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Emerging W.SME’s

women powered SMEs

A Tough Fight by Women Actors to Beat Poverty

It is widely acknowledged that private sector development in this era of globalization through international trade has a significant role to play in reducing poverty. A significant portion of the Pakistan economy is made up of micro, small, and medium-sized businesses, which are cited in the Pakistan strategy for growth and poverty reduction. Being an essential component of meeting the issues and goals of the future, Small and medium-sized businesses (SMEs) are considered to be the primary source of economic growth for any nation because the sector’s capacity to operate at a cheap cost of manufacturing is its main advantage for the national economy. Compared to huge firms, SMEs have more potential to create jobs so, there is no doubt in the fact that main force behind development, employment, poverty reduction, wealth generation, and fair income distribution are SMEs.

SMEs are the source of increased economic productivity and ultimately improve the well-being of people by reducing poverty. Not only do SMEs play a major complementary role in global industrialization but also serve as agents of structural transition that’s why developing markets that have real work and income dispersal problems is more crucial as it helps to gain a more influential yield, organize jobs in parts and become the primary stage for the vast activities of the future. It is split into two classes, business on a wide scale, and small-scale industry so, undoubtedly growth of small and medium-sized enterprises is a strong mystery triggering the development of the Gross Domestic Product. In the developing world, gender inequality is a significant issue that contributes to both extreme poverty and slow economic progress. Pakistan is grappling with the same issue. Pakistan’s poverty is significantly made worse by socioeconomic factors such as rapid population increase, poor economic conditions, social and cultural constraints, and political instability.

Poverty has been a problem for Pakistan due to the limited participation of women in economic activities, who make up 52% of the total population of the nation and are the main cause of poverty. Although, women’s empowerment is a significant part of developing countries’ development policies there are several challenges to achieving this goal as reducing poverty is directly connected to the economic empowerment of women. If we go through the state of women’s participation in economic activities then we can easily observe that the ratio of working women is much better in Punjab as compared to other provinces (the most populated province of Pakistan) which is further categorized as rural women and Urban women where rural women are attached with some conventional sectors that are characterized by low technology and low levels of production. These sectors usually require skills that are essentially the extension of household skills, or that represent a particular experience of women in education and work where, these women usually invest the majority of their business profits in their children’s homes, housing, clothes, and schooling instead of reinvesting. However, women in urban areas are also engaged in a mix of low-tech projects. Due to the low employment opportunities educated, women are also engaged in these activities at a small-scale level. It is, therefore, important to consider the role of small and medium enterprises in women’s empowerment and poverty alleviation in Southern Punjab. Being the majority (52% of the total population) there is no doubt in the fact that, women-owned small and medium enterprises (W-SMEs) make a significant contribution to the growth of economies by generating employment, creating wealth, reducing poverty, empowering women entrepreneurs, and improving the social wellbeing of society. Yet, women entrepreneurs are subject to several challenges in realizing their potential. In Pakistan, women entrepreneurs face several social and economic constraints particularly related to low access to financial services which can play a catalytic role in the growth of their businesses.

Moreover, women generally remain in a disadvantaged position than men considering access to financial resources due to socio-cultural barriers, the informality of their businesses, inability to take economic decisions, lack of financial literacy, absence of credit history, and failure to meet lending criteria of the financial institutions. The financial institutions, on the other hand, do not consider women a commercial case’ although they have proven to be more loyal customers (than men) and represent one of the fastest-growing consumer segments in the global economy. Women have added to the bottom line of those financial institutions which have focused on them as a key client base. Therefore, the business case for women desires not only to provide support for their development but also to bring profitable opportunities to financial institutions.

Since access to finance is complementary to the inclusion of women in formal financial services, Pakistan’s National Financial Inclusion Strategy (NFIS) recognizes was introduced by SBP to target the enhancement of formal financial access to 50% of the adult population by the year 2020, but realized the fact that it is not at all possible without reaching 25% of adult females with formal accounts. Also, the agenda of NFIS extended to 2023 focuses especially on the renewed targets of increasing women’s digital transactions accounts to 20 million (out of overall 65 million accounts) and the availability of State Bank of Pakistan (SBP)’s specialized refinance facility for women entrepreneurs with the end-user rate of 5% per annum.

Why do we Focus on Women in Poverty?

A focus on poor women as distinct from men in efforts to reduce poverty is justified because women’s paid and unpaid work is crucial for the survival of poor households. Women are economic actors as they produce and process food for the family; they are the primary caretakers of children, the elderly, and the sick; and their income and labor are directed toward children’s education, health, and well-being. In fact, there is incontrovertible evidence from a number of studies conducted that, spend their income on food and health care for children, which is in sharp contrast to men, who spend a higher proportion of their income on personal needs but still women face significant constraints in maximizing their productivity. They often do not have equal access to productive inputs or markets for their goods. They own only 15 percent of the land worldwide, work longer hours than men and earn lower wages. They are overrepresented among workers in the informal labor market, and businesses, in jobs that are seasonal, more precarious and not protected by labor standards. Despite this, policies and programs that are based on notions of a typical household as consisting of a male breadwinner and dependent women and children often target men for the provision of productive resources and services. Such an approach widens the gender-based productivity gap, negatively affects women’s economic status, and does little to reduce poverty. Addressing these gender biases and inequalities by intentionally investing in women as economic agents (through entering and encouraging W.SMEs) and doing so within a framework of rights that ensures that women’s access to and control over productive resources is a part of entitling women as citizens, is an effective and efficient poverty reduction strategy which definitely leave positive footprints on national growth.

It is highly recommended that,

These strategies are promising and offer the potential for meeting the international community’s commitment to gender equality, and poverty alleviation as demonstrated most recently through the inclusion of Goals 1 and 5 in the Sustainable Development Goals (SDGs). All that remains now is for that commitment to be transformed into action.


The author is MD IRP/ Faculty Department of H&SS, Bahria University Karachi

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