MACRO DEMAND FOR MICROCREDIT: WOMEN IN POOR NATIONS NEED MORE CASH TO EXPAND START-UPS

Betsy Cummings, The New York Times

It used to be that a $50 microloan to start an embroidery kiosk or other modest enterprise was a gateway out of poverty for women in poor countries.

Now, some of them are telling aid groups that that is no longer enough. Rather, they want hundreds or thousands of dollars to build small businesses, hire employees and establish themselves in a developing marketplace.

After almost three decades, the microloan movement has created a global network of tens of millions of female entrepreneurs and a growing subclass of sophisticated businesswomen who are helping to lift reduce poverty.

As these new entrepreneurs proliferate, their demand for more capital is prodding microloan companies to rethink the size of their financing offers.

Whereas seven years ago the Asian Credit Fund, a lending institution in Kazakhstan created by Mercy Corps, an American humanitarian agency, offered mostly $40 loans, for example, today borrowers can receive as much as $10,000 -- enough to rent office space, hire staff, buy equipment and expand.

"What started as a microfinance institution is starting to move into small and medium loans" purely in response to demand, said Nancy Lindborg, president of the Washington office of Mercy Corps. In Kazakhstan, 67 percent of the Asian Credit Fund's borrowers are women.

In Mongolia, XacBank, a similarly expanding lender also established by Mercy Corps, helped one woman expand her bakery from a $100 enterprise into a $75,000 operation with 37 employees that operates around the clock. XacBank gave her a series of loans of increasing size, from $2,000 in 2001 to $24,000 most recently

Figures for worldwide microloans vary widely, from 70 million to 750 million outstanding, said Christina Barrineau, chief technical adviser for the International Year of Microcredit 2005, a United Nations initiative to expand microfinancing opportunities.

Whatever the figure, 28 years after the microloan movement was introduced by Grameen Bank of Bangladesh, the number of entrepreneurs in poor countries is huge, perhaps equaling nearly The Global Entrepreneurship Monitor, an annual study by Babson College and the London Business School, this month reported that 73 million of 784 million people surveyed in 34 countries owned new businesses. And most of them are women.

"You can say that microfinancing is now reaching 80 million families, 90 percent of the borrowers being women, and that's just the tip of the iceberg in terms of demand," said Alex Counts, president of Grameen Foundation USA, a microfinance organization in Washington and an arm of Grameen Bank.

While microloans have long been a strategy to alleviate destitution among women, Lindborg said they also had the broader purpose of pumping up local economies "by helping to support a vibrant, small-business sector."

But not all that much money is available for the new wave of larger loans. Grameen Bank, which has made loans to 3.7 million borrowers across the globe, 96 percent of them female, has increased the size of some loans, Counts said.

The problem is that social service agencies that aim to eradicate poverty feel that their job is done if they help poor women create thriving, if tiny, businesses, he said. To ensure growth, larger, more sophisticated businesses must emerge, he said, yet many aid organizations are not structured to finance them.

For many poor women, like the 11 percent of female entrepreneurs in Kabul who are war widows, starting a business is the only hope for survival.

Of the few banks established in Kabul, "none of them are lending," said Katrin Fakiri-Wardak, director of Parwaz, a Kabul-based microfinancing company.

In some rural areas, cultural constraints, a lack of financing, a lack of transportation and the absence of basic resources like supplies and skilled labor make starting a business an almost impossible dream for women. And in cities like Kabul, while starting a microbusiness can be easy for women, taking it to the next level can be daunting.

But it can be done. In the final days of repressive Taliban rule in Afghanistan, Kamela Sediqi was able to squeeze out a modest income from a small tailoring business in her home with the help of her family. But there was a limit to her expansion, and a limit as well to her desire to continue in the tailoring business.

Now, under a new government, Sediqi runs New Pimar Construction, a growing business of 250 women that has secured a few public works projects.

By any Afghani's standards, that would be a small-business success story. But Sediqi, 28, who recently visited the United States to take part in a business training program, said she was just getting started. There is only one problem: she cannot secure a loan to expand, despite steady growth and a business that generates $28,000 a year in revenue.

In 2004, Ms. Sediqi secured three building projects, including a dam and buildings on an ox farm. But her goal is to land 10 jobs a year and triple her annual income. To do that, she said, she needs $70,000 to purchase necessary machinery -- a gargantuan sum in a country where the average annual income is less than $200. So far, she can find no financial backers.

''More women want sophisticated businesses,'' said Ms. Sediqi, who started her tailoring business in 1996 with about $100, and her construction company three years ago with $50,000 that she had painstakingly saved from her tailoring business. ''They have good ideas, but a lot of family problems'' -- meaning opposition from tradition-minded male relatives -- in addition to financial hurdles, she said.

Ms. Sediqi recently completed the training program, Project Artemis, at Thunderbird, the Garvin School of International Management in Phoenix, a pilot program meant to help Afghanistan's female entrepreneurs learn to market their services better and become more shrewd entrepreneurs.

''There is so much drive and desire to learn'' entrepreneurial skills in Afghanistan, said Ruxandra Boros, a consultant in Afghanistan with the International Labor Organization, part of the United Nations. But the training for women is generally absent.

Many loan programs do not take into account the ability of women to spin the experience of these homegrown businesses into something larger. That is a missed opportunity, experts say, since women have a nearly 100 percent repayment record on microloans. That success has helped organizations like Grameen Foundation USA to expand its budget from $100,000 in 1997 to $11 million today.

Last August, Mr. Counts of the foundation visited a woman in India who, through a $50 starter loan, had expanded her 20-chicken farm to one with more than 500 chickens. Her borrowing power has risen to accommodate a $2,000 loan, a huge sum in her community. The success of some of these women, Mr. Counts said, is the ''equivalent of Steve Jobs inventing a computer in his garage.''