Banking Obstacles in the Path of Women’s Entrepreneurship and Self-Employment

A member of the parliamentary labor faction says banks do not lend to women who intend to start businesses or engage in cooperative activities. Cooperatives account for 25 percent of Iran’s economy, yet women only undertake 10 to 12 percent of cooperative activities.

In the Fifth Development Plan, cooperatives were projected to constitute 25 percent of Iran’s economy, but this figure was not achieved by the end of 2015. The cooperative sector is considered a job-creating field, and this target has been extended in the Sixth Development Plan as well. Bahman Abdollahi, head of the “Iran Chamber of Cooperatives,” says there is still a significant gap to reach this figure.

Khatere Ostad Rezaei, head of the “Women’s Commission of Iran’s Chamber of Cooperatives,” says women only undertake 10 to 12 percent of cooperative activities. This is despite the fact that cooperatives are presented as the best platform for entrepreneurship and employment of women, especially in developing countries.

In March 2019, the deputy minister of cooperative affairs at the Ministry of Labor stated the number of women’s cooperatives across the country at 10,000 and said the general approach is to allocate government facilities for expanding these cooperatives or marketing the products of rural women.

However, Fatema Zolghadr, a member of the parliamentary labor commission, says there are obstacles in the path of women’s activities to form cooperatives, including their inability to obtain loans.

The ILNA news agency reported on Wednesday, October 8, 2019, quoting Zolghadr: “Many women who want to start a business, despite being capable, do not have the initial capital to begin. When support for employment is discussed, the first thing is helping people secure initial capital. On this basis, women who want to start a business should be able to obtain loans.”

The CEO of Bank Cooperative Development had previously stated that one-third of the bank’s customers are women, and 27 percent of the bank’s total accounts and 10 percent of its total resources belong to female depositors. In September 2019, he announced that 50 billion rials in interest-free loan facilities would be provided to women’s cooperatives in the form of 500 facilities of 100 million rials each at 4 percent interest.

However, Ms. Zolghadr says obtaining loans is more difficult for women than men, and in some cases the treatment is discretionary; banks, with the mentality that women have greater problems in loan repayment compared to men, have refused to lend to them.

Women in local communities have traditionally and culturally participated in collective economic activities. International organizations have also introduced the formation of women’s cooperatives as one of the strategies for reducing gender inequality and increasing women’s participation in economic and social affairs, and they recommend that governments support the self-employment process of women by supporting cooperatives. Women primarily engage in cooperatives in food industries, handicrafts, carpet and rug production, or businesses related to clothing and medicinal plants.

A member of the women’s faction in parliament added that this faction is following up on women’s problems, particularly female household heads, in obtaining loans: “The reality is that women have been more successful than men in many cases of creating businesses. Helping women create jobs through loans not only enables them to become business owners but also provides opportunities for employment of other women. We have witnessed that women who have established workshops and produce goods often turn to women for workers when needed. In this way, removing obstacles in women’s participation in cooperatives has a significant impact on addressing women’s unemployment.”

Women’s share of Iran’s total employment market does not even reach 20 percent. The cooperative sector’s share of Iran’s total economy is one quarter, and the number of men active in the labor market is 4 times that of women. The Vice Presidency for Women and Family Affairs has proposed objectives such as increasing the number of women’s entrepreneurship associations, distributing 18 billion tomans in facilities in villages for women’s investment, and networking for women’s employment. Objectives that, due to budget constraints in 2019, remain unfulfilled.

Source: DW