In general, the small and medium scale sector refers to small businesses which are owned and operated by the same person, perhaps with employees, and located in a fixed site. Small scale businesses operate primarily in the service sector, although they sometimes involve production such as agroindustry and small scale manufacturing. Traders, peddlers and sellers are all examples of persons who work in the informal sector. Together, these two sectors hold considerable potential to provide employment and generate income for countless women and their families, especially in the burgeoning cities of the developing world. Given the problems of surplus of labor and the high levels of poverty in most of these urban areas, the encouragement of these sectors should be a cornerstone of any policy to promote sustainable economic growth.
Women entrepreneurs provide gainful employment and enable their employees to acquire new skills.
If they are fortunate, they may be able to obtain the capital they need to expand their businesses and respond to growing markets. But this is not the case for all. Many of those working in the small scale and informal sectors face serious constraints which block them from obtaining credit, generating sufficient income to save, gaining new and expanded markets, and acquiring better business skills. The lack of affordable credit from the formal financial sector is the most critical constraint for women entrepreneurs. The provision of credit to a small group of women entrepreneurs may enable them to pool their resources and purchase goods for resale or raw materials much more cheaply as a result of the economies of scale which they will realize.