Investing in women-owned businesses as a poverty-busting scheme

It’s impossible to spend any time in Bangladesh’s capital Dhaka and not wonder at the remarkable role cycle-rickshaw plays as a core transport service for city commuters.

It is, after all, nimble, affordable, zero-emissions and usually faster than a car in Dhaka’s stop-start traffic. On the other hand, the concept of a pedal-powered transport represents dehumanising labour – made possible by poverty that belongs in a bygone era for most parts of the world.

Today, roughly 80,000 people pull rickshaws in the capital, a majority of whom live in slums that lack schools, health facilities and other essential services.

And yet, slums and rickshaws are an integral part of an employment eco-system that sustains millions in Dhaka. Any intervention that imagines a better reality for Dhaka’s poorest will have to work on alternatives for employment and housing as a part of the solution.

These are some issues that weighed on our minds as we were working with Dhaka City authorities on their Livelihoods Improvement of Urban Poor Communities Project (LIUPCP) under National Urban Poverty Reduction Programme (NUPRP), the largest urban poverty project in the country, made possible through the support of the UK’s Department for International Development (DFID).

We realised that for transformational change to take place in the lives of the urban poor, we needed to focus on pathways that release people from the ‘poverty trap’ – a cycle of having only enough to subsist and never enough to invest in a business or asset that ensures a release from poverty.

In Bangladesh women are considered the most vulnerable in this respect due to economic and cultural barriers that prevent them from finishing high-school or breaking out of traditional forms of low-paid employment.

For women entrepreneurs, gaining access to finance is the biggest challenge. One of the features of the NUPRP is to train young women in business skills and inject capital into their businesses, whilst a matched mentor advises them on day to day decisions and long-term sustainability.

During my recent visit to Korail slum, I spoke with a young woman called Bulbuli who had joined her mother’s tailoring business, started with seed-funding from the programme. I sensed the confidence she had gained from learning the business from her mother and contributing to support her family through helping her mother. It made me realize how a small grant to a woman can have a ‘multiplier effect’ in empowering other women in the community and lifting families out of poverty.

The litmus test is whether businesses can sustain beyond their seed funding. So far, we’re seeing over 60% of the participants continue their business after the initial six months. The approach also benefits the mentors too as they’re able to earn additional income in that capacity.

Looking to the future
The programme is a delicate and balancing act to ensure that we keep strengthening the community and not contribute to expanding the slum. The objective is to equip residents with skills that enable them to graduate from the poverty that holds them in slums.

Bangladesh may have considerable development challenges, including a large informal economy, geographical vulnerabilities and financial and technological barriers. Yet, my time in Dhaka showed me a country with an entrepreneurial spirit that shows immense promise. And women entrepreneurs are the at the centre of that promising future.

Asami Okahashi, Urban Development Specialist for Bangkok Regional Hub, UNDP.