Project assistance completion report (PACR) : rural industries project -- women's entrepreneurship development program (WEDP) component

The purpose of WED-1 was to strengthen the capacity of the WEDP Unit of the Bangladesh Small & Cottage Industries Corporation (BSCIC) to promote women-owned, -operated, or -managed microbusinesses and to expand women's profitable participation in cottage industries. Despite the negative economic conditions constraining poor Bangladeshi women, WED-1 was generally successful, demonstrating that businesses managed by women can succeed in rural Bangladesh and that a public sector entity such as BSCIC's WEDP Unit can implement an informal enterprise lending activity at least as well as local and foreign-supported NGOs in similar circumstances. Though unable to aggressively promote women entrepreneurship, WED-1 did set the stage for further improvement in this area. WED-1 had a positive impact on rural women because it was a women-managed program. The majority of the staff both at headquarters and in the field were women, many of them young university graduates. The presence of these women provided rural women with positive role models and persuaded them to assert themselves as entrepreneurs. The project disbursed over $1 million (the USAID portion of which was $296,000) in about 16,000 small loans averaging $83 to some 11,000 rural women from the lowest 20% income group and achieved a loan recovery rate averaging 80%. A 2-day management course taught about 4,000 borrowers how to operate a subsistence firm and engage in more productive and sustainable microenterprise opportunities. Another 3,000 potential borrowers received skills training. There were visible improvements in quality of beneficiaries' lives, and the program increased family incomes, but did so by absorbing under-utilized family labor. In general, expansion by employing outside labor would still entail losses for the borrowers. USAID support for WEDP has continued under project 3880082, which is making efforts to ensure WEDP sustainability after its termination in 1997. Despite its overall success, implementation could be improved in several regards: (1) the effectiveness of WED-1'S 20 field offices varied widely -- even the best need to improve substantially in terms of number of loans, borrowers, and disbursements; (2) costs of lending must be brought down; (3) WED-1 set very low targets for client recruitment because there were no incentives to motivate field workers to exceed targets; (4) the WED-1 policy to limit borrowers to three loans should change in order to encourage more repeat business; (5) WED-1 focused too much on enterprises with tight profit margins; (6) the WEDP Unit should have been given direct responsibility for personnel management, and for selecting office sites and closing unprofitable offices; (7) WED-1 found it difficult to identify potential borrowers in the larger 10,000-60,000 taka loan category; (8) insufficient attention was paid to whether the markets in which applicants operated could sustain yet another enterprise; (9) the accounting system did not treat field offices as profit centers, and so they did not behave as such; (10) loan application procedures were too cumbersome and requested unnecessary information. In addition, the lending practices of the Bangladesh Krishi Bank (BKB), which was a major participant in WED-1, were particularly inappropriate to the needs of small (and often illiterate) borrowers. The disincentive effect of BKB's processing and approval delays was exacerbated by liquidity deficiencies at BKB field branches which delayed disbursement. The project teaches that skills training independent of a credit program yields few benefits either for the project or for the trainees. Management training for borrowers should be mandatory.