ANKARA
"If the Turkish economy is to achieve its full potential, then bringing more women into the labor force is essential," European Bank for Reconstruction and Development director for Turkey Jean-Patrick Marquet told the Anadolu Agency in an interview on Thursday.
The Finance and Advice for Women in Business Program, funded by the European Union (EU), the European Bank for Reconstruction and Development (EBRD) and the Republic of Turkey, was introduced to local women-led businesses in the central Anatolia city of Kayseri on Thursday.
The EBRD is providing up to €300 million ($327 million) in credit lines to local banks for lending to women-led businesses. The EU, the Turkish Ministry of Labor and Social Security and Turkish Employment Agency are supporting the program with €38 million ($41.6 million) for credit enhancement, advice to companies, including mentoring, entrepreneurship trainings, and networking opportunities, as well as technical assistance for partner banks.
To date, four Turkish banks have joined the program and received financing from the EBRD: VakifBank ($30 million), Finansbank ($54.7 million), Isbank ($55 million), and Turk Ekonomi Bankasi ($54.7 million).
In an interview with Anadolu Agency, European Bank for Reconstruction and Development Director for Turkey Jean-Patrick Marquet, explained critical aspects of the program, which the EBRD sees as a key initiative to boost the Turkish economy.
Anadolu Agency: Why is this program so important?
Marquet: The program takes a very holistic approach. It includes a combination of credit lines, finance investment, risk cover for local banks to increase risk appetite, and very important, technical assistance and advice for both the banks and the women in business themselves.
It is an important program for Turkey, because women’s participation in the labor force is low, very low - below 30 percent, less than half of male participation in the labor force - and this is a drag on the Turkish economy. If the Turkish economy is to achieve its full growth potential, then bringing more women into the labor force is essential. These women will start creating new businesses and attracting investment. These new businesses will create jobs, innovate and aid the economy to fully mature.
Anadolu Agency: How do you select these businesses?
Marquet: It’s really across the board. The idea is not just to support women. Ultimately, we want to expand small businesses. We do see a gap in terms of women entrepreneurs, and for several reasons. Women are less likely to hold assets and therefore do not have collateral for loans. Relatively few women hold bank accounts – there are a number of factors that mean that women need specific support.
This program is intended to provide that support. It includes advice for women entrepreneurs to organize their businesses, to develop their marketing, to review the structure of their organizations, but also to support the local banks that can make loans to those businesses. We are trying to raise the risk appetite of these banks by training them, and to provide some risk cover, funded by donors, to allow these banks to take more risks with these kinds of loans.
Anadolu Agency: You work with established businesses?
Marquet: Yes, these are mostly businesses that are already established. A good example is a car rental company in Diyarbakir that is owned by two women. The company didn’t have a website able to provide electronic booking. The potential of the company wasn’t being realized, because access by clients was cumbersome.
So we provided technical assistance to help that company offer electronic booking on the website. That increased the company’s turnover by 29 percent. So that had quite an impact in terms of the business, and it allowed the company to recruit two new staff members simply because of the growth of the business.
So that is a very concrete example of how we can help businesses to grow with the Women in Business Program. We can also leverage that by partnering with local banks.
Anadolu Agency: What are the challenges?
Marquet: There really are two types of hurdles. The first is knowledge, or experience, and the second is access to finance. On the first one, through the various programs for SMEs that we sponsor, whether for women, or for energy efficiency, or for the agriculture sector, we systematically bring technical assistance to bridge that knowledge gap, allowing those companies to do some leapfrogging. To improve access to finance, we work with the local banks, so that they make loans, they bring those companies through their established credit analysis system. What we do is to bring risk cover in which, thanks to donors, we can absorb a portion of the risk for these banks. There are also subsidized schemes, as we have in our energy efficiency programs, we can provide some subsidized lending, with the help of donors, to support investments. We believe all this will have a ‘demonstration effect’ to raise the game for SMEs.
Anadolu Agency: How receptive are the banks to this kind cooperation?
Marquet: Not all the banks are receptive to every idea. We have facilities in energy efficiency, residential investment, women in business, agriculture, among others. So we have a kind of toolbox that we present to the various banks, and they can choose what best fits their own strategies.
If I take the example of women in business, we started the program last year, and we already have four banks that have signed up: VakifBank, Finansbank, Isbank and Turk Ekonomi Bankasi. We are talking with two others that hopefully will sign up in the course of this year. So we expect to have six banks in Turkey, all among the country’s largest banks, so it’s a pretty good coverage. This indicates that the banks are interested, and that there will be a real systemic impact.
TEB is the last bank to which we provided €50 million ($54.7 million), and they added €15 million ($16.4 million) of their own. So there is a sizeable sum for investment.
The program reaches 15,000 women entrepreneurs, so it should have some impact. The idea is to have a very broad impact which we hope will become systemic.
Anadolu Agency: How will it become systemic?
Marquet: We believe two things. We want it to be systemic within the banks that engage with us. The whole idea is to get the banks to revisit the way they assess businesses.
Statistically, we see to date that the credit scores of women entrepreneurs are lower than those of men entrepreneurs. We want to build a track record, and to use the track record to derive a different method of credit scoring, one that will be equal for men and women. That would be a significant systemic impact. We hope that other lenders in the marketplace will observe and reconsider their approach to scoring.
Anadolu Agency: How will the program expand geographically?
Marquet: The idea is to focus the program on the less developed parts of the country. We are seeking a regional impact, beyond the usual targets like Istanbul, Izmir, etc. So we have that criterion in developing the credit lines with the banks, so that they focus on those regions. We recently had a presentation in Gaziantep with the banks.
Anadolu Agency: What kind of support are you receiving?
Marquet: We have two very important partners. One is the Turkish Ministry of Labor and Social Security, which is contributing very proactively, and is cofinancing the program, the European Union through the IPA fund, which is providing the bulk of the technical assistance funds, and Iskur, the Turkish government employment agency. It takes a lot of resources, and we are grateful to have strong partners.
