Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices by

1. Regional Cooperation CouncilWorkshop on Enhancing Women Entrepreneurship in SEESarajevo 1 October 2009 Financing Women Entrepreneurship: Lessons Learnt and Innovative Practices by Siv Hellén, Advisor to the President, Nordic Investment Bank (NIB) and Marja Seppälä, Senior Country Manager, Council of Europe Development Bank (CEB)

2. Brief presentation of the Nordic Investment Bank (NIB) and the Council of Europe Development Bank (CEB) • Description of the loan programmes for women entrepreneurs • Lessons learnt • Conclusions and remarks Outline of the presentation:

3. NORDIC INVESTMENT BANK enhancing competitiveness & the environment 3

4. Iceland Norway Finland Sweden Estonia Latvia Denmark Lithuania Northern Europe’s multilateral bank • Nordic and Baltic countries as shareholders • Established in 1976 by Nordic countries • Baltic countries joined in 2005 • Headquarters in Helsinki • Balance sheet € 22.6 billion • Loan portfolio € 13.1 billion • Loans disbursed 2008 • € 2.5 billion • AAA credit rating • Lending in member countries and emerging markets 4

5. Mission NIB promotes sustainable growthof its Member countries by providing long-term complementary financing, based on sound banking principles, to projects that strengthen competitiveness and enhance the environment. 5

6. NIB’s global reachFramework agreements outside the member countries Asia China, India, Indonesia, Laos, Pakistan,the Philippines, Sri Lanka, Thailand, Vietnam Botswana, Egypt, Jordan, Mauritius, Morocco, Namibia, South Africa, Tunisia, Turkey Africa & Middle East Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Poland, Romania, Russia, Serbia, Slovak Republic, Slovenia, Ukraine Europe & Eurasia Latin America Argentina, Brazil, Colombia, Dominican Republic,Mexico, Peru, Uruguay, Venezuela 6

7. CEB - COUNCIL OF EUROPE DEVELOPMENT BANK Marja Seppälä I 1 October 2009 I 7

8. CEB Overview Institution • Oldest pan-European supranational financial institution • Set up in 1956 to strengthen social cohesion • 40 Member States - members of the Council of Europe Key figures (end-2008) • Total assets: € 21.4 billion • Own funds: € 4.7 billion • Rating: AAA (Moody’s, S&P, Fitch Ratings) • € 30 billion in projects financed since inception • Outstanding loan portfolio: € 12.4 billion • Loans disbursed in 2008: € 1.5 billion Marja Seppälä I 1 October 2009 I 8

9. CEB Overview Borrowers • Member States • Local or regional authorities • Financial Institutions Activities • Loans • Guarantees • Trust Accounts Sectorallines of action • Strengthening social integration • Managing the environment • Developing human capital Marja Seppälä I 1 October 2009 I 9

10. Loan Facilities For Women Entrepreneurs • Idea was born in 1999 at conference in Iceland • Purpose: to support and increase women's involvement in business and decision-making processes in order to promote gender equality • Projects carried out by SMEs or individuals in the private sector • Involve local financial intermediaries • Priority given to projects creating new jobs and projects located in rural areas and in regions with high unemployment 10

11. The programmes’ objectives • Provide credits to SMEs (women entrepreneurs), for investment and working capital • Total loan amount (CEB & NIB) EUR10m, extended by each institution in 6 loans to 5 banks in Estonia, Latvia and Lithuania • Facilitate access of women entrepreneurs to medium/long term commercial credits with attractive interest rates • Create and maintain jobs • Contribute to the promotion of welfare and equality in Estonia-Latvia-Lithuania through the development of women’s entrepreneurship 11

12. Loan Facilities For Women Entrepreneurs • The 1st loan programme was only 1 million euro to be divided equally by the three Baltic countries • Followed by another loan programme this time together with CEB in the total of 10 millon euro • NIB later launched one loan programme in Russia of 2 million euro, which was less successful 12

13. Loan Facilities for Women Entrepreneurs: Guidelines • Requests for loans considered on a commercial basis • Emphasis put on the strategy of the borrower, the competitiveness of the project idea and environmental aspects • Flexibility in expenditure to be financed • Maximum tenor: five to seven years • Interest rate charged by the financial intermediary individually based on market terms • Loans must be adequately secured 13

14. SME Eligibility Criteria • maximum 100 employees • maximum 75 m€ net fixed assets and • maximum 33% held by a large corporation Plus • owned or managed by women or • clearly improving women’s opportunities in the employment market 14

15. Loan Facilities for Women Entrepreneurs: Total Figures Number of projectsJobs maintained*New jobs* ESTONIA 66 562 88 LATVIA 191 1,346 363 LITHUANIA 1311,614383 TOTAL 388 3,522 834 RUSSIA 5 * Estimated figures 15

16. Baltic StatesLoan Programmes for Women Entrepreneurs:Lessons learnt NB: The CEB findings presented hereafter are adapted from the results of an ex post evaluation carried out in 2007 on these programmes. 16

17. Overall a very positive outcome • The programmes performed well and efficiently • Served the businesses that were targeted • Good correspondence with CEB’s social mandate 17

18. The programmes performed well and efficiently • Objectives largely met • Very satisfactory institutional arrangements • Satisfactory sub-loan performance • Banks and women entrepreneurs satisfied about management and conditions • Efficiency was satisfactory • Programmes well documented • Zero defaulting loans (June 2007) • Schedule well-respected and lead times acceptable, short even • Satisfactory cost-efficiency and cost-control

19. The programmes served the businesses that were targeted • Great variety of sectors, often services • Half or more were micro-enterprises • Rural focus well-respected

20. Great variety of companies Marja Seppälä I 1 October 2009 I20

21. Rural focus well respected Marja Seppälä I 1 October 2009 I21

22. In line with CEB’s social mandate Women entrepreneurs target represents specific niche combining… • Commercial aspect • Credit to companies at market terms • Social aspect • Specific disadvantaged group, namely women entrepreneurs Marja Seppälä I 1 October 2009 I22

23. Relevance was not perfect • Objectives and eligibility criteria OK • Label « women entrepreneurs » does lower barrier-to-entry for women • Rural area focus gives chance to entrepreneurs with less collateral • Start-up finance responded to need • But • Relevance of job creation objective rapidly eroded at the time • Baltic States: narrow gender gap in entrepreneurship • Other CEE countries probably more relevant • Additionality ? Marja Seppälä I 1 October 2009 I23

24. Impact on individual companies Marja Seppälä I 1 October 2009 I24

25. Differentiating types of impact • Internationally operating production companies • Investments in machines, increasing productivity, efficiency, competitiveness - E.g. Siauliai textile manufacturers • Nationally operating companies • Investment to allow national expansion - E.g. opening shop in other town • Locally operating companies • Increase local client base by increasing attractiveness or capacity - E.g. refurbishment/extension beauty salon; new car lift in repair shop; fitness apparatus… Marja Seppälä I 1 October 2009 I25

26. Sustainability • Women entrepreneurs seem to have become more mainstream clients • Financed companies are healthy • But experience lack of skilled labour • Companies improved their ability to raise money • Influence of credit squeeze and overheating? • Government support , trust funds?

27. General Assumptions: Women's Point Of View • Women set up their companies still with own capital • Women have equal opportunities to access credit • Women need more encouragement and support • Women want role models • Women need more information on credit possibilities • Women are more careful and take less risks than men 27

28. Experience Gained • Women feel that credits for SMEs are in general too expensive • Women positively surprised by friendly and helpful attitude at banks • Women found it positive that the loans were only for them • Government support was considered to be important • Majority of borrowers will ask for additional financing in the future 28

29. Experience Gained: Banks' Point Of View • Difficult to combine profitability and small credits • Not used to address women’s particular concerns • Challenge: Banks should not give advice on how to prepare business plans • Business plans prepared by external consultants often not of good quality • Women in rural areas with start-up projects difficult to reach • Loan applicants did not have sufficient collateral 29

30. Have Micro Loans Reached Their Goal? – • NIB's and CEB's programmes have raised several questions: • Why special credits to women entrepreneurs? • Are special loans for women entrepreneurs in line with gender equality? • What is innovative in NIB's and CEB's programme? 30

31. Why special credits to WomenEntrepreneurs ? • Women like to be target clients • Women do not need generally better terms and conditions • Women need good advice in preparing business plans • Women need information about credit possibilities • Women as an untapped resource have become a new target group for the banks • Loans for women have taught the banks to simplify their procedures and to understand women's special needs 31

32. Are loans in line with GenderEquality ? Yes because: • Loans sparked discussion of women's issues and gender equality • Credits were not created to distort competition and they did not contain any real subsidy • Women got increased access to credit • Women as an untapped resource have become a new target group for the banks 32

33. What was innovative with the loans ? In fact not so much – back to basics A few observations: • Banking in transition countries still very male -dominated, both clientele and loan officers • Important to choose the right local intermediaries, e.g. banks with experience in SME-financing • Collateral support is needed especially in rural areas and for start-up projects • Expedient loan processing essential • Advisable to enhance programmes with trust funds • Loans for women have taught the banks to simplify their procedures and to understand women's special needs 33

34. Key Points Be Smart • S - Simplify • M - Market • A - Adapt • R - Respond • T -Train 34