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Supporting Women Entrepreneurs Is Just Good Business
March 20, 2018

By Mary Jane Maxwell

Supporting Women Entrepreneurs Is Just Good Business
A traditional Zulu woman in South Africa makes money selling colorful ethnic baskets. (Shutterstock)

Gender equality is important. Communities where opportunities for women are on par with men have fewer child deaths, fewer conflicts, and better public services and health, data show.

There are also strong economic incentives to close the gender gap.

Research shows that where women-owned businesses thrive, the community wins. The country’s GDP grows and the global economy benefits. In places where women’s entrepreneurship is restricted or limited, the opposite happens — individuals, communities, countries and the global economy miss out on unrealized economic gains.

What the experts say

The 2016 Africa Human Development Report noted, “Gender inequality is costing sub-Saharan Africa on average $95 billion a year … jeopardizing the continent’s efforts for inclusive human development and economic growth.” Gender inequality hinders economic advancement in the developing world.

On a global scale, the McKinsey Global Institute figures that if women and men played “an identical role in labor markets,” $28 trillion would be added to the global economy by 2025, an increase of 26 percent.

And in 2017 the International Finance Corporation (IFC) published “Investing in Women: New Evidence for the Business Case,” (PDF, 4.38 MB) in which three case studies make strong arguments for investing in women entrepreneurs. According to IFC findings, women entrepreneurs:

  • Open new markets.
  • Offer unique assets and abilities.
  • Strengthen and diversify supply chains.

One IFC program in India aimed to build up the solar energy market in rural communities. Sales increased by 30 percent and expanded the market for solar lighting products after a network of female sales agents was developed to target women customers.

Another IFC program in the Democratic Republic of the Congo worked with microfinance institutions, banks and mobile network operators to provide digital financial services to people without access to banks. Women were recruited as online agents to expand a network of banking services for low-income customers. Although only 27 percent of the online agents were women, the women achieved 12 percent more transactions and a 16 percent higher net profit than their male counterparts.

A third IFC case study took place in Turkey, where only 16 percent of small and medium enterprises are majority-owned by women. The IFC partnered with one of Turkey’s largest retail corporations to train women-owned suppliers in how to obtain more financing and improve their business performance. Successful women entrepreneurs strengthen supply chains and competitive advantage of their companies, the IFC concluded: “Working with women to unlock latent capacity can lead to improved security and diversity.”

These studies — and those below — demonstrate why supporting women entrepreneurs is just good business:

Addressing the problem and providing solutions

Only 30 percent of formal small and medium enterprises around the world are owned and run by women, largely due to lack of access to financial capital. Other barriers facing women who want to start a business include insufficient knowledge, networks and links to high-value markets.

To help overcome these obstacles, the World Bank recently launched the Women Entrepreneurs Finance Initiative (We-Fi), which will mobilize $1 billion in financing to improve access to capital for women entrepreneurs in developing countries. We-Fi will provide women with mentors and access to networks and markets, and will invest in projects and programs that support women and women-led small and medium enterprises.

The Global Banking Alliance for Women also works to financially empower women around the world in dozens of countries. The alliance has members in 135 countries around the world — from small financial institutions to large commercial banks. These member financial institutions offer services to women that include access to capital, information, education and markets.