I joined the bank very early on as the advisor to the U.S. Director, and in 1995 I moved to the Financial Institutions team. For 10 years I worked on a variety of debt and equity bank investments and equity funds. I spent the last 5 of my years in the FI team focused on small business finance, particularly using E.U. and U.S. resources to help commercial banks improve lending practices to address SMEs. After that, I went to Croatia, where I was Country Director.In 2010 I took up the position to lead the Small Business Support Team, which offered an advisory program for women entrepreneurs in the Caucasus. We started a similar program in the Western Balkans, but it became pretty clear when we were helping these businesses that access to finance was a problem. We could help them develop a business plan, products, markets, etc., but if they didn’t also have access to finance, they couldn’t grow their businesses.We started engaging with the Swedes on this, as they have a strong gender focus. They took up the mantle and committed to support the EBRD across not just the six countries of the Western Balkans (Albania, Bosnia and Herzegovina, FYR Macedonia, Kosovo, Montenegro, and Serbia), which was our original proposal, but also in an additional six countries in Eastern Europe (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine). We were also able in 2013 to secure a substantial amount of funding from the E.U. to do a program for Turkey. So now we have Luxembourg and Italy supporting us in the Western Balkans, the E.U. is supporting us in Eastern Europe, and Sweden is supporting us throughout. I should add, Kazakhstan is paying for their own program.
GBA: Can you tell us the dimensions of EBRD’s WiB program? How much do you have to invest, how large a portfolio do you seek to build, how does the non-financial services piece fit, and what kind of network effects do you hope to create?
Charlotte Ruhe:
We have three elements to the program. The first is EBRD finance to commercial banks. At this stage, the bank has approval for 460 million euros in 16 countries to support access to finance for women in business. What we seek from donors is a risk-sharing component, which is typically equal to 10 percent of the EBRD loan. This provides some cover if commercial banks were to lose money from lending to women entrepreneurs. The risk sharing is really helpful for getting banks to override some of their collateral restrictions that in many cases would prevent them from lending to women-led businesses. This is a first-loss policy, and we have restrictions on percent per loan and overall portfolio. So far it’s proved really useful in our marketing with the commercial banks.
The second component is a technical assistance package to help commercial banks with development, and help them analyze their lending practices and how they might be improved to better capture the Women’s Market.
Besides these two elements, we also offer EBRD assistance to borrowers, which we think is a really important part of the picture because women need a certain amount of training to feel confident. We have studied the market for women entrepreneurs and put together a package that includes our usual advisory services provided by local consultants and international experts, complemented by a mentoring program — often conducted in partnership with the Cherie Blair Foundation.
Women-owned enterprises tend to be more concentrated at the small end of the SME pool in bank portfolios and in our portfolio for advisory services, and they also tend to be in the service sector. We offer coaching by experienced consultants for these types of enterprises and a suite of training courses covering financial literacy, eMarketing, growing a family business (i.e., dealing with family involvement when growing a business), leadership skills, and more. Women professionals and entrepreneurs love these offerings because they build confidence and help with presentation skills for making their case when they go in to a bank.
This training suite is something we’ve developed ourselves over the last two years, but we look for local language partners to help us deliver it. We started our training in the Caucasus and then in the Western Balkans, and we’ve been implementing courses in Egypt, as well. We recently signed an agreement with the Cherie Blair Foundation, and they’re working with us across the Western Balkans and Eastern Europe.
GBA: What have been the internal challenges to actualizing a WiB program?
Charlotte Ruhe:
Because there are subsidies related to the product in the form of first loss for the bank, we had to convince our economists that there is a market failure here that we’re working to correct. We had to do a detailed baseline assessment to show those gaps in the market.
In terms of presenting a cohesive offer to our banks, it’s important that the bankers buy in to the product, because they’re the ones who are interacting with the clients. We have had to do some internal marketing to get that buy in, but I’ve been very happy with the results. It’s been well-received across the board. When you have a product the banks like, the bankers themselves tend to like it, too. The team in Turkey has been tremendous. We’ve gotten such good traction in Turkey, and that’s helped us in other countries.
The EBRD’s gender strategy wasn’t moving ahead very quickly until our new President came on board three years ago. He’s really made it clear that this is a management priority, and he hired senior women to focus on it at the executive committee level.
GBA: So the leadership is key?
Charlotte Ruhe:
Absolutely, and leadership is what is going to be the key for commercial banks, as well. You can talk to branch managers and get buy in from them, but it’s buy in at the top that really makes a difference. When we get that top-down support, that’s when I feel really optimistic that things are going to happen.
GBA: What are your bank clients asking for in terms of subsidy?
Charlotte Ruhe:
They aren’t asking us to pay for internal costs. There’s always a participation cost on their side, but their chief expense is staff training. All the training for the banks’ women clients is run by us. The subsidy is mainly in the form of the first loss policy.
GBA: GBA is putting huge effort into supporting banks to capture sex-disaggregated data on their customer base so we can measure performance and prove the business case. Are you encouraging clients to sex-disaggregate customer data?
Charlotte Ruhe:
Yes — this is so important. We have a pretty intense reporting package, and our donors like SIDA and the E.U. want to know what impact their funding is having on the banks. You have to disaggregate the data to understand the impact. And banks need to do it so that they can track the profitability of the market segment. We help our clients adjust their MIS to get the reporting right and set up data systems so that they can disaggregate their data.
GBA: How do you see the WiB program impacting the EBRD itself over time?
Charlotte Ruhe:
The WiB program has been great for raising awareness about the opportunity of the Women’s Market and for demonstrating the effects of inclusion. I think combining the training, financing and risk sharing elements is a good model. And I also think the program puts the EBRD on the map more. We expect to assist some 10,000 women with the WiB program; there is nothing else we’re doing on gender that has that kind of scale.
GBA: Are you intent on helping the banks on the internal change piece?
Charlotte Ruhe:
Yes, that’s something we consider important for sustainability and part of what advisors working with the banks focus on. SIDA wants to see the banks’ HR departments focus on gender and offer better opportunities for women within the banks.
Our engagements with our advisors are finite, though. That’s part of the reason we think the GBA is so important — we see banks signing up to be GBA members as a great way to continue their learning and continue to adopt best practices. I’m a great advocate for the GBA.
GBA: EBRD covers a vast geographical area, can you paint a picture of some of the commonalities women face across the territories and some of the differences you have observed?
Charlotte Ruhe:
Across the board, women business leaders face the problem of balancing family life with business. This comes up in every discussion. Many of them mention the importance of having support from their family members that allows them to step up and lead a successful business.
Cultural norms are much more restrictive for women in MENA and south Turkey, for example. In many of these areas it’s simply not culturally acceptable for a woman to go into the marketplace on her own, learn a trade and set up a business. In Eastern Europe, the cultural norms are not nearly as severe. However, there is a myth that women made great strides in Eastern Europe under socialism, so the situation is far better for women in that region. The reality is women were not in real positions of power under the socialist regimes. Some equal roles may have existed, but there would always be a man calling the shots in the organization.
Nevertheless, we can’t underestimate the benefits of equal access to education, a lack of overt discrimination in laws and the state provision of child care, all of which make life a bit easier for women in Eastern Europe. The impact of this over time is that we will probably see women running businesses with bigger scale and greater growth opportunities in places like Serbia and Kazakhstan than in places where they face greater cultural barriers.
GBA: I have always found that the cultural issues women clients face are reflected in the attitudes of the management and leadership of the financial services providers themselves, albeit mostly to a lesser degree. Does the magnitude of the change management piece reflect this?
Charlotte Ruhe:
Yes, but there are always exceptions. In Egypt, for example, you do have women in positions of power, but the cultural landscape is more challenging than it is in other markets.
I think that women still need more support in growing their businesses, and part of that is they don’t feel confident putting themselves out there. They need to be three times more assured than male entrepreneurs that their projects are viable before they take it to a financer. Further, they lack access to networks, mentors and role models.
GBA: In some cases, once a bank sees that women are crowded into the smaller end of small in terms of business size, management tends to want to park the WiB strategy in CSR and just run a couple of programs for women, which causes the initiative to fizzle out. What will EBRD do to mitigate that?
Charlotte Ruhe:
We will not engage with banks that view the Women’s Market as a CSR project. This is a commercial business opportunity. We feel like it’s really main stream — women are far too big of a market to treat that way.
GBA: We know that generally there is limited capacity in the sector in terms of supporting banks to design and execute on the holistic value proposition that women business owners need. How do you intend to build the bench?
Charlotte Ruhe:
First, we’re coming into the banks with a full package. The banks like that women are getting training from us and have access to consultants and advisors — they see them as more creditworthy when they approach the banks. We’ve also developed a diagnostic tool that allows women to do self-assessments of their businesses online or at the bank, and it points out the areas where a woman business owner might want to place more attention before putting forward a credit proposition. Banks love this, as it saves them labor; they respect the fact that we come to them with a good set of tools because we’re helping them to improve their own efficiencies.
At the same time, in terms of building the market, there are two things you really need: awareness and competition. We’re raising awareness as we sign on more banks, but you’ve got to have more than one bank involved to achieve competition in a market. What made me so excited about Turkey was that the E.U. and the Ministry of Labor supported us with enough resources that we could engage with banks that represent 40 percent of Turkish banking assets, and that’s when you can really start to change a market — when you get big banks with big firepower competing with one another on this.
It will be slower in smaller markets where we have fewer resources and where banks are more cautious as a result of recession or other business challenges, but we’re in it for the long haul, and we have time. I’m hopeful we will continue to see good take-up of the product and will be able to start discussions with donors for second rounds of funding in many of these countries.
GBA: What is your vision for the Women in Business program at the EBRD?
Charlotte Ruhe:
My vision is to have a lasting impact across the Bank’s geographies. You really can hope to change a market where you have the resources to engage several banks that represent a substantial portion of banking assets, like we do in Turkey.
I hope we are able to raise more money for the Western Balkans and Eastern Europe. The scale we have now is good for awareness raising, but not enough to change markets. Ultimately, it’s about getting banks to compete on serving the Women’s Market and making it normal to offer a women-led business in a service sector economy a good 3-5 year investment loan for her business.
GBA: How can GBA support you in achieving that vision?
Charlotte Ruhe:
GBA will really contribute to the sustainability of our efforts. It’s the place where the commercial banks can engage to continue to learn about the latest technologies and best practices in financing women. I’m really hopeful that many of our banks will sign on to be GBA members, as TEB and Garanti have already. We have agreed to support this in the early phase, and I am sure once they get involved as members they will remain committed.
As told to the Global Banking Alliance for Women
