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New Organization Helps Russian Businesswomen - 2002-08-23

There are few who would argue with the old saying that it takes money to make money. But in much of the world capital is difficult to come by, especially for women. When leaders from around the world converge in Johannesburg, South Africa for the World Summit on Sustainable Development, one of the main topics will be raising the living standards of women.

It's lunchtime at a café in Vidnoe and in the kitchen chicken is frying to a crisp. Nearby, a woman chops cucumbers and tomatoes for salads while a man makes small pies out of a mountain of dough. The café owner Lubov Ezdakova runs in and out of the kitchen making sure everything is read for the lunch rush. "I spend 12 hours a day at work," she says. "Even if I'm at home, I'm at work. Each of my employees has a telephone so even if I'm at home, I can call them. If something goes wrong, I correct them, telling them you should do this or that. I keep the situation under control night and day."

It's that kind of work ethic that has made her business grow over the years. Ms. Ezdakova started out with three people: herself, her husband and her daughter in a small café. Today, she runs two small restaurants and two stalls at a local trading area.

But while hard work has played a role, there is another factor in Ms. Ezdakova's success. In 1999, she borrowed money from an organization called the Women's Initiative.

The organization lends money to small business owners in the city of Vidnoe, a suburb of Moscow. It's affiliated with the Russian Women's Microfinance Network, a Moscow-based organization that helps provide small loans, mostly to women business owners in different regions of Russia.

Ms. Ezdakova used her initial loan to buy goods for her restaurant. Since then she's taken out a total of 11 loans for new equipment and various improvements and repaid them all on time with interest.

Organizations that do such small scale lending are part of a worldwide movement to help women like Ms. Ezdakova become business owners. It's called microfinance lending because the size of the loans is quite small - as little as a $100 in some cases.

Many organizations affiliated with the Russian Women's Microfinance Network will lend to qualified men. But more than 70 percent of their clients are women, and they say there's a reason. Men don't usually want to borrow such small sums of money.

Diana Medman, chairperson of the Russian Women's Micro-finance Network, says most prospective male clients want to borrow the maximum amount of money, right away. "$300 for a man is nothing, but for a woman it's money," she said. "It's a different attitude because women have always been in charge of the household in Russia and they know what can be done for $300, unlike men. We have a lot of cases where wonderful businesses have started!"

There is another reason why so many of the clients are women. Most of these organizations actively work on cultivating female clients because they believe it reaps a greater overall benefit than focusing on men.

Anna Gincherman works with Women's World Banking, a New York based group which helps organizations in the developing world who specialize in microfinance lending to women. She explains why she feels that lending specifically to women, as opposed to men, can play an important role in the development of a region. "We know that when women take the money and make profits in their business, most of their profits go back into the family and the education of the children, health related issues and so on so it's really a contribution to the social development," she says.

So, says Ms. Gincherman, lending money to women helps not just the women but helps the whole family too.

And the benefits can go even further. According to statistics from the Russian Women's Microfinance Network, about 2,000 new jobs have been created in businesses that have borrowed money through its affiliates.

The benefits aren't strictly financial as the organization's Diana Medman explains. "They have become real leaders," says Diana Medman. "They are being invited to the parliament. They have become well-known people in their regions. They enjoy huge respect. It's very pleasant for us to see, not to mention our clients. We see how they develop, how they grow."

But in the beginning, the going was rough for these organizations. Many people in Russia weren't comfortable with the idea of borrowing money. Ms. Gincherman from Women's World Banking says a big challenge in Russia was convincing people that taking out a loan is a natural part of doing business. She said after 70 years of Communism, people believed borrowing was bad. "It's really educating a broader population, saying that borrowing or financing your business from external sources is a part of running a business in any part of the world, in the developed world," she said.

Such organizations like the Russian Women's Microfinance Network also fill an important niche in Russia. Here, most banks won't even consider lending such a small sum of money. Those that do, can make it very difficult.

Natalya Nekrasova owns a small grocery store in the bottom floor of an apartment building in Vidnoe. She employs seven people and used her first loan to buy equipment for the store.

Ms. Nekrasova tried to borrow money from a Russian bank but describes it as a complete waste of time. She says there was an endless stack of documents to fill out. "I tried to obtain a loan from the banks. But unfortunately banks take a long time to look at all the documents," she says. "With the network, I liked that it is very fast. The first credit was obtained within one week, which is very fast considering how long it takes to get credit from the banks. So these terms are very good."

Since then Ms. Nekrasova has taken out a number of loans to make improvements to the store. With the most recent loan, she had a small green roof built over the front entrance of the store to give it the appearance of a cottage.

And like many of the women who borrow money through microfinance networks, she's already making plans for what she'll do with her next and, she hopes, bigger loan.