Korets Israel arm transforms women into entrepreneurs

Last year, about 40 Israeli women enrolled in a course to learn how to run a small business. Jewish and Israeli-Arab, the women were mostly single parents, immigrants or others who don't have the resources to start a business on their own.

"The target population is people who depend on social support, do not have experience with banks or other lending sources, and have a strong desire for self-help," said Carl Kaplan, managing director of the Koret Israel Economic Development Funds.

KIEDF is an arm of the S.F.-based Koret Foundation.

Kaplan, an American-born investment banker who has lived in Israel since 1990, was in town for board business and spoke of the women's class, as well as other outreach programs the 7-year-old fund is engaged in.

The course, offered by the Haifa-based nonprofit Women for Economic Independence in conjunction with KIEDF, covered such standard topics as formulating a business plan and management techniques. But it also dealt with some emotional issues that can arise when women start a business, including what to do if an ex-husband shows up and tries to interfere.

Upon completion of the course, the women could apply for "microcredit" financing from KIEDF. (The concept involves granting small loans — often between $1,000 and $5,000 over the course of one to three years — to individuals who would not normally qualify, for home-based businesses.)

Since its inception in April 1994, KIEDF has grown from offering about 30 loans worth roughly $5 million in the first year, to granting more than 250 loans worth $10 million in 2000. Overall, the fund has offered a total of $40.5 million to nearly 1,000 small businesses.

"People don't realize how much we do with so little money," he said. "The cost of creating a new job is $1,200."

When it was founded, KIEDF focused solely on the development of the Negev, but later it broadened its emphasis to include other developing regions. It now funds businesses throughout Israel.

Discussing the program for women, Kaplan said, "It looks like 20 to 25 percent of the graduates will be taking initial loans." Those who are successful can then apply for further assistance, to expand.

Women who have taken the class have launched such businesses as beauty parlors and a bakery.

That these small businesses are flourishing is good news, especially since the economy is another victim of the new intifada.

"The Israeli economy is in serious difficulty," said Kaplan. "We're in a serious recession, and I have doubts whether there will be any growth this year."

He cited widely reported statistics pointing out that the tourism industry has been hit the hardest, with construction and agriculture industries suffering as well.

"Since 1995, there have been fewer and fewer housing starts, but this year we hit a low of the last five years" he said.

Furthermore, apartment sales are also down. "There's a sense of uncertainty and there's been a drop in investments. The banks have money to lend, but they can't give it away."

The Mideast crisis has caused the KIEDF to become more cautious and re-evaluate its lending strategy.

Unfortunately, Kaplan did not have any solutions, as the economic situation directly ties into the political one.

"They go hand in hand," he said. "There was a lot of joint economic activity being planned between the Jordanians, Palestinians and Israelis and [but now] we've hit a stone wall."

However, Kaplan pointed out that in addition to the political situation, other factors have been contributing to Israel's austerity. For one thing, he characterized the nation's tax system as "a disaster."

The plunge of the Nasdaq and the dot-com demise are also taking a toll, he said, as the high-tech industry comprises as much as 15 percent of the nation's economy.

"Israel is losing its edge as an attractive place for high-tech factories as well as for venture capital.

"Venture capital is a business, and Israel is competing for the same venture capital just like here," he said. But Israel's tax laws make an uneven playing field. "Israeli companies don't get a fair shot."