From struggles and dreams to unhampered opportunities
By Wendy Teleki*
Entrepreneur Pham Thi Hoa at her wood furniture workshop. Photo credit: Le Toan / IFC.
In my career I am fortunate to meet many inspiring women entrepreneurs in developing economies around the world. I have often been in awe over their stories. Entrepreneurs who pursue their dreams, to turn their ideas into a scalable venture and take it to the next growth stage, make enormous sacrifices. My own mother was an entrepreneur and I have experienced first-hand that they face enormous hurdles requiring extreme levels of persistence, resilience and ultimately optimism, and still, many fail.
When meeting such stellar women, I always think about how I can help; how can this female entrepreneur get better access to finance and more opportunities to enter national and international markets with her services and goods, and what if she has better networks and business connections? My organization, the Women Entrepreneurs Finance Initiative (We-Fi) an international partnership of many multilateral, public and private sector actors is tackling those questions by addressing the financial and non-financial barriers women entrepreneurs face.
Research has shown that the effects of women entrepreneurs on their communities are exponentially large; not only in social-economic terms but also as change agents and inspirators. Success begets success.
Still, the wings of many women entrepreneurs are clipped. One of the biggest challenges that women entrepreneurs face is access to capital: 70 percent of women-owned small and medium-sized businesses in developing countries are shut out by financial institutions and cannot access funding. This adds up to a global credit deficit of nearly $1.5 trillion. It is nearly impossible to start or sustain a business without access to capital.
Another impediment is lack of access to markets. Women entrepreneurs find it much harder than men to access markets to sell their goods and services. Women own 30 percent of registered businesses worldwide but large corporations source just one percent of their inputs from women-owned businesses.
For example, Pham Thi Hoa from Vietnam, who is part of a widening array of We-Fi-supported entrepreneurs around the world, has a growing wood furniture business. She says that she did not experience legal or regulatory barriers to start or initially grow her business. She does, however, feel hampered in networking and accessing business opportunities as most business decisions in her country are decided ‘by men over a stiff drink’. These are circles she is excluded from.
Studies show that men have more social connections that enable them to access business opportunities, information, and contacts than do women. In this way, women are disadvantaged from the start.
So how can we turn this situation around? Experience has taught us that that a holistic approach is necessary; one that helps women in developing countries gain increased access to the finance, markets, technology and networks necessary to start and grow a business and contribute to inclusive economic growth. So in the case of Pham and her wood furniture firm, we help with one of our implementing partners, the International Finance Corporation (the private sector arm of the World Bank Group), with a tailor-made banking program which does not only provide financing to women entrepreneurs but also mentoring, business development support and sector-specific knowledge.
At the Women’s Forum in Singapore this week, among a phalanx of distinguished women leaders, we will discuss how we can include women-led small and medium-sized enterprises in large public and private organizations and thereby create more equitable economic growth. Naturally, this is not only a women’s issue but something men and especially male business leaders need to be engaged in, too.
Asia is home to many fast-growing companies which could have an enormous impact on women entrepreneurs by making their supply chains more inclusive. For example, already over 50% of all online shops on Alibaba, China’s premier e-commerce platform, are owned by women. In comparison, only 17.5% of small enterprises in China has a female top manager, and the figure globally stands at 18.6%. As the Alibaba example shows, digital technologies can empower women and increase market access. The internet lowers entry costs for SMEs to trade online and brings female producers and traders closer to the markets.
At We-Fi, through our implementing multilateral development banks, we help to expand networks by connecting women-owned businesses to qualified buyers of their goods and services. In 2018, the World Bank Group, one of our partners, launched a two-year global partnership with WEConnect International, a leading global network of 80 multinational corporations representing over $1 trillion in annual purchasing power committed to sourcing from women-owned businesses in emerging markets.
Governments have an important role to play in lowering formal barriers for women entrepreneurs, but they can also be drivers of change as buyers of goods and services. Whether companies are delivering health services or manufacturing a product, smaller private sector companies are involved as suppliers. Public procurement accounts for 15 to 30 per cent of GDP in countries. This creates market opportunities that serve as an engine for growth in SMEs, yet women-owned enterprises are severely underrepresented as suppliers. The UN’s High-Level Panel on Women’s Economic Empowerment estimated in 2016 that a 1 percent increase in the share of procurement would result in 60-70 billion dollars in revenues for women-owned businesses.
At We-Fi, we are looking for solutions that bring about such double-wins for women entrepreneurs and economies. We want to create new and innovative opportunities for women-owned businesses to thrive and grow. Perhaps at a future Women’s Forum Asia, we can convey a panel of female and male business leaders about how together we can leverage procurement as a powerful tool for economic opportunities for women.
(*) Wendy Teleki heads the secretariat of the Women Entrepreneurs Finance Initiative (We-Fi) which is a collaborative partnership among 14 governments, six multilateral development banks (MDBs), and other public and private sector stakeholders, hosted by the World Bank Group. It seeks to address financial and non-financial constraints faced by women-owned/led small and medium enterprises in developing countries. We-Fi has allocated close to US$250 million over the past two years and programs will benefit 115,000 women-owned SMEs in over 50 countries.