On Jan. 31 at the Nordic Countries Information Office the Senior Vice President of Nordic Investment Bank - Hellen Siv and the chairperson of the board of Hansabanka, Ingrida Bluma, presented the Baltics Women Business program.
Last October Nordic Investment Bank (NIB) announced its decision to set up a financial mechanism worth 1 million Euros to finance projects in support of women in business in the Baltic countries. That is a part of the Baltic Investment program (BIP) which was already established in 1992 by the Nordic countries with the Baltic countries to help in the transition to market economy.
BIP's main goals are to develop the private sector as an essential factor of a market economy. Small and medium enterprises play a key role in the progress, and there is a great need to create market based on financial mechanisms supported by technical assistance. While BIP would act as a catalyst for attracting foreign capital to the Baltics, the national investment banks would be the key local vehicle for channeling long term financing and serve as outstanding examples for prudency, transparency and credibility.
A Women's Business loan facility is an initiative of a conference on Women and Democracy held in Reykjavik in October, where participants from the Nordic countries, the Baltic countries, the United States and Russia discussed the idea and initiatives to enhance women's involvement in economic and political life. The aim of the conference was to identify concrete projects and possibilities for affirmative action to achieve the set goal. The conference was hosted by the government of Iceland, co-sponsored by the government of the United States and the Nordic Council of Ministers. In addition, the first lady of the United States, Hillary Rodham Clinton, participated in the conference through the global initiative of the Vital Choices.
The total value of the Baltic Investment program is 75 million Euro. The loan facility for women entrepreneurs is the last part of this program.
"The objective is to focus on women entrepreneurs. But we are not going to give women entrepreneurs any favours here. This is not subsidized funding. This is a loan facility that will be equally available to anybody. We want to encourage female entrepreneurs to ask for bank credit as their male colleagues do and attract potential entrepreneur attention to this project.
Surveys in the Nordic countries show that women do not want to be treated differently than men. But they are a little more reluctant to ask for bank credit. They also need to be encouraged entering the business as they do not consider it as easy as men do. Women pay more attention to the risk involved ñ they will not borrow more than they expect to earn. Women also tend to look more at those who are unsuccesful. So this facility has been established to attract the attention of women entrepreneurs. The plan is to have it fully utilised within this year and to be able to demonstrate concrete results at the follow up conference in Vilnius in 2001.
The projects to be financed will be chosen in co-operation with financial institutions in each Baltic country. Optiva Bank in Estonia, the Lithuanian Development Bank in Lithuania and Hansabanka in Latvia have agreed to act as financial intermediaries and grant the loans under the facility.
NIB signed the loan agreement with Hansabanka in Riga on Jan.31. Similar agreements were signed between NIB and Lithuanian Development Bank on Jan. 27 and with Optiva Bank in Tallinn on January 28, 2000. Female entrepreneurs and other commercial businesses promoting female entrepreneurship are encougared to contact the banks to learn more about terms and conditions.
These Baltic banks have already witnessed an increasing number of projects initiated by, or involving women, as well as networks established between business women in the Baltic Countries.
Eligible projects should enchance the involvement of women in business and decision making processes in general. They should be carried out by Estonian, Latvian and Lithuanian enterprises or by resident individuals in the private sector.
Priority will be given to projects involving transfer and exchange of know-how, goods and services between the Baltic and the Nordic Countries. Projects involving interaction between women with different backgrounds will have priority as well. Similar projects will bring together women from rural and urban areas, combining different cultural and ethnic backgrounds.
Looking at financing requirements - consideration will be given to commercially and economically oriented projects. There should be a well-developed strategy with a competitive idea that meets market demand. The project should also be fully financed and have sufficient base capital, so that it will be certain that the project can be implemented. It will be important to see that the project is profitable and has a reasonable cash flow.
Any costfactor of a project can be financed. The loan amount can be used for capital expenditures, financial costs, working capital and to cover costs for research and development.
The loan amount should not exceed 60% of the total project cost for a start-up project. It is necessary to have a capital from other sources. For an ongoing, well established operation loan the amount can reach up to 70% of total costs. The loan amount to a single borrower should not exceed EUR 33000 or the equivalent thereof.
The minimum amount is up to the intermediary to decide, for example to Hansabanka in Latvia. Ingrida Bluma said that minimum amount for entrepreneurs from rural areas is 3000-5000 Ls, and 15000 Ls for entrepreneurs in Riga.
Lending terms are on ordinary banking terms, there is no subsidy involved. Pricing is on market terms and the repayment schedule will matche project needs. The maturity of the loan will normally not exceed 5 years and also adequate securities will be required.
Borrowers will be required to submit quarterly reports on their financial status and on the progress of the project.
In order to reach the women projects in Latvia, NIB needs the help of a local bank and Hansabanka has been chosen as the intermediary in Latvia. Hansabanka will now be the bank in which female entrepreneurs may turn and possibly get the projects financed. Hellen Siv hopes that this will be a spur for the government and other bodies and authorities to be on the lookout for new initiatives.
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