Forum for South East European Women EntrepreneursIstanbul 21-22 September 2010

Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices

by Siv Hellén, Advisor to the President, Nordic Investment Bank (NIB)

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

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NORDIC INVESTMENT BANKenhancing competitiveness

& the environment

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IcelandIceland

NorwayNorway

DenmarkDenmark

LithuaniaLithuania

LatviaLatvia

EstoniaEstonia

FinlandFinland

SwedenSweden

Northern Europe’s multilateral bank• Nordic and Baltic countries

as shareholders

• Established in 1976 by the Nordic countries

• Baltic countries joined in 2005

• Headquarters in HelsinkiKey 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

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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.

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NIB’s global reachFramework agreements with 39 non - member countriesCurrent focus countries

China, India, Vietnam

South Africa, Turkey

Poland, Russia, Belarus, Ukraine

Brazil

Asia

Africa &Middle East

Europe& Eurasia

Latin America

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CEB -

COUNCIL OF EUROPE

DEVELOPMENT BANK

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CEB OverviewInstitution

• 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 (Moody’s, S&P, Fitch Ratings)• Over € 30 billion in projects financed since inception• Outstanding loan portfolio: € 12.2 billion• Loans disbursed: € 1.8 billion

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CEB OverviewBorrowers

• 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

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Loan Programmes For Women Entrepreneurs

The idea was born in 1999 at a conference in IcelandPurpose: 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 intermediariesPriority given to projects creating new jobs and projects

located in rural areas and in regions with high unemployment

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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 jobsContribute to the promotion of welfare and equality in Estonia-

Latvia-Lithuania through the development of women’s entrepreneurship

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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

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Loan Programmes for Women Entrepreneurs:Structure of the Programmes

Siv Hellén 22 May 2010

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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 financedMaximum 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 04/10/23

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Loan Programmes for Women Entrepreneurs : SME Eligibility Criteria

maximum 100 employees

maximum 75 m€ net fixed assets and

maximum 33% held by a large corporation

PlusPlus

owned or managed by women

or

clearly improving women’s opportunities in the employment market

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Loan Programmes for Women Entrepreneurs: Total Figures

Number of projects Jobs maintained* New jobs*

ESTONIA 66 562 88

LATVIA 191 1,346 363

LITHUANIA 131 1,614 383

TOTAL 388 3,522 834

RUSSIA 5

* Estimated figures

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Baltic StatesLoan Programmes for Women

Entrepreneurs:

Lessons learnt

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NB: The CEB findings presented hereafter are adapted from the results of an ex post NB: The CEB findings presented hereafter are adapted from the results of an ex post evaluation carried out in 2007 on these programmes.evaluation carried out in 2007 on these programmes.

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Lessons learnt - Ex post evaluationOverall a very positive outcome

The programmes performed well and efficiently

Served the businesses that were targeted Good correspondence with CEB’s social

mandate

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Lessons learnt –Ex post evaluationThe 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

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Lessons learnt - Ex post evaluationThe programmes served the businesses that

were targeted

Great variety of sectors, often services Half or more were micro-enterprises Rural focus well-respected

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Lessons learnt- Ex post evaluation – Great variety of companies

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Lessons Learnt – Ex post evaluationRural focus well respected

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Lessons learnt- Ex post evaluationIn line with CEB’s social mandate

The programme's target represents a specific niche combining…A commercial aspect

Credit to companies at market termsA social aspect

Specific disadvantaged group, namely women entrepreneurs

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Lessons learnt- Ex post evaluationRelevance 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?

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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…

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Lessons learnt – Ex post evaluationSustainability

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?

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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

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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 essentialGovernment support was considered to be

importantMajority of women entrepreneurs will ask the banks

for additional financing in the future04/10/23

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Lessons learnt - Experience Gained: Banks' Point Of View

Difficult to combine profitability and small creditsNo experience in addressing women’s particular

concernsChallenge: Banks should not give advice on how to

prepare business plansBusiness plans prepared by external consultants often

not of good qualityWomen in rural areas with start-up projects difficult to

reachLoan applicants did not have sufficient collateral

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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?

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Conclusions and remarks - Why offer special credits for Women entrepreneurs ?

Women like to be target clientsWomen do not need generally better terms and

conditionsWomen need good advice in preparing business

plansWomen need information about credit possibilitiesWomen as an untapped resource have become a new

target group for the banksLoans for women have taught the banks to simplify

their procedures and to understand women's special needs

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Conclusions and remarks Are loans in line with Are loans in line with gender equality ?gender equality ?

Yes because:Loans sparked discussion of women's issues

and gender equalityCredits were not created to distort competition

and they did not contain any real subsidy Women got increased access to creditWomen as an untapped resource have become a

new target group for the banks

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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 needs3304/10/23

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Conclusions and remarks - Key Points: Be Smart

• S - Simplify

• M - Market

• A - Adapt

• R - Respond

• T -Train

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