Banks to women: no house, no loan

In the wake of the global financial crisis Liberian President Ellen Johnson-Sirleaf is pushing for local economic development, including boosting people’s access to loans for business start-ups. But many rural Liberian women say they have been turned down because they do not own property.

Women make up 80 percent of Liberia’s market traders, according to the Ministry of Gender and Development, but women from all over the country told IRIN they have been unable to expand these small businesses by accessing credit.

“Banks in Liberia do not want to give out loans to women,” Norah Anderson, who sells kitchenware in Gbarnga, 150km from the capital Monrovia, told IRIN. “I have been striving to get a loan from banks for over three months, but I cannot meet the conditions.”

Men “skeptical”

To get a loan both women and men must have legal evidence they own a house to use as collateral – a condition that bars most unmarried women. Many married women told IRIN their husbands will not allow them to use the house as collateral as they consider it too risky.

“We find it difficult to convince our husbands and partners to allow us to use our houses for collateral. They are always skeptical,” said Rebecca Moore, a clothing trader in the northern Liberian town of Ganta in Nimba County.

Some women say they can access a loan only once their husband has died and they have inherited his property.

“It took me only about two weeks [to get a loan] after presenting my late husband’s house documents. It is quite a pity for those who do not have houses of their own, or have not inherited,” said Ciatta Randolph, who used her US$5,000 loan to set up a restaurant in Kakata, a town 35km north of Monrovia.

Powerful force

Without loans most women stick to petty trade like selling groundnuts, fruits or second-hand clothing, which requires at most $200 in start-up capital.

Women’s domination over petty trade means enabling them to expand these businesses would have a powerful impact on economic growth, Monrovia-based economic consultant Achie Bedell told IRIN.

“The government should provide the conditions for women to gain more access to credit facilities so they could easily compete with foreign merchants, who now dominate commerce in Liberia,” Bedell said.

But even when women have property as collateral, the loan application process can put many off. Applicants must present a business plan, insurance documents, income statements and a convincing profit strategy, according to businesswoman Randolph. This poses problems for illiterate women, who according to the UN Development Programme make up the majority in Liberia.

Most micro-finance borrowers around the world are women, and difficulty in accessing credit, combined with food price shocks and remittance drops linked to the international economic crisis, will make women more vulnerable worldwide, according to February 2009 World Bank research.

Rural women hardest hit

Mary Johnson, member of the Liberia Marketing Association, a public-private enterprise, said rural women are hardest hit, since few banks open branches in rural areas, thus giving no access to loans at all.

...We find it difficult to convince our husbands to allow us to use our houses for collateral....

A staffer at the Monrovia-based Central Bank of Liberia, who preferred anonymity, said the bank gave out small loans to 138,000 entrepreneurs in 2007, most of them women, but it does not yet provide this service outside of the capital. The bank will extend its micro-finance programme to rural areas for the first time in 2009, the staffer said.

Meanwhile rural networks such as the Southeastern Women Development Association (SEWODA) with 4,500 members around the country, try to train rural women in business development to boost their business skills. “We have realised the lack of knowledge in business management is one of the main problems rural women face when gaining access to credit,” said Helena Torh-Turo, SEWODA’S president.

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