Small and medium-sized enterprises (SMEs) play an important role in economic growth in Vietnam. Studies show that SMEs in Vietnam make an important contribution to GDP. The COVID-19 pandemic has disrupted the economy, pushing many businesses, especially women-led SMEs (WSMEs), to downsize or stop operating. This case study aims to explore gender-sensitive policies and practices in supporting SMEs to access credit, especially in response to the negative impacts of the COVID-19 pandemic.

Before the COVID-19 pandemic, Vietnam had issued regulations on the principle of non-discrimination and gender equality in the economic field, as well as quotas of female business owners nationwide. The National Assembly, the Government, and the State bank of Vietnam have issued a number of guidelines and policies related to the monetary sector during the COVID-19 pandemic aimed at supporting businesses to overcome the negative impacts of the COVID-19 pandemic. Such guidelines and policies are gender neutral.

To support WSMEs through the COVID-19 pandemic, financial institutions such as the International Finance Corporation (IFC) and the Asian Development Bank (ADB) have provided a number of grant packages through commercial banks.

WSMEs still face some difficulties accessing finance to maintain and develop their businesses due to the negative impacts of the COVID-19 pandemic. They include lack of information, lack of corporate governance capacity, lack of collateral, or insufficient collateral. The burden of housework also affects women’s ability to build and maintain relationships with banks. Meanwhile, collateral, the health of the business, the capacity in network and building relations with banks, and the ability to negotiate are the factors that determine the size of the loan and the interest rate to be paid.

Most of the headquarters of commercial banks implementing projects funded by IFC, ADB, and some other international financial institutions are very aware of credit support packages for WSMEs, and this support is communicated and reflected in the banks’ annual reports. However, bank branches and credit officers do not fully understand the meaning and objectives of these support packages, so they should treat the same between men-led and women-led SMEs.

To better support WSMES during the COVID-19 pandemic, this case study recommends commercial banks to do the following:

• Carry out internal communication to help branches and credit officers understand the meaning and requirements for projects funded by international financial institutions and the bank’s capital products to support WSMEs to overcome difficulties caused by the COVID-19 pandemic, contributing to gender equality. In addition, commercial banks need to reinforce communication messages about the significance of supporting WSMEs for the reputation of the banks themselves;
• Organize trainings on the principle of nondiscrimination on the basis of gender, substantive gender equality, and measures to promote gender equality in credit access, and to design and implement on that basis credit packages for WSMEs, contributing to the achievement of quotas related to WSMEs in the National Strategy on Gender Equality for the 2021-2030 period;
• Continue to advise and support WSMEs to strengthen their corporate governance capacity to meet loan conditions for production and business. loans.

To read the full report in English, click here.

To read the full report in Vietnamese, click here.