On the occasion of the G-20 Summit, the World Bank Group yesterday announced the creation of an innovative new facility that aims to enable more than US$1 billion to advance women’s entrepreneurship and help them gain increased access to finance, markets, and networks necessary to start businesses in developing countries.
“Women’s economic empowerment is critical to achieving the inclusive economic growth required to end extreme poverty, which is why it has been such a longstanding priority for us,” World Bank Group President Jim Yong Kim, said.
“This new facility offers an unprecedented opportunity to harness both the public and private sectors to open new doors for women entrepreneurs and women-owned firms in developing countries,” he added.
According to a World Bank press release, the initiative received strong donor support from Australia, Canada, China, Denmark, Germany, Japan, Netherlands, Norway, Saudi Arabia, South Korea, United Arab Emirates, United Kingdom, and the United States, enabling the Bank Group to take the facility from concept to board endorsement.
“It is remarkable to see how quickly the international community has mobilized support for this new initiative, which has exceeded our target by nearly $100 million,” Kim said.
He added, “This demonstrates not only the importance of increasing women’s economic empowerment, but it scales up our efforts to help women open and grow businesses, for which we’re grateful to President Donald Trump, Chancellor Merkel, and Ivanka Trump for being such strong champions of this facility and the broader cause of women’s entrepreneurship.”
Kim said the initiative will also support public sector interventions to strengthen the enabling environment and enhance market opportunities for women-owned businesses.
“We will be using We-Fi which differs from the current effort because it represents a platform to align country-level reforms and private investment, build on and implement lessons learned about what works for starting and growing female owned/led firms, collect key data from the public and private sector on female entrepreneurs and their firms, and support innovation and learning for results at scale,” he said.
He said women entrepreneurs face numerous challenges to financing, owning, and growing a business, including limited access to capital and technology, a lack of networks and knowledge resources, and legal and policy obstacles to business ownership and development.
Kim said they will work to break down barriers to financial access and provide complementary services such as capacity building, access to networks and mentors, and opportunities to link with domestic and global markets as well as improve the business environment for women-owned or women-led SMEs in supply chains across the developing world.
One of the major constraints, he said, that is limiting female-led enterprises is access to financial services and nearly 70 percent of women-owned SMEs in developing countries are either shut out by financial institutions or are unable to receive financial services on adequate terms to meet their needs.
He said it is estimated that women-owned entities represent just over 30 percent of formal, registered businesses worldwide. Yet, seventy percent of women-owned SMEs in developing countries are either shut out by financial institutions or are unable to receive financial services on adequate terms to meet their needs and as a result, nearly US$300 billion annual credit deficit to formal women-owned SMEs.
At the same time, the World Bank President disclosed that lack of networks, knowledge, and links to high-value markets further constrain female entrepreneurship.
Moreover, unfavorable business and regulatory environments are among the barriers that still impede women entrepreneurs from accessing finance. “The fact that many emerging markets financial institutions have yet to develop a sustainable strategy to address this significant market gap represents a missed opportunity and constrains private sector development,” Kim said.