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Women and Entrepreneurship

Written by Rabia Hashmi  •  Special Features  •  March 2011 PDF Print E-mail

Published by the World Bank, the Country Gender Profile deplores the fact that the working status of women in Pakistan is amongst the lowest in the world. Increasing at a steady annual rate of 2.1 percent, the female population of Pakistan is estimated at 78 million. An increase in the number of females, however, has not been met with a corresponding increase in the employment share of women. In 2008, the female labor force participation rate was recorded at 21.8 percent. Compared to the global and regional standards of 52.6 and 35.6 respectively, the figures for Pakistan are disturbingly low.  Domestically, even more alarming is the fact that female labor force participation is a quarter of the 82.4 percent participation rate for males.

These statistics help illustrate the extent to which females in Pakistan remain largely excluded from the formal economy and as a result, the economic growth of the country. The significance of female labor force participation for Pakistan lies not only in potential economic growth but additionally, in the economic independence and overall empowerment and welfare of women. Even though the reasons behind this dismal situation are many, the low visibility of women in the formal economy, however, is usually attributed to supply side factors such as cultural restrictions, domestic responsibilities and low levels of education and skill. Due to the rigid social barriers in place, an increase in female economic inclusion requires one of two approaches. Firstly, the more lengthy approach would consist of efforts to boost female education and skill levels on a nationwide scale, thereby creating a more competent workforce over time. The second, relatively shorter method would seek to create formal employment opportunities for women by working within the existing social constraints. Allowing women to work from within the private sphere of their homes, entrepreneurship is one example of this approach. 

Various efforts on behalf of the government, NGOs and other private organizations around the country have been made to improve the economic situation of women. Focusing specifically on the buzzword of the past two decades, microfinance aims to create entrepreneurs. In the words of Grameen Bank’s Dr. Yunus, “We recognize every single human being as a potential entrepreneur.” Access to credit has been considered a tool for addressing poverty, gender discrimination in the labor market and greater social and economic empowerment of women.

The microfinance sector in Pakistan is relatively young and over the course of its relatively brief existence, it has shown considerable levels of growth in terms of expansion and outreach. The asset base increased from Rs. 7.8 billion in 2003 to Rs. 22.9 billion in 2007. Loans and savings are the two key services being provided by the microfinance sector in Pakistan. Its operations, however, are mainly concentrated in the activities of non-governmental organizations (NGOs) and various rural support programs. Most of these organizations predominantly target the rural areas and as a result, their clients comprise 65% of rural borrowers. These clients typically require credit for agriculture, livestock and non-farm activities. In the urban areas, however, microfinance clients are usually small scale traders, cottage industry workers and wage earners.

Even though several different microfinance based approaches have been undertaken, the impact they have had has been relatively limited. Non-microfinance initiatives have also been implemented but unfortunately, to no drastic avail. In spite of the growth of this industry, the level required greatly outstrips the level provided. The Pakistan Microfinance Network has estimated that ten million people need microfinance services in the country; the current outreach, however, is approximately one million. As far as women are concerned, according to the State Bank of Pakistan and ILO, the share of female borrowers in total borrowers has remained unchanged over the past five years.

Given the prerequisites a system such as this requires, compared to the success of microfinance and entrepreneurship in Bangladesh, Pakistan’s mediocre experience is somehow not as surprising. Since there is a considerable deficiency of public services for the human resource development of women in particular, the impact of microfinance has been considerably less compared to what was envisioned. Social intermediation is necessary for educating, raising awareness and influencing women regarding the need for credit. Due to the traditional restrictions on mobility, the costs associated with engaging in social intermediation are extremely high for women. As a result, its deficiency adversely affects the sustainability of microfinance operations. In addition to this, the cost of delivering financial services to the remote areas of the country is exorbitant and difficulties arise due to low population density and overall infrastructure. As far as communicational infrastructure is concerned, methods such as mobile banking and branchless banking are currently being developed to enhance the effectiveness of available facilities. In spite of these difficulties, in the cases when women, in particular, do gain access to credit, most women borrowers only have partial control over loans, or have relinquished all control to male member of the family. This has serious implications for gender equity. Consequently, even though women directly receive credit, there is a high chance that they will be unable to utilize it.

At the micro level, global experience suggests that efforts which are able to ensure the participation of people are the ones that yield the most effective development results. In Pakistan, even though the provision of credit has been a popular approach for promoting entrepreneurship, it has not necessarily been able to “empower” women in terms of giving them the ability to have control over their lives. Members of a rigid patriarchal society and subject to several constraints, women are seldom able to control their own finances. On average, women are less literate, less healthy and are much more likely to be unemployed compared to men. In the case that they do have jobs, high wage rate disparities persistently keep them lagging behind men in nearly all aspects of life. Given these dismal conditions, it is necessary to work towards the creation of a program within the social and cultural context of Pakistan that will motivate the participation of women in the economy, and subsequently, the overall development process.


Rabia Hashmi holds Bachelors from Bard College in Anthropology and Economics.  She is currently a social researcher at InterActive Research and Development (IRD).

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