Factors Affecting Women Entrepreneurship in Small and Cottage Industries in Nepal
Opportunities ancl Constraints
Jyoti Tuladhar
SEPTEMBER 1996
ISBN: 92-2-110415-X
International labour Organization
South Asia Multidisciplinary Advisory Team
S id a
Swedish International
Development Cooperation Agency
Table of Contents
list of Abbreviations
Chapter 1 : Introduction
1.1 Setting the Context
1.2 Objectives of the Study
1.3 Methodology and Scope of the Study
1.4 Organization of the Report
Chapter 11 legal Barriers to Women Entrepreneurship
2.1 Conceptual Framework
2.2 Socio-Cultural Norms governing male/female behaviour
2.2.1 Socialization Pattern
2.2.2 Gender Division of Labour
2.2.3 Attitude to Outside Work
2.3 Impact of Socio-Cultural Norms on Entrepreneurial Behaviour
2.3.1 Low Level of Confidence
2.3.2 Double Roles and Responsibilities
2.3.3 Social Attitudes towards Women
2.3.4 Low Value Attached to Women's Work
2.4 Lack of Education/Training System
2.4.1 Access to Development Training
2.4.2 Access to Education
2.5 Legal Barriers
Chapter Ill : Personality Traits Essential for Entrepreneurship
3.1 Personal Entrepreneurial Traits
3.2 Motivational Factors
3.2.1 Situational Motivational Factors
3.3 Business Behaviour
3.3.1 Type of Ownership and Range of Investment
3.3.2 Employment Range
Chapter ]V : Access to Supply-side Economic Opportunities
4.1 Financial Constraints
4.2 Marketing Problems
4.2.1 Marketing Related Problems of Women Entrepreneur
4.3 Institutions Providing Support to Microenterprise
4.3.1 Government Agencies
4.3,2 DonorlINGO Assisted Programmes
4.3.3 Local NCO Interventions
Chapter V : Conclusions and Recommendations
5.1 Conclusions
5.2 Recommendations
5.2.1 To Improve Credit Facilities
5.2.2 To Improve Marketing Opportunities
5.2.3 To Facilitate Technology Transfer and Training
5.2.4 Policy Level Intervention
5,2.5 To Enhance Women's Self Image
Selected list of Useful Addresses
References
Annexure
The Project
This project for the promotion of entrepreneurship among women in small and cottage industries (RAS/92/M12/SWC) is funded by the Swedish International Development Cooperation Agency (Sida) and executed by the South Asia Multidisciplinary Advisory Team of the International Labour Organization, ILO-SAAT, based in New Delhi.
Country Papers
One of the key activities undertaken under this project has been to commission country studies to assess the status - barriers and constraints, as well as opportunities and support mechanisms of womenis entrepreneurship in each of the five participating countries, viz. India, Nepal, Philippines, Sri Lanka and Thailand. This paper is the second in this series and is published by ILO-SAAT. The report has been authored by Dr. Jyoti Tuladhar in accordance with terms of reference provided.
Nepal Paper
This report brings together a large amount of information on various entrepreneurship and womenis development programmes which have been formulated in Nepal. It also assesses the extent and the quality of womenis participation in these programmes. The situation is updated by providing an assessment of the current position of women entrepreneurs in Nepal, as well as of the existing support programmes and mechanisms. The paper looks at the sociocultural, educational and legal barriers to womenis entrepreneurship in Nepal. In addition, there is a valuable overview of the personality traits essential for successful entrepreneurship, with consideration given to distinctions between female and male entrepreneurs. The report also analyses supply-side economic opportunities, such as credit and marketing support, for women to establish their own enterprises. This section includes useful profiles of most of the key agencies involved in promoting womenis entrepreneurship in Nepal. While presenting a comprehensive overview of the status of women entrepreneurs in Nepal, the report goes a stage further by providing polic_y-makers with recommendations aimed at enhancing the economic empowerment of women throughout the country.
Questions and Answers
A document such as this may raise as many questions as it provides answers. This can be due to the paucity of well-researched published material, both in Nepal and elsewhere, on this important topic. It may also result from underlying biases - both formal and informal - which tend to play down the significance of womenis entrepreneurship in many countries. The Government of Nepal and key international agencies - such as United Nations Development Programme and other UN specialist agencies like ILO itself - as well as major bilateral agencies (such as Sida), are giving more prominence to programmes of poverty alleviation and employment creation, with a focus on women. Although many of them promote income-generation and small enterprise development as a means of achieving their objectives, there is a general lack of awareness of the significant factors which impact upon the enterprise development process, particularly in the case of women entrepreneurs.
Programme of Action
Many pertinent questions are posed about the efficacy of existing support strategies and programmes. This paper should enable policy-makers and programme planners alike to have a greater awareness of key issues. The report provides recommendations which could usefully be incorporated into a !programme of action! for the development of women entrepreneurs in Nepal. The author also provides practical recommendations aimed at exploiting existing supply-side economic opportunities, specifically in the fields of credit provision, marketing support, technology improvement, and effective policy level interventions.
An Ongoing Process
This study documents many of the general and specific support activities available for women entrepreneurs. The effectiveness, including the cost-effectiveness and impact, of these programmes in addressing the needs of women entrepreneurs in Nepal is an area worthy of further research. Where women-specific organisations and projects exist, their formal and informal roles, as well as their support programmes and member activities, will require further documentation. It should be helpful to profile a cross-section of women entrepreneurs, including members of women-specific groups, partly to provide greater visibility for womenis entrepreneurship, and partly to provide role models for potential women entrepreneurs - particularly for young women entering the labour market for the first time. As the problems of running a small enterprise can be very different from those encountered at the start-up stage, it would also be worthwhile to undertake studies into the factors which encourage or inhibit the growth of womenis enterprises in Nepal. Once available, this information should prove to be most useful for Government, donor organizations, NG0s, womenis support organizations, and indeed for the women entrepreneurs themselves.
As the executing agency for this Project, ILO-SAAT is eager to receive comments, suggestions or additional information relating to the theme of this paper. As well as being involved in projects such as this, ILO is the designated UN agency responsible for Employment issues, and it has a special focus on issues relating to women workers. In addition, ILO has been working in the fields of entrepreneurship, small enterprise and informal sector development, for more than 20 years. For more information on any of these matters, please contact the ILO's South Asia Multidisciplinary Advisory Team, ILO-SAAT, based in New Delhi. Contact numbers and addresses are provided in this document.
GERRY FINNEGAN
Senior Small Enterprise and
Management Development Specialist
ILO-SAAT
1.1 Setting the Context
WOMEN entrepreneurship, in a formalized sense, is a relatively new phenomenon in Nepal. Although certain ethnic communities in the country, especially the Newars and Tibeto-Burman Highland Groups such as the Sherpas, Curungs, Thakalis are known to have a long tradition of women being involved in small business enterprises (CEDA, 1981), it is only within the last ten years that the concept of women entrepreneurship has progressively gained some acceptance in the overall dominant majority within the Nepalese society. With the growing recognition that women have unique talents which could be harnessed for development, and for creating employment opportunities for others who are not suited to an entrepreneurial career, developing women as entrepreneurs has become an important part of national development planning and strategies.
Gender equality and economic development go hand in hand. Since the early 1980s, the policymakers and planners have become acutely aware of the economic significance of women's productive activities and the nature of their contribution to income generation. It has been firmly established that women in Nepal are vital and productive contributors to the national economy but their access to knowledge, skills, resources, opportunities and power still remain rather low (Shtrii Shakti, 1995).
Although women constitute a little over one half of Nepal's population (Annex: Tables I:1-2), they rank lower than men in almost every social indicator in the country. Within the increasing tides of poverty in Nepal, women are the poorest of the poor, a relatively more deprived segment even from among the poor (World Bank, 1991).
Forty-five percent of women aged 10 and above are listed as economically active, while the corresponding figure for men is 68% (Census, 1991). The growth rate in the female labour force exceeded that of males between 1981-1991, but they are still confined to a few activities indicating their disadvantaged position in reaping the benefits of diversification in many areas of employment (see Annex: Tables I:3-11 for specific details).
Over the past fifteen years women's participation in economic activities has also moved beyond agriculture into the local market economy. In search for wage employment, women are moving into small business and self employment ventures thereby creating many formal and informal opportunities for work. Women are increasingly migrating to urban areas for employment in a range of cottage industries, such as carpet weaving, textiles and handicrafts.
Some 82% of working women are self-employed and 12% are wage-employed, as compared to 69% and 27% in the case of men. More than 4% of women are unpaid family workers, the only category where women have outnumbered men. Less than 1% of the working women hold the status of "employer". Women's participation in the informal sectors has increased significantly in both urban and rural areas. Vending, petty trade, liquor making, and vegetable selling are some of the more common employment ventures undertaken by women (Census, 1991).
Full-scale unemployment in Nepal is relatively low, but the extent of under-employment is markedly high. The proportion of household under-employed by net workdays is estimated at 46.4% for urban and 33.3% for rural areas. Under-employment rates for males and females are estimated at 41.8% and 51.1% respectively. For urban Nepal, this is estimated at 23.8% for males and 46.6% for females. An estimate of 0.2 million persons are entering the labour market every year. By 1996, 2.65 million additional jobs will have to be created to achieve full employment.
The vicious circle of backwardness and poverty can be eliminated by transforming the agrarian economy into a dynamic one through industrialization. The contribution of industry to national income in Nepal is about 6% of CDP; besides organized industries in the country, there is a large number of microenterprises operating on a small cottage basis which contribute about 4% of GDP.
The major industrial strategies employed in Nepal are both import substitution and export promotion. In these circumstances, one major way to achieve the goal of industrial development could be through establishment of small-scale enterprises. For this to happen, it is recognised that entrepreneurship development can be the key to raising the prospects for increasing the share of small-scale and cottage industries in the national income (Aryal, 1992). (Annex: Tables I:12-13)
It is against this backdrop of industrial development and women's role and participation in the national economy that one must critically view the emerging needs of and scope for women entrepreneurial development. The history of entrepreneurship development programmes in Nepal is quite recent. While Nepal has been interested in the development of small-scale and microenterprises since the late '70s, issues and questions relating to the promotion of women entrepreneurs have only been raised more recently (UNIDO, 1988). The number of women who come under the category of entrepreneurs in a formal sense is still negligible. The representation is somewhat better in the informal sector with a higher percentage of women applying for loans for cottage industry enterprises. However, this does not necessarily mean that these women intend to enter the economy as entrepreneurs. They may simply remain self-employed and limit the scale of their enterprise to meet the requirements of household consumption (Annex: Tables 1:14-15).
Therefore, some of the fundamental questions that need to be explored in connection with women and entrepreneurship are:
• What kinds of factors restrain or obstruct women from entering the entrepreneurial field in a fully-fledged manner?
• Are women less entrepreneurial than men?
• Is their entrepreneurial talent different from that of men?
• Should they adopt the same skills that men have?
• Why are there not more capable women operating small enterprises?
• Should entrepreneurship development be promoted for women, and if so how?
• Would this require a women-specific approach and methodology, or is women entrepreneurship development a gradual dynamic growth that will come. fc51lowing on from the increased empowerment of women?
There is not an extensive body of work in the entrepreneurial research arena in Nepal and the topic of women entrepreneurs virtually remains untouched, with the exception of a few studies carried out within the last five years which have merely scratched the surface. The need for more substantial research, especially an exploration into the gender perspectives of this issue cannot be over emphasized, especially in view of the fact that a fair degree of awareness has already been raised, particularly among the urban elite, about entrepreneurial ventures, challenges and scope in small and cottage industries in Nepal.
The overall objective of the study, therefore, is to examine the gender issues involved in entrepreneurship development for women, and to examine the gender differences that inhibit restrain and obstruct women from advancing in the field of entrepreneurship or availing of the opportunities which promote it.
The factors affecting women entrepreneurship development are to be studied within three broad categories, as demarcated by the specific objectives below:
(i) To examine and assess the socio-cultural/educational and legal barriers to women's entry into enterprise, as well as performance and growth in entrepreneurship;
(ii) To identify and examine personality traits vis-a-vis entrepreneurial functions;
(iii) To examine and assess women's access to economic opportunities and formal inputs which promote entrepreneurship development; and
(iv) To provide recommendations on how to promote and strengthen the potential for enhancing women entrepreneurship in Nepal.
1.3 Methodology and Scope of Work
This study is based entirely on secondary sources. The basic methodology has been to review the relevant literature on small and micro enterprises, entrepreneurship, education, training and credit; meet with the representatives of the concerned agencies and institutions for additional and new or updated information; explore any other data sources available, and analyze the genderrelated factors on the basis of information thus generated.
The present study had no scope for primary research or in-depth examination or assessment of any one particular issue. Therefore, the analysis is more of an overview based on the existing work on women entrepreneurship in Nepal, but with an added analytical dimension on gender issues. Given the time constraints and the specified scope of work, this endeavour is intended to be neither exhaustive nor comprehensive, but a modest step in the direction of pinpointing the importance and need for examining the opportunities and constraints facing women entrepreneurs through a gender perspective.
1.4 Organization of the Report
The study is divided into five chapters.
(i) Chapter One sets the national context introduces the subject matter of investigation, and specifies the methodology and scope of this work.
(ii) Chapter Two includes a brief conceptual framework, and an analysis of the socio-culturaleducational and legal barriers to entrepreneurship for women.
(iii) Chapter Three examines the personality traits of women vis-a-vis entrepreneurial functions.
(iv) Chapter Four is concerned with access to resources and other inputs critical to the women entrepreneurship development process.
(v) Chapter Five presents a summary of findings, major observations and a set of recommendations on how to promote and strengthen the potential of women entrepreneurs in Nepal.
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