Q&A: Leveling the playing field for women entrepreneurs in Nepal

Leveling the playing field for women entrepreneurs by creating access to markets and breaking down barriers to starting a business — “that’s when you start breaking some these gendered norms,” said economist Arpita Nepal, co-founder and research and development adviser at Samriddhi Foundation, during the Aug. 5 event “Harnessing an enabling environment for women’s economic empowerment post-pandemic,” hosted by Devex and Atlas Network.

The COVID-19 crisis and consequent lockdowns have devastated the livelihoods of many women, especially in low- and middle-income countries. UN Women and Women 20 estimate that 527 million women work in some of the hardest-hit sectors, including hospitality, food services, and manufacturing, many of which are unsuitable for remote working.

Already facing gendered labor market disadvantages, women workers have been disproportionately affected by job losses, reduced working hours, and even bankruptcy.

But already before the pandemic hit, Nepal’s Kathmandu-based policy think tank was working to remove some of the legal hurdles and barriers facing entrepreneurs and ultimately boost the country's economic growth. Initially, “we didn’t focus on women entrepreneurs,” Nepal said. “It so happens that most of our stakeholders are women entrepreneurs, because those are the kinds of businesses we really want to help evolve.”

Nepal discussed how her organization is working to understand the problems of these entrepreneurs and help create enabling environments.

This conversation has been edited for length and clarity.

What are some of the issues you’re tackling in Nepal to help achieve inclusive markets for all, particularly within low-income communities?

One of my foundation’s priority areas is trying to make markets accessible to everyone, especially for small and micro enterprises. Compliance becomes the biggest hurdle in terms of starting your business or getting involved in the market at all. So most of our priority work is to reduce this regulatory burden of compliance for small and micro enterprises.

You’d be amazed that most of these enterprises are run by women. Because of migration, many women have been left behind as the head of the household — and they have certain capital. These are the women who are actually recognizing opportunities in the market and saying: “I can resolve that problem. Here’s an innovative way of doing it.”

The priority of my foundation’s work is [to figure out] how to limit face-to-face contact with bureaucrats and limit the number of signatures you have to collect in order to start up a business.

Women definitely want to operate their businesses in the formal market, because that means there are more opportunities for expansion. But I think this wall of bureaucracy and regulations in general — some very well intended — unfortunately result in these perverse consequences.

How can donors improve ways of measuring the success of women’s economic empowerment programs? And how can donors better support women’s groups working at the local level?

I think it’s just asking the stakeholders at the local level of what they require help with. I think one of the biggest problems with donor projects is that programs are decided in their headquarters, and the last person you ask on what kind of help is needed is the person receiving it.

That’s where the major problem lies in most donor approaches. These sewing and knitting programs came about because somebody living in [Washington] D.C. or London decided that “oh yes, women in rural Nepal, an additional skill is how to sew — that’s a good idea!” It’s not a good idea if you teach the whole village to do it because then women have nowhere to go as a business opportunity.

There’s no way for me, even living in Kathmandu, to say that a woman living in western part of rural Nepal is going to identify as a good entrepreneurship opportunity. I don’t know what exists in that market. There’s going to be a woman entrepreneur out there who has already identified the opportunity. My question is: “How can I help you achieve what you’ve set out to do?”

I would like to see a lot more investment in the entrepreneurial ecosystem. Entrepreneurial ecosystems are not just about business regulations; it’s also about running an enterprise, how can we equip people [with the skills] to run an enterprise better, how do I market my products better. Simple things like training on online selling — as someone living in a very rural part of Nepal, how can I sell my enterprise online?

What kind of financing challenges do micro-level enterprises face specifically?

Whenever a micro enterprise wants to expand to the next level, they can’t because micro credit schemes don’t support that kind of risk-taking. So that’s one challenge.

The second challenge with micro enterprises is [that], because there’s not enough credit rating, they’re the ones who have access to finance at the highest interest rates. So the most vulnerable people end up paying the highest amount for acquiring capital.

So the question is: How can we ease this process? And this requires really smart, innovative thinking in terms of how to establish a system of credit rating of some sort, because unless you have that, no financial institution is going to come into play.

Cooperatives amass huge amounts of money, because a lot of the money in Nepal is stuck at that level. Big banks actually don’t have a lot of money; it’s actually the cooperatives that run the country and own the country in that sense. But cooperatives don’t have avenues to actually finance.

If we can open up investing opportunities for cooperatives, then I think that is also going to open up another new revenue and bring down the cost of capital for micro credits in general. If you can bring some kind of changes in that financing scheme, I feel like we’re going to unlock a lot of this capital that’s stuck at this medium level in Nepal.

Private equity financing and venture capital are two new things — at least in Nepali financial market — which have facilitated a lot more project financing; otherwise it’s all collateral-based. The traditional financing is like you have to own a piece of property and you put that as collateral and that’s when banks give you a loan. So essentially, access to finance is difficult for women also because they don’t own property.

Opening up avenues for private equity financiers and venture capitalists to access micro and small enterprises run by women would also go a long way in helping women deal with financing problems. This is already at work in many urban parts of Nepal.

Learn more about what it takes to support women entrepreneurs in low- and middle-income countries by catching up on the event “Harnessing an enabling environment for women’s economic empowerment post-pandemic.”