CHALLENGES OF WOMEN IN SMES By Randa Abousleiman Managing Partner in Abousleiman and Partners.
SUMMARY— Women and SMEs— Current Legal Framework of SMEs & Proposed Amendments― Access to Financing― Conclusions 2
WOMEN AND SMESMajority of women owned businesses in Lebanon are informal: ― Such businesses do not benefit from Social Security ― Average income is low, which sustains poverty ― Chances of business expansion are significantly reduced 3
LEGAL HURDLES TO MOVE TO THE FORMAL SECTOR: ― High costs involved in establishing formal businesses ― Lack of knowledge on the legal options available ― Legal framework not adapted to cater to SMEs • business concerns do not limit personal liability • corporate structures available, such as SARLs and SALs, are too cumbersome 4
ENVISAGED SOLUTION Improving the legal framework and reducing registration costs to encourage women who own businesses to formally register their businesses.Advantages: ― Participating in economic growth ― Benefitting from Social Security coverage ― Having a legal structure that would facilitate access to financing 5
LEGAL FRAMEWORK OF SMES― No official legal definition of SMEs.― One legislative attempt: Article 2 of law n° 24 dated February 23, 1999, defines SMEs as being enterprises employing a maximum of 40 employees.― Since more then 80% of businesses fall within the scope of this definition, we need a more developed legal definition of SMEs to cater to the needs of the different categories of SMEs: Medium Sized Enterprises Small Enterprises Micro Enterprises Cumulative thresholds: Staff Headcount Annual turnover 6
LEGAL ACTIONS TO ENCOURAGE THE ESTABLISHMENT OF FORMAL WOMEN-OWNED BUSINESSES: ― Applying tax incentives for businesses that fall within the scope of the SMEs by establishing a favorable fiscal regime. ― Reducing the costs relating to the incorporation of existing corporate structure ― Creating new legal corporate structure such as an “Entreprise Unipersonnelle à Responsabilité Limitée” (Sole enterprises with limited liability) 7
ACCESS TO FINANCING― Most of women-owned businesses are self-financed― Difficulty in obtaining banking loans: • insufficiency of bank loans • high pricing of loans • high level of collateralization― Solutions implemented in Lebanon to remedy the unavailability of financing: • Kafalat guaranteed loans. • Micro – credit regulations introduced by Banque du Liban. 8
CONCLUSION1. Implement a legal framework that is not complicated to encourage women to formally establish businesses2. Reduce business registration costs and minimize the paperwork required to register a business3. Establishing a One-Stop shop for micro-enterprises4. Support and further develop the services offered by Kafalat and develop similar enterprises. 9
CONCLUSION5. Offer women access to further education and business training.6. Support women to have greater market exposure, technical know-how, as well as networking and strategic partnership opportunities. 10
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