 4.9 billion Rating: AAA (Moodys, S&P, Fitch Ratings) Over 30 billion in projects financed since inception Outstanding loan portfolio: 12.2 billion Loans disbursed: 1.8 billion 8 2/25/2014

9 CEB Overview Borrowers Member States Local or regional authorities Financial Institutions Activities Loans Guarantees Trust Accounts Sectorial lines of action Strengthening social integration Managing the environment Supporting public infrastructure with a social vocation 9 2/25/2014

10 || | 10 Loan Programmes For Women Entrepreneurs The idea was born in 1999 at a 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

11 || | The programme objectives Provide credits to SMEs (women entrepreneurs), for investment and working capital Total loan amount (CEB & NIB) 10 million, extended by each institution in 6 loans to 5 banks in Estonia, Latvia and Lithuania Facilitate access to medium/long term commercial credits with attractive interest rates for women entrepreneurs Create and maintain jobs Contribute to the promotion of welfare and equality in Estonia- Latvia-Lithuania through the development of womens entrepreneurship 2/25/201411

12 || | 12 Loan Programmes For Women Entrepreneurs – Amounts and targets The 1st loan programme was only 1 million to be divided equally by the three Baltic countries Followed by another loan programme, this time together with CEB, in the total of 10 million NIB later launched one loan programme in Russia of 2 million euro, which was less successful 2/25/2014

13 || | 13 Loan Programmes for Women Entrepreneurs: Structure of the Programmes Borrowers Women (SMEs and Individuals in the Private Sector) Loan Facilities to Intermediary Banks Divided among Banks in Target Countries NIB and CEB Loan Programme for Women Entrepreneurs Siv Hellén 22 May 2010

14 || | 14 Loan Programmes 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 based on market terms for each borrower individually Loans must be adequately secured 2/25/2014

15 || | Loan Programmes for Women Entrepreneurs : SME Eligibility Criteria maximum 100 employees maximum 75 m net fixed assets and maximum 33% held by a large corporationPlus owned or managed by women or clearly improving womens opportunities in the employment market 152/25/2014

16 || | 16 Loan Programmes for Women Entrepreneurs: Total Figures Number of projects Jobs maintained* New jobs* ESTONIA LATVIA1911, LITHUANIA1311, TOTAL3883, RUSSIA5 * Estimated figures 2/25/2014

17 Baltic States Loan Programmes for Women Entrepreneurs: Lessons learnt 17 NB: The CEB findings presented hereafter are adapted from the results of an ex post evaluation carried out in 2007 on these programmes. 2/25/2014

18 Lessons learnt - Ex post evaluation Overall a very positive outcome The programmes performed well and efficiently Served the businesses that were targeted Good correspondence with CEBs social mandate 2/25/201418

19 Lessons learnt –Ex post evaluation The programmes performed well and efficiently Objectives largely met Very satisfactory institutional arrangements Satisfactory sub-loan performance Banks and women entrepreneurs satisfied with 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 2/25/201419

20 Lessons learnt - Ex post evaluation The programmes served the businesses that were targeted Great variety of sectors, often services Half or more were micro-enterprises Rural focus well-respected 2/25/201420

21 Lessons learnt- Ex post evaluation – Great variety of companies 2/25/201421

22 Lessons Learnt – Ex post evaluation Rural focus well respected 2/25/201422

23 Lessons learnt- Ex post evaluation In line with CEBs social mandate The programme's target represents a specific niche combining… A commercial aspect Credit to companies at market terms A social aspect Specific disadvantaged group, namely women entrepreneurs 2/25/201423

24 Lessons learnt- Ex post evaluation Relevance was not perfect Objectives and eligibility criteria OK The label « women entrepreneurs » does lower barrier-to-entry for women Rural area focus gives a 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 ? 2/25/201424

25 Lessons learnt-Ex post evaluation 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… 2/25/201425

26 Lessons learnt – Ex post evaluation 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? 2/25/201426

27 || | 27 Lessons learnt - 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 2/25/2014

28 || | 28 Lessons learnt - 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 exclusively for them Choosing the right local bank is essential Government support was considered to be important Majority of women entrepreneurs will ask the banks for additional financing in the future 2/25/2014

29 || | 29 Lessons learnt - Experience Gained: Banks' Point Of View Difficult to combine profitability and small credits No experience in addressing womens 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 2/25/2014

30 || | 30 Conclusion and remarks - Have Micro Loans Reached Their Goal? NIB's and CEB's programmes have raised several questions: Why offer special credits for women entrepreneurs? Are special loans for women entrepreneurs in line with gender equality? What is innovative in NIB's and CEB's programme? 2/25/2014

31 || | 31 Conclusions and remarks - Why offer special credits for 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 2/25/2014

32 || | 32 Are loans in line with gender equality ? Conclusions and remarks 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 2/25/2014

33 || | Conclusions and remarks - 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 Quick and efficient/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 332/25/2014

34 || | Conclusions and remarks - Key Points: Be Smart S - Simplify M - Market A - Adapt R - Respond T -Train 342/25/2014


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