Seventeen years ago, Pathana Panyathip decided to give her children a gift that would pay dividends forever—a high-quality education. Since she couldn’t find a suitable school, she started her own. In 2001, the Early Years Centre opened its doors in Vientiane, the capital city of Lao People’s Democratic Republic.
As the children progressed from grade to grade, she searched for ways to expand her school. But funding was continually a problem. “Although it was challenging to decide the right curriculum, find high-quality teachers, source appropriate resources and identify good locations to set up new campuses, the biggest and most stressful obstacle was financing,” says Panyathip.
In a small country like Lao PDR, the dearth of capital is a common roadblock for owners of small and medium enterprises (SMEs). Women face an even higher hurdle because they often lack collateral, and lenders therefore perceive them as riskier and less-profitable clients. Typically, female entrepreneurs like Panyathip must use their own limited savings or approach informal sources for funding. This hampers their initiative’s growth potential.
Panyathip persevered. After exhausting her own savings and selling her assets, she secured a loan in 2011 from IFC client Banque Franco Lao (BFL). This helped her establish a better-resourced Early Years Centre along with a shared primary/secondary campus. Subsequent loans, paired with the bank’s guidance on growth, helped the school expand even further. Within just five years, she established four new campuses in Vientiane and a new campus in Savanakhet province.
Today, she is the director and founder of the Panyathip International School, which offers a primary and secondary education aligned with international standards to more than 1,000 students. The school’s five campuses employ 150 staff members. She recently established partnerships with several UK schools to expand British education to Lao students, from English language courses to ballet classes. She also diversified her business, providing stationery and textbooks to schools across the country, as a result of BFL’s funding and advice.
A Lesson for Lao’s Businesswomen
Panyathip credits much of the school’s successful expansion to BLF’s role as a financial advisor.
“Whenever I needed funding for an item—a swimming pool, a playground, or something much bigger, like a new building or a new campus—I turned to BFL for advice. I knew BFL was not only a reliable source of funds, but would also guide me to prepare bankable projects,” Panyathip says.
BFL prioritized outreach to women entrepreneurs two years ago after investment and advice from IFC. These local bank officials were trailblazers because they acted against prevailing wisdom in Lao PDR that there was no need to tailor their approach to serve women entrepreneurs.
As with IFC clients elsewhere, BFL’s subsequent success with these programs demonstrated that investing in women makes business sense: Women repay their loans at a higher rate than men and the nonperforming loan rate for women is lower than that of men across most customer segments. Women customers are also a strong source of deposits for banks.
Recognizing the value of investing in women is particularly key in Lao PDR, where SMEs account for 97 percent of the private sector and 63 percent of jobs. Women own or run about a third of the country’s SMEs—which are often smaller in size than men-owned firms but grow faster. Yet nearly half of them are financially underserved or unserved—representing a $340 million financing gap.
Setting the Standard
IFC helped BFL craft a strategy that appealed to female clients. It included new financial products and services, training and networking, branding and communications strategy, and training to meet the needs of female customers for BFL management and frontline staff. In 2016, BFL launched dedicated branches where women-owned SMEs can access both financial and non-financial products and services.
With this program in place, BFL has quadrupled its women-owned SME portfolio. From serving 50 women with $8 million in loans in 2015, it now serves 338 women customers with loans reaching $30 million. “We tapped into the women’s business market as a separate and strategic segment—leading the way for other financial institutions in the market and region. The success of the program proved that investing in women is good business,” said Bounmy Sengphachan, Deputy Managing Director at BFL.
Panyathip is now actively participating in BFL’s network for businesswomen, where she shares her advice and experience with peers. She’s become a role model for other women. Looking back, she feels that the much-needed funding and support gave her a strong foundation as a businesswoman. “It helped me to believe in myself,” she says, echoing her schools’ motto: “Become the Best that You Can Be.”
IFC’s Banking on Women Advisory program has regional clients in Lao PDR, Cambodia, Indonesia, Vietnam, and Mongolia. It aims to increase financial services for over 64,000 women-led SMEs by 2020 in East Asia.
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Published in November 2018