Striking Gold with Women Entrepreneurs

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Women don’t know how to manage Small and Medium-Sized Enterprises (SMEs).

Women can only run retail or services businesses.
Women-led businesses don’t create jobs.
Women don’t really want to grow their businesses – it’s just a hobby for them.

How many times have we heard these and similar sentiments?

There are indeed far fewer businesses led by women compared to men; female-led businesses do tend to be smaller and less profitable; and they do concentrate in the low-productivity retail and services sectors. Yet it is a vast oversimplification to underestimate the already-strong and potentially even greater economic contribution of women entrepreneurs. Even worse is the assumption that the underperformance of women-led enterprises is always something done by choice, or due to something inherently female.

A recent World Bank research report on supporting growth-oriented women entrepreneurs adds nuance to the dispiriting facts above. It focuses exclusively on growth-oriented women entrepreneurs and identifies the crucial elements needed to effectively support them. What merits the focus on growth entrepreneurs? Simply put: their ability to generate jobs, enhance national productivity, and stimulate socioeconomic transformation is greater. What merits the focus, specifically, on women growth entrepreneurs? Simply put: their immense untapped potential. There are an estimated 812 million women in the developing world (according to well-researched projections) with the potential to contribute more fully to national economies as workers and job creators, but who are unable to do so.

We find that firms led by women and men survive at the same rate, women-led firms employ more women as a share of their workforce, and far more dramatically, women and men lead equally productive firms . . . as long as the firms operate in the same sectors.

Unraveling these trends allows us to identify the underlying obstacles that result in both the underperformance of women-led enterprises and their comparable performance in specific sectors. We find that women growth entrepreneurs are held back by a complex intersection of factors – driven both by individual preferences and external constraints. These include gaps in management skills and knowledge, limited financial literacy, lack of access to finance, lack of mentoring, over-representation in low-productivity and low-growth sectors, restricted access to networks and supply chains, and legal and regulatory obstacles. While we now know more about what holds women entrepreneurs back, the support programs by the World Bank and others do not always adequately reflect this knowledge in program design and delivery. 

What can we, through the World Bank, do to ensure that our programs have greater impact, are more relevant to women growth entrepreneurs, and demonstrate a replicable model for other development actors and client governments?

The answer: We should start by “gendering” our programs.

In the case of business education for example, “gendering” means more than just limiting program participation to women. Program content must explicitly speak to gender-related challenges like interacting and negotiating with buyers and suppliers in male-dominated markets, navigating team dynamics in a culture where women are not considered “leaders,” and managing intra-household dynamics and mobility constraints. In a related concern, program delivery must also be gender-sensitive: That includes offering in-class examples of successful women-led businesses, inviting successful women as guest speakers, and addressing the patriarchal attitudes of the people implementing the program. 

Moreover, diversification and sector-switching should be an explicit focus of the program. This means a wide range of things – from transitioning into higher-value-added products, and entering into new supply chains and markets, to and initiating operations in more productive sectors. Facilitating access to new markets, supply chains and networks is a crucial part of this process. At a practical level, encouraging women growth entrepreneurs to envision medium- to long-term growth plans for their businesses helps identify the path that works best with their unique constraints.

In addition, capacity-building for women entrepreneurs should be combined with macro-level legal and regulatory reform aimed at improving gender equality, and leveraging such World Bank knowledge products as the annual “Women, Business and the Law” report. More than 200 million women, for example, still live in countries where they require a male guardian’s written consent to register their businesses: In this context, there is little incentive for women growth entrepreneurs to expand and formalize their enterprises, and there are limited pathways to accessing financial products through formal financial institutions. Of special interest is women’s limited access to traditional collateral like land – and how reforms like the establishment of movable collateral registries can facilitate their access to credit.

While these elements are essential for all women entrepreneurs, they have special relevance for women growth entrepreneurs – enterprising risk-takers whose businesses have demonstrated the potential to create jobs and contribute to national economic growth in a meaningful way.

There is an incredible opportunity for Bank programs to work at unleashing the unrealized potential of female entrepreneurs. One example is how the Trade and Competitiveness Global Practice is working closely with the Finance and Markets Global Practice on the womenx program, currently being piloted in Nigeria and Pakistan. The womenx program aims to provide a suite of solutions (mentoring, customized business education, supply-chain connections, business advisory services and networking) to female entrepreneurs, selected through a competitive process, who have been operating an SME for at least two years, and who employ at least two people, with a fully embedded M&E framework to track business performance over time. The hypothesis being tested is whether tackling the constraints identified in the Bank’s recent research report will yield real results.

There are many more still-unexplored options to design programs to address constraints that are specific to this target segment, rather than implementing various often-used but inadequately tested instruments in the hope that they will effectively address undiagnosed constraints. We need programs on the ground to generate further data, gather definitive evidence, and develop a much-needed World Bank Group approach toward supporting women growth entrepreneurs. It is going to take creativity, a willingness to test new approaches, and an operational commitment to improving outcomes for female entrepreneurs.



Qursum Qasim

Senior Private Sector Specialist

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