In the past policymakers have tried to address women-owned businesses’ lack of financing by increasing the supply of finance. But our research shows that this is addressing the wrong problem. In Tanzania women entrepreneurs aren’t deterred by a lack of supply. They don’t apply for formal loans for a host of reasons – most of them negative beliefs.
This is what needs to be changed. But that’s easier said than done. Often, entrepreneurs’ beliefs are rooted in legitimate issues such as loan officers’ inappropriate behaviour. So it’s imperative that policymakers tackle problems such as corruption, harassment and abuse.
In other cases negative beliefs are probably the result of entrepreneurs’ lack of knowledge and low financial literacy. This can be mitigated by educating women entrepreneurs on how to keep accounts, how to invest loans and explanations on the relationship between interest and risk.
Full article: Sun-Connect-News