Women play a crucial role in the economic
development of their families and communities but
certain obstacles such as poverty, unemployment, low
household income and societal discriminations mostly
in developing countries have hindered their effective
performance of that role. The objective of this study is
to examine the effect of microfinance on women
entrepreneurs’ socio economic performance in
Batticaloa. The results indicate that the microfinance
factors positively and moderately affect the women
entrepreneurs’ socio economic performance. The
economic benefits of microfinance on women
entrepreneurs have potential effect on the economic
development. In terms of development and social
impact, the microfinance factors allow significant
improvement in quality of life on women
entrepreneurs in Batticaloa District. Microfinance
factors allows the poor people to better manage
spending, which often generates saving ,and this
provides better standards of living to their family, and
dependents in terms of housing nutrition, health and
education. New Micro finance system promotes a sense
of entrepreneurship among women

Phillip, P. Godwin

English

IR South Eastern University of Sri Lanka

[ 9 ]
Abstract: Women play a crucial role in the economic
development of their families and communities but
certain obstacles such as poverty, unemployment, low
household income and societal discriminations mostly
in developing countries have hindered their effective
performance of that role. The objective of this study is
to examine the effect of microfinance on women
entrepreneurs’ socio economic performance in
Batticaloa. The results indicate that the microfinance
factors positively and moderately affect the women
entrepreneurs’ socio economic performance. The
economic benefits of microfinance on women
entrepreneurs have potential effect on the economic
development. In terms of development and social
impact, the microfinance factors allow significant
improvement in quality of life on women
entrepreneurs in Batticaloa District. Microfinance
factors allows the poor people to better manage
spending, which often generates saving ,and this
provides better standards of living to their family, and
dependents in terms of housing nutrition, health and
education. New Microfinance system promotes a sense
of entrepreneurship among women.
Keywords: Microfinance, women entrepreneurs,
performance, Batticaloa
Introduction
Micro finance is often considered one of the
most effective and flexible strategies in the fight against
global poverty. It is sustainable and can be
implemented on the massive scale necessary to
respond to the urgent needs of those who are living on
less than $1 a day, the worlds poorest. Practically twice
in a year small entrepreneurs obtain micro credit from
various Micro finance institutions. This continual
reinvestment multiplies the impact of each dollar
loaned.
The microfinance industry has long recognized
women as a force in international development and as
a market worthy of attention, but it could do even
better if it addressed ongoing barriers to women’s
participation and empowerment. Women business
owners often are associated with the best credit risks
and are more likely than men to funnel earnings in to
their children’s education.
Despite the crucial role of women entrepreneurs
in the economic development of their families and
countries; it is, however, discovered that women
entrepreneurs have low business performance
compared to their male counterparts (Akanji, 2006);
and this is caused by factors which normally affect
entrepreneurial performance. Such factors include lack
of credit, saving, education or training, and social
capital (Shane, 2003).
Women entrepreneurs, especially in developing
countries lack training (IFC, 2007) and entrepreneurial
process is a vital source of developing human capital
as well as plays a crucial role in providing learning
opportunity for individuals to improve their skills,
attitudes and abilities (Brana, 2008; Cheston & Kuhn,
2002; Shane, 2003). Again, the effect of training on
women entrepreneurs’ performance, especially in
developing countries, has not been adequately
addressed in the literature. Taking cognizance of the
peculiar situations of most women in developing
countries in terms of poverty, low educational levels
P. Godwin Phillip(1)
The Eﬀect of Microfinance Factors on
Women Entrepreneur’s Performance in
Batticaloa District­Special Reference to
SEEDS (GTE) Ltd
(1) Department of Economics and Management, Vavuniya Campus of the University of Jaﬀna, Sri Lanka.
(email: godwian@yahoo.com) 
Proceedings of the Third International Symposium,
SEUSL: 6-7 July 2013, Oluvil, Sri Lanka
[ 1 0 ]
and other societal discriminations (Porter &
Nagarajan, 2005; Roomi & Parrot, 2008); training is a
very important micro-finance factor for women
entrepreneurs as it would provide the skills and
experience needed for business (Akanji, 2006, Cheston
& Kuhn, 2002; Kuzilwa, 2005).
Entrepreneurship theory (Shane, 2003) stated
that entrepreneur’s ability to discover and exploit
opportunity for entrepreneurial activity differs between
individuals and depends on individual’s attitude
towards risk-taking. For instance, a risk-averse
individual is less likely to exploit entrepreneurial
opportunity (Shane, 2003). As such, a person may not
search for or discover entrepreneurial opportunity if
he/she has a negative attitude towards risk-taking. In
the same vein, an individual may have an innovation
business or service idea, and great likelihood to access
micro-finance but may not utilize the opportunity if
he/she fears risk. Behavioral theories such as the
Theory of Planned Behavior, specifically the Intention
Theory (Ajzen, 1991) concluded that attitude towards
behavior leads to intention which eventually leads to
actual behavior. Other supporting behavioral theorists
(e.g Crisp & Turner, 2007) found that attitude and
behavioral intention are positively related.
SEEDS it could be defined as Sarvodaya
Economic Enterprise Development Services Guarantee
Limited was established in 1987 in order to provide a
wide range of micro finance services to the people who
were encaged with self employment activities in Sri
Lanka. In 2002 SEEDS expanded its micro finance
service to Batticaloa district to strength the vulnerable
community in rural area. SEEDS obtained a significant
experience that the small enterprise can be sustainable
with law investment and higher human resource there
by offering opportunities for long term employment.  
Literature Review
Evidences from literature show that adequate
credit aids entrepreneurship performance (Gatewood
et al., 2004; Kuzilwa, 2005; Lakwo, 2007; Martin, 1999;
Ojo, 2009; Peter, 2001). The result of such credit
assistance to entrepreneurs, especially women, is often
seen in improved income, output, investment,
employment and welfare of the entrepreneurs
(Kuzilwa, 2005; Lakwo, 2007; Martin, 1999; Peter,
2001). Credit had positive impact on business
performance of entrepreneurs in Kenya (Peter, 2001),
income and wellbeing of women in Uganda (Lakwo,
2007). Credit and savings had positive impact on
performance in Nigeria (Ojo, 2009). Credit and
training had positive impact on women entrepreneur’s
performance in Tanzania (Kuzilwa, 2005). Savings acts
as insurance for credit since women entrepreneurs lack
physical collaterals (Akanji, 2006; Mkpado & Arene,
2007; Versluysen, 1999). Savings has been found to
have positive effect on enterprise productivity in
Nigeria (Ojo, 2009).
Research Problem
Micro finance is important to reducing poverty
in rural economy. Especially women’s contribution is
essential to house hold income. Compare with other
district in Sri Lanka, a significant number of women
lost their spouse due to the ethnic war and natural
disaster and several NGOs focus to increase the
income of the women headed families through micro
finance service, even though they not yet achieved
expected out come. The Problem of this study is the
effect of microfinance on women Entrepreneur’s
Performance.
Objectives
1. Identify the factors of microfinance focusing the
women entrepreneurs
2. Find out the activities of SEEDS (GTE) Ltd in
order to promote women entrepreneurship
through micro finance service. 
3. To examine the effect of microfinance on women
entrepreneurs’ socio economic performance in
Batticaloa.
Methodology
In this study, the data were collected as primary
as well as secondary. the primary data were collected
from 100 sample household surveys using structured
questionnaires and interviews  .The samples were
selected from women entrepreneur in batticaloa
P. Godwin Phillip 
The Effect of Microﬁnance Factors on Women
Entrepreneur’s Performance in Batticaloa District
district. Thus are hundred (100) women entrepreneurs
who were getting microfinance from SEEDS (GTE)
Ltd. 
The sample were analyzed by univariate and
bivariate analysis consist of mean, standard deviation,
p-value, correlation and co-efficient. The result
gathered through the SPSS have presented in the charts
and tables. Likert scale rating (from 1-5) were used to
measure the variable through relevant statement by
descriptive analysis.
Results
Table 1.1: Overall Mean & Standard
Deviaon of Micro Finance System
Variables Mean Std. Deviation
Growth of business 3.01 0.541
Utilization of loans 3.20 0.620
Utilization of profits 2.02 0.492
Disposable income 2.90 0.689
Savings 2.56 0.538
Food and consumption level 3.01 0.541
Educational level 3.20 0.752
Livelihood improvement 2.28 0.668
Micro finance System 2.97 0.171
The table 1.1 shows the overall impact of micro
finance on women entrepreneur’s performance.
Growth of the business
Information regarding Growth of the business in
small business enterprises was measured through five
indicators which are expected income, expansion of
the business, employment opportunity, new product
development and use of new technology and
equipment.  14% of the respondents feel the variable of
growth of business by using the microfinance is in low
level, 71% of respondents feel it in moderate level   and
15% feel it is in high level. The variable of growth of
business gets a mean value of 3.01 as moderate level.
Expected income and expansion of the business are
showing 3.46 mean values, 50% of respondent have
agreed that they are in moderate level of these two
variables. Employment opportunity gets 2.05 mean
value it shows low level of opportunity for new
employment. New product gets 3.00 mean value it
shows moderate level in new product development. 
Utilization of loans
As consider the mean value of utilization of loan
is 3.20. It shows moderate impact of microfinance.
Usage of loans indicates 3.94. Because of 94% of
respondent were using their micro credit for the
specific purpose which they mentioned in the
proposal. But satisfaction of loan shows as 2.05 mean
value. Because of the amount of loan disbursed by
micro finance institution was insufficient.
Utilization of profits
The variable of utilization of profit gets a mean
value of 3.02 even though out of three indicators of
utilization of profit not get the same mean value. The
indicator of sufficient of profit gets 3.00 mean values
and the indicator of monthly installment gets 3.95.
Compare above two indicator loan repayment of profit
utilization is higher than other factor. If we consider
invest part of profit it shows 2.05 mean values showing
as lower than other two factors it mean small
entrepreneur were awarded that they should pay the
monthly installment as regularly from the profit.
Disposable income
Using likert scale, impact of micro finance
focusing on women entrepreneur found to have a
moderate impact on the disposable income after the
micro finance loan service. Mean value is 2.90 which
is in the moderate range. Level of income is one of the
three indicators of value of income gets 3.00 mean
value it shows respondents have agreed level of
disposable income gradually increased. Family income
gets mean value of 2.55 which indicates there were no
major effect in the family income after micro finance
loan service. However family expenses moderately
covered by disposable income which gets 3.00 mean
value.
Savings
As we know most of the micro finance institution
attempt to mobilize the savings or family savings in the
[ 1 1 ]
Proceedings of the Third International Symposium,
SEUSL: 6-7 July 2013, Oluvil, Sri Lanka
[ 1 2 ]
rural economy according the micro finance institutions
add the saving is one of the eligible criteria for loan
applicants those who are in the project area. 2.56 mean
value shows for saving variable which comes to the
moderate range. Savings in income gets 2.99 mean
value and 51% respondents have agreed that at the
meant time regularly savings also gets 2.54 because of
they were instructed by the micro finance institution
regarding the compulsory savings. Considering the
children saving gets mean value 2.50 which mean 50%
respondent agreed that the income not sufficient to
saving in the children account. Another 50%
respondents have agreed that they would like to
deposit small part of the income to their children’s
account.
Unexpected expenses shows as 3.00 mean values
which explain the respondents were using the income
to face the unexpected incident or expenses such as
deceases and natural disaster as moderate range
.Increasing of assets is the one show low means value
2.05 out of five indicators in the saving variable which
indicates there was no significance changes in the
assets which means the family income is not being
used to increase the assets.
Food and consumption level
Satisfaction of family food, food nutrition and
children food nutrition are taken as indicators of food
and consumption level. Satisfaction of family food gets
3.95 mean values which is the higher value compare
with other two factors. 60% of respondent have
accepted that they have spent for the family food after
start a small entrepreneurship.
Educational level
Education level include following indicators
children school attending, parents motivation skills
and education level of children. And overall mean
value of education level gets 3.20 as moderate range .
School attending shows 3.45 mean value and also
motivation skills get same value 3.45, those mean
values indicates micro finance service contributes to
children education through income generation. But the
education level gets 2.55 mean values which explain
quality of education and infrastructures were
insufficient.
Other Livelihood improvement
Other livelihood improvement variable includes
cloths and jewel, medical needs, social and religious
event, life insurance policy, and housing development.
2.28 mean value shows the overall indicators. Cloths
and jewels gets 2.05 mean value in which there was no
considerable positive change in the indicators. As we
know the rural level population depends on
government hospital and free clinic for their medical
needs that what medical need shows as 2.50 mean
values. Social religious events indicators also get 2.50
mean values as well. Life insurance policy gets mean
values 2.05 it mean 51% of respondents have
dissatisfied. Housing development gets mean value
2.05 it mean 52% respondents have disagreed because
of the big part of income which obtained from their
small enterprises spent for family expenses apart from
housing development.
Conclusion and Recommendation 
Micro finance system should consider effective
business proposal when they disburse the loan.
Feasibility study has to be done for expansion of the
business. The business proposal should financially
viable and practically suitable. The women
entrepreneurs have to be trained in order to obtain
multi skill, such as technical skill (especially job related
Technique), financial management training, marketing
and exposure visit.
Post loan service will be carried out by MFIs in
order to ensure the utilization of loan. It can be done
by the close monitoring, partial loan disbursement,
supplying material and conducting awareness
program. MFIs can get assistance from various
government and non government organization in
order to aware the rural community regarding
nutrition food and consumption. Such as School level
awareness program, Special workshop for feeding
mothers,  Special loan for milking cows and country
poultry and Attach the child wealth rank records with
loan application.
MFIs can introduce various loan products to
improve the children education of their clients, Such
as students progress report has to be attached with loan
P. Godwin Phillip 
The Effect of Microﬁnance Factors on Women
Entrepreneur’s Performance in Batticaloa District
application for loan interest loans, gifts and seasonal
promotional items have to be issued the parents those
who encourage their children good achievement as
well as regular school attendance. MFIs must
determine the loan size accordance with number of
student in the family.
The study confirmed that most of the women
entrepreneurs have moderately improved their socio-
economic conditions through micro finance system..
Moreover, poor livelihood assets, vulnerabilities and
weak transforming structures and process are
identified as constraints for sustainable livelihoods of
women entrepreneurs and associated group. It is
therefore necessary to provide institutional,
organizational, and government support for
sustainable women entrepreneurship.
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The effect of microfinance factors on women entrepreneur’s performance in Batticaloa District special reference to SEEDS (GTE) Ltd

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The effect of microfinance factors on women entrepreneur’s performance in Batticaloa District special reference to SEEDS (GTE) Ltd

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