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Crowding-In: The Case for Changing Metrics Measuring Successful Financing of Women Entrepreneurs
1. Crowding-In:
The Case for Changing Metrics
Measuring Successful Financing
of Women Entrepreneurs
Finance for Development MOOC
2. Current State of Affairs…
Today, there are approximately 1B people in the world
living in poverty, subsisting on less than $1.25 per day
70-80% of the poor are women
The International Fund for Agricultural Development
reported that the number of women living in poverty has
increased disproportionately to the number of men over
the last two decades
The UN describes this ‘feminization’ of poverty as being a
direct result of the lack of economic opportunities and
resources available to women, particularly in developing
nations
4. Studies agree…
The International Center
for Research on Women
has shown that women
have a higher propensity
to use their earnings to
buy goods and services
that improve family
welfare, which
supports the development
of human capital, fueling
economic growth.
The International
Labour Office reported
that the socioeconomic
empowerment of
working mothers leads
to a direct improvement
in overall family welfare
and a decrease in child
labor.
5. The Economist reported that a 10% increase in borrowing by
woman for business (vs. male borrower) led to:
0
0.5
1
1.5
2
2.5
3
3.5
Increase in
Household
Spending
Increase in Female
Labor Supply
Woman-Owned
Man-Owned
6. Benefits to local communities and
beyond…
When women play an active role in civil society
and politics, governments tend to be more open,
responsive and transparent.
When women are at the negotiating table,
peace agreements are more durable.
Women often lead the way in managing and
adapting to the impacts of climate change.
(Source: USAid, “Empowering Women and Girls”)
7. More women in the
labor force can
significantly boost GDP
growth.
Increasing female
access to capital has a
tangible impact on per
capita income in
developing and
emerging markets.
Women business
owners are more likely
to mentor and teach
business skills to other
women.
(Source: Goldman Sachs, “Giving
Credit Where Credit is Due”)
8. Challenges faced by female
entrepreneurs…
Women-owned businesses in the developing world face barriers to
entry and business growth that include access to education and training,
legal, and cultural barriers.
SMEs account for more than 90% of enterprises in the global economy
and contribute 50-60% of employment in the world. Women-led SMEs
make up roughly 33% of this market, the majority of which are in
developing countries. Despite the growth and contribution of these
businesses, there is a tremendous gap in their access to finance.
IFC estimates that as many as 70% of women-owned SMEs in the formal
sector in developing countries are unserved or underserved by financial
institutions, resulting in a financing gap of approximately $285 billion.
10. Microfinance
Traditional Microfinance: Since
2008, IFC has committed more
than $785 million to women
through microfinance
institutions and commercial
banks. This includes a program
in Tanzania where the client
bank extended 174 credit lines.
This approach was then
replicated across eight
countries in Sub-Saharan
Africa.
Online Microfinance: Founded
in 2005, Kiva is a non-profit
organization with a mission to
connect people through
lending to alleviate poverty.
Leveraging the internet and a
network of microfinance
institutions on 5 continents,
Kiva lets individuals lend as
little as $25 to provide loans to
people without access to
traditional banking systems.
When choosing a borrower, the
first filter is gender, allowing
lenders to funnel their loans to
women.
11. Bank Support Facilities
Goldman Sachs and IFC have partnered to create the
first-ever global finance facility for women-owned
SMEs. The Women Entrepreneurs Opportunity
Facility, seeded by the Goldman Sachs Foundation
and IFC, is raising $600 million in capital through
investments from additional public and private co-
investors. The Facility extends lines of credit and
shares risk with local banks in emerging markets
enabling them to on-lend to women-owned SMEs.
12. Measure the socioeconomic benefits,
not just capital deployed…
Public and private financings
should include gender-
specific components in
structures to encourage an
increase in woman-owned
SMEs, in an effort to close the
substantial credit gap. The
social and economic returns
from these enterprises could
be tracked through initial
documentation and periodic
updates.
Data collected from financial
facilities provided to women
entrepreneurs using
innovative measurement
techniques can be shared
throughout the industry to
support change and use of
best practices.
13. Crowd-in private sector finance to empower women
entrepreneurs and you will crowd-in many of the
UN’s Sustainable Development Goals.
