What are the latest trends in women’s entrepreneurship? What are some gaps and opportunities to support women entrepreneurs?
These are among the questions that the GEM 2020/21 Women's Entrepreneurship Report will answer.
The Women Entrepreneurs Finance Initiative (We-Fi), a partnership housed in the World Bank Group that mobilizes financing and non-financial support for women-led/owned businesses in developing countries, is among the organisations sponsoring this report to be released in early October.
Wendy Teleki, head of We-Fi, shared her thoughts on how to support women entrepreneurs and other related topics in the below Q and A interview.
Tell us about We-Fi?
At We-Fi, we believe in women as change agents, job creators and drivers of economic growth. We-Fi is the first multilateral fund specifically designed to unleash the potential of women entrepreneurs in developing economies. It was launched in 2017 at the G20 Hamburg Summit with an initial $355 million from 14 donor governments and works in partnership with multilateral development banks as Implementing Partners and private and public sector actors. We-Fi helps address a significant, but often ignored, constraint to growth and job creation—the wide global gender gap in starting and growing businesses.
Within three years of its launch in 2017, We-Fi has allocated nearly $300 million to programs that are expected to mobilize an additional $3 billion and benefit close to 130,000 women-led SMEs (WSMEs) in 60 countries worldwide.
The We-Fi program notes three thematic pillars to support women entrepreneurs: strengthening entrepreneurial ecosystems, expanding financial services and improving market access. Can you share some examples of best practices in these three areas since We-Fi aligned on these pillars?
Access to finance is a key pillar of We-Fi’s work. By working with intermediaries, We-Fi provides capital, risk mitigation and capacity building to expand women entrepreneurs’ access to debt, equity, venture capital and insurance. For example, blended funding by We-Fi and the Asian Development Bank is enabling 10 financial institutions in Sri Lanka to provide nearly $30 million in lending to women entrepreneurs. There is also a big emphasis on leveraging digital finance to increase lending to women-led SMEs. In Nigeria, the World Bank with We-Fi backing is supporting the development of a digital cashflow-based lending product that reduces the reliance on collateral and allows WSMEs to apply for loans on their phones.
In the pillar of market access, We-Fi enhances linkages between WSMEs, buyers and suppliers. For example, We-Fi is helping WSMEs expand market entry through e-commerce. The World Bank and We-Fi have partnered with international shipper UPS to train WSMEs in the Middle East and North Africa on leveraging e-commerce platforms to boost sales and adapt to consumer demand during the pandemic. Another example is in Honduras where IDB Invest (part of the Inter-American Development Bank Group) with We-Fi support is providing an incentive to a leading clothing manufacturer to increase its share of WSME suppliers and the volume of purchases from women-owned firms.
We-Fi is improving the entrepreneurial ecosystems by assisting governments in easing the regulatory constraints and gender biases that impede women entrepreneurs in running their businesses. For example, with We-Fi support, the World Bank’s program Women, Business and the Law has developed reform recommendations for 12 countries on removing barriers to women’s entrepreneurship. This work has led to Pakistan eliminating discriminatory business registration procedures and Jordan prohibiting gender-based discrimination in accessing finance. On the non-regulatory side, We-Fi builds the capacity of women entrepreneurs and connects them to mentors and networks so they can take their businesses to the next level. Due to the COVID-19 crisis, much of this work has focused on strengthening the resilience of women entrepreneurs by business resilience training and to help them with tailored advisory services such as digital skills.
From your vantage point, how has the pandemic impacted We-Fi's work and more broadly women entrepreneurs?
Women-led businesses in developing countries have been disproportionately impacted compared to businesses led by men. COVID-19 has exacerbated existing barriers that have long impeded women entrepreneurs, such as limited access to finance markets, and networks and unsupportive cultural and policy environments.
Women entrepreneurs tend to be concentrated in consumer-facing sectors which have been hard hit by social distancing rules and supply disruptions. In the early months of the pandemic when governments announced lockdown measures to control the spread of the virus, 90 percent of WSMEs reported a decrease in revenue. The pandemic has also heightened the gender divide at home; women entrepreneurs have absorbed the majority of household tasks. A survey of small business owners showed that 23 percent of women entrepreneurs spent six hours or more per day on domestic responsibilities.
The crisis has demanded a rapid response, and We-Fi’s Implementing Partners have answered with increased action to finance, building skills and leveling the playing field for women entrepreneurs. Many of our Implementing Partners started or intensified their online training and mentoring programs and have ramped up capacity-building to support women’s abilities to pivot their businesses such as online marketing and distribution skills and digital finance.
We-Fi’s last financing round of August 2020 and its upcoming round of funding of early 2021 is shaped by the circumstances of the pandemic to support the recovery of women-led businesses.
The We-Fi program uses a disciplined blended finance approach to catalyze We-Fi donor funds into high-impact investments that benefit women entrepreneurs. What types of investments have you seen deliver optimal impact for female entrepreneurs?
We-Fi’s Implementing Partners are utilizing performance-based incentives to advance private sector investments in WSMEs, ensuring high leverage and direct accountability. Performance incentives, which are linked to measurable targets and actions, are an effective, low-cost tool to boost financial institutions’ lending to the WSME segment. Implementing Partners are embedding them in credit lines provided to financial intermediaries or in risk sharing facilities to reward clients for channelling capital toward lending to women entrepreneurs. Implementing Partners are also applying incentives to risk sharing facilities with banks to help absorb a portion of the risks and encourage more assertive lending to women entrepreneurs. For example, over the last year, IFC has used $685,000 in performance-based incentives funded by We-Fi alongside $78 million in risk sharing facilities extended by IFC to banks in Nigeria, Kosovo and Myanmar.
What is the rationale for collaborating with GEM as a report sponsor of the GEM 2020/21 Women's Entrepreneurship Special Report?
GEM has over 22 years of data, across a range of geographies, and a core focus on entrepreneurship. This makes GEM a great organization for We-Fi to partner with. In addition, GEM’s focus on Women’s Entrepreneurship in the past has highlighted key issues and opportunities to support women’s entrepreneurs, and we are thrilled to see GEM that will include these issues in the reports going forward.
What insights are you looking forward to learning from the research?
At this moment it is critical is to get additional insights on how Women Entrepreneurs have been affected by the COVID-19 crisis and the specific constraints they are still facing. This information will help us design better solutions for women-led businesses going forward.