G-2214

Women Entrepreneurs in Bolivia

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Financing

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Project Description

Region: South America

Country: Bolivia

Location: La Paz

Total Budget: $120,000

Area of Focus: Economic and community development


Credit Card Fundraising

Fundraising Goal:

$10,000

Already Donated:

$0

Still Needed:

$10,000

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Bolivia is a geographically diverse and has a multi-ethnic society, where 62 percent of the population self-identifies as indigenous people. Despite the recent economic progress, Bolivia is still one of the poorest countries in South America. Bolivia has suffered economically from its landlocked position and decades of political and social instability. These issues hindered sustainable economic growth generally, but have decimated effective women-owned businesses. Bolivia ranks 108th out of 186 countries in the Human Development Index and 97th out of 186 countries on the Gender Inequality Index.

Bolivia has a population of approximately 11,306,341 (July 2018 est.) and an economy of $37.78 billion (2017est.). Despite being a socialist country, the Bolivian people are naturally entrepreneurial when provided sufficient opportunity. According to the GEM Index by Babson College, Bolivia ranks sixth in a survey of 70 countries, with its rate of early-stage entrepreneurial activity. Based on Fundaempresa (Fundacion para el Desarrollo Empresarial), it was reported that as of June of 2018, there were approximately a total of 308,622 and 95,267 active businesses in Bolivia and La Paz respectively. From the total, 79.62% are sole proprietorships, 18.9% are limited liability companies and 1.11% of them are corporations. According to INE (Instituto National de Estadistica), microenterprises - businesses with less than 10 employees- generate more than 40% of jobs in Bolivia and constitute 95% of all active sole proprietorship businesses.

According to the National Institute of Statistics in Bolivia (INE) there has been a rise of micro and small enterprises (MSE's). Approximately 92% of the enterprise universe in Bolivia is comprised of microenterprises that have created more than 80% of the nation's jobs. Microenterprises are contributing to the Country's GDP, improving both national and local economic development and increasing the distribution of income and household savings.

While there is no a universal definition for the micro or small business, according the International Labor Organization (ILO), the concept should be defined by each country. In Bolivia, a microenterprise is a business with less than 10 employees, with assets less than US$ 60,000 and annual sales less than US$ 100,000. Small enterprises are those employing 11-30 employees and have assets less than US$200,000 and annual sales less than US$350,000.

According to a survey carried out by the National Institute of Statistics in Bolivia, to MSE's, the majority of these businesses are in the commercial and services industry (117.550). Then services 73,539 and manufacturing 24,975, which includes textile/apparel, furniture and metal. The study also shows that approximately 216,064 MSE's are located in one place and the others are mobile. In terms of services, the majority of MSE's are in the hotel and restaurant industry and the rest are in mechanic and repair shops. Finally, only few MSE's provide services of telecommunication and mailing.

Furthermore, this study shows that more than 87% of these MES's lack affiliations to business associations, chambers of commerce and other kinds of networks. It was concluded that this lack of essential support and networking system impedes potential for generating new markets and appropriately scaling of businesses. This also impeded quality improvement of products and services. Another important conclusion from this study was that only 11% of these MSE's in the manufacturing industry are able to access financial loans. Whereas MSE's contribute to both the national and local economies, they are typically confronted by a variety of challenges according to research.

 Limited access to new markets locally or internationally

 Limited access to technology

 Under developed labor force

 Limited access to financing

 Insufficient information, training and business support

 Absence of national policies of economic development

 Low capacity of production

 Limited access to export markets

 Low productivity

 Increase in product smuggling (Contrabando) and black markets:

 As in many other countries of South America, large corporations and the public sector purchase from larger suppliers because they can produce in scalable quantities and enhance quality. Therefore, MSE's struggle to compete in bidding typically associated with larger vendors due to a lack of resources to purchase in large quantities. There are no national or local policies that support national products.

 Latest salary policies issued by the Government. Minimal salary increased more than 82.5 % in the period of 10 years. Also the double bonus** demotivate MSE's, which is thought unaffordable leading small businesses to close their doors. Few can stay in business and struggle to survive alone. This contributes to development of an informal business sector.

 In general, there is limited coordination and joint effort in the private sector and a negative relationship between the private sector and the public sector.

Women Entrepreneurs

According to research, women-owned businesses are at significant disadvantages in their efforts to compete or even to participate in bidding due to discriminatory and other cultural factors. Women entrepreneurs face unequal access to economic opportunities compared to men. According to the World Bank, as a result, there are fewer small and growing businesses where women have leadership roles, and even those small businesses with women leaders generally enjoy lower profitability and prospects for growth by comparison to men.

Most microenterprises, especially those started by women, are family-owned businesses. They can be successful as small businesses, but often need strategic assistance in achieving meaningful growth. Also, women-owned microenterprises are further challenged by a need to balance family care and business responsibilities. Since women remain in the informal sector, it is challenging to access finance without a guarantor. Lastly, women entrepreneurs are typically unable to join traditionally male-dominated business networks. Therefore, research has shown that there are high failure rates among microenterprises owned by women in Bolivia. It is estimated that more than 50% of newly established businesses fail in the first 18 months of operations. While the government has recently launched a variety of initiatives to support microenterprises, small firms struggle in becoming suppliers to big companies who dominate the value chain in the country.

In general, even though some women do start microenterprises to support themselves and their families, their ability to achieve significant returns are unacceptably limited and many of these businesses are unlikely to grow, let alone achieve sustainability over time. Women-owned microenterprises are confronted by additional challenges that hinder their ability to grow. This includes lack of basic literacy/education, underdeveloped technical skills and business knowledge, absence of essential support/encouragement, inadequate access to markets and impediments related to gender or cultural acceptance. In addition, women entrepreneurs face other types of challenges such as demands associated with balancing family care and business responsibilities; accessing financing just because they are women and joining traditionally male-dominated business networks.

In general, women entrepreneurs face unequal access to economic opportunities as leaders, business owners and suppliers compared to men. This is why there are fewer MSE's owned by women. Several studies in Latin America have documented this inequality that traps women in a static state of perpetual poverty. However, the Rotarians proposing this project, along with U4C, are planning to reverse such trends for women in La Paz and Quine, Bolivia.According to the Bolivian Economic and Social Development Plan 2016-2020 , while oil and mining continue to be core activities of the economy in the coming years, it is imperative to take actions to strengthen the productive sector with emphasis on micro and small enterprises, community and social-cooperative producers. The need to democratize the means and factors of production with emphasis on the micro business sector in Bolivia is expressed in this Plan, as one of the most important goals for economic sustainability.

Besides prior field experience and gathering all current statistical information about the socio-economic development of Bolivia-specifically La Paz-, Rotarians from the Host Club San Jorge and International Club Hobbs along with their cooperating organization U4C, have been working on assessing the MSE's strengths, weaknesses, needs and assets in order to plan this project effectively. There are two assessment methods being used. First, a survey to approximately 250 MSE's owned and led by women and a focus group, including a diverse group of stakeholders such as businesses owners and representatives of local businesses and women associations. The focus group will be carried out in with a facilitator and all the participants' responses will be recorded. Investing in women's economic empowerment will most likely help to close the achievement gap between women and men achieving not only greater gender equality, but it will also help eradicate poverty and create a more inclusive economy. Studies in the Latin America region have shown that increasing participation of women in the labor market can lead to poverty reduction. Furthermore, studies have demonstrated that women spend a higher percentage of their income on education, health, and nutrition for the household. According to Grown and Gupta , "women empowerment means not only women with equal capabilities (such as education and health) and equal access to resources and opportunities (such as land and employment), but they must also have the agency to use those rights, capabilities, resources, and opportunities to make strategic choices and decisions (such as is provided through leadership opportunities and participation in political institutions). And for them to exercise agency, they must live without fear of coercion and violence."

The Supporting and Suppliers Network for Women Entrepreneurs in La Paz, Bolivia is designed to build capacity and technical capability of women-owned microenterprises in becoming qualified suppliers for big companies, the public sector as well as exporting opportunities. Research has demonstrated that when women entrepreneurs work together, they can accomplish much more individually and collectively. By having a support network of other women active in women-owned businesses and increasing their leadership acumen as well as technical capability, women will enhance their confidence the quality of their products while meeting increasing demand from large buyers locally and globally.

The overarching goal for both the network and program is to promote economic inclusion of more women entrepreneurs and while enhancing competitiveness and productivity within their businesses. Participants in the network will increase their incomes and establish long-term relationships with other women-owned micro-enterprises. Furthermore, they will consolidate productive alliances with other small businesses outside the network, producers, organizations and other buyers. This project will provide funds for the creation of the network, a web-based platform, an entrepreneur accelerator and training initiative and will facilitate access to technical assistance and capital. The project will increase the revenues of the microenterprises participants by as much as 80%; generate new jobs and improve the quality standards of their products.

The project will be implemented in one year (12 months) and will include eight activities. The implementation of the project will be carried out in coordination with all the stakeholders mentioned above who would have influence on the implementation process.

Primary Host Partner

District: 5520

Rotary Club of: Hobbs

Primary Contact: Bob Reid, Phd.

Email: bobreid@jfmaddox.org

Primary International Partner

District: 4690

Rotary Club of: La Paz San Jorge

Primary Contact: Mauricio Steverlynck

Email: arq.msc@gmail.com

Project Status

Need $71,500
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Project listed for the 2019-20 Rotary Year.

The TRF Grant application number is #19875.

Proposed Financing

Existing Contributions Towards This Project

Date

Cash

DDF

Total

Hobbs (5520)

5-Sep-19

$4,000

$2,000

$6,000

La Paz San Jorge (4690)

5-Sep-19

$500

$1,000

$1,500

Remaining Amount to Raise

Additional Club Contribution (Needed) - Add a contribution

$71,500

-

$71,500

Amount Requested from The Rotary Foundation

$38,000

$3,000

$41,000

Total

$120,000

Note: as of July 1, 2015 there is a 5% additional support fee for cash contributions. This fee does not appear in the financials above because it does not apply if the funds are sent directly to the project account (without going through TRF, and therefore without Paul Harris credit). Clubs sending their cash contribution to TRF must be aware they will have to send an additional 5%.

Project Supporting Documents


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History Log Entries

5-Sep-19

System Entry

System Entry: Creation of project page.

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