It is nearly impossible to sustain a business without access to capital. Estimates suggest that women-owned entities represent just over thirty percent of formal, registered businesses worldwide. Yet, seventy percent of formal women-owned Small and Medium Enterprises (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. This results in a nearly $300 billion annual credit deficit to formal women-owned SMEs. Lack of networks, knowledge, and links to high value markets further constrain female entrepreneurship.
Women entrepreneurs play a critical role in economic development by boosting growth and creating jobs, particularly for the poorest forty percent of the population. Yet, 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.
Women-led enterprises tend to be concentrated in retail and service sectors where profits and growth opportunities are lower, and rarely in more profitable industries such as construction, electronics, or software.
Lack of networks and knowledge also constrain female entrepreneurship. 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, having fewer professional connections, role models, and mentorship opportunities, which can adversely affect their businesses in the long run.
To help unlock the potential of women entrepreneurs, the new Women Entrepreneurs Finance Initiative (We-Fi) will enable more than $1 billion in financing to improve access to capital, provide technical assistance, and invest in projects and programs that support women and women-led SMEs in World Bank Group client countries.
The goal of the facility is to leverage donor grant funding of over $325 million and mobilize more than $1 billion in international financial institution and commercial financing, by working with financial intermediaries, funds, and other market actors, potentially through similar models as the International Finance Corporation’s (IFC) Women Entrepreneurs Opportunity Facility/Banking on Women program.
The We-Fi facility 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 improving the business environment for women-owned or women-led SMEs across the developing world.
We-Fi builds on the success of past and current programs of the World Bank Group and other partners, while reaching into new areas, supporting women-led businesses at earlier stages of growth, and unlocking access to equity and insurance services. At the same time, the facility aims to support complementary public sector interventions that strengthen the enabling environment and enhance market opportunities for women entrepreneurs.
We-Fi fills a gap where there was no significant fund or facility committed to a holistic public and private sector approach to addressing the constraints faced by women entrepreneurs.
We-Fi provides dedicated resources to foster innovation and new approaches to removing these constraints for women entrepreneurs. It will also help elevate the issue to spur action by governments and private sector.
We-Fi is a Financial Intermediary Fund (FIF) housed at the World Bank, drawing on the Bank’s strong track record in designing and managing such Funds to ensure best practice in terms of governance and efficiency.
The Bank acts as the Trustee for the facility, drawing on its financial platform and extensive experience with the provision of such services for other FIFs; it would also serve as the Secretariat. Multilateral development Banks, including the World Bank and IFC, are eligible as implementing partners to propose private and public sector activities to be supported by the facility. A Governing Committee, composed of the founding contributors to the Facility will make allocation decisions.
The United States and Germany invited the Bank Group to establish the facility. We-Fi is a collaboration among the governments of Australia, Canada, China, Denmark, Germany, Japan, Netherlands, Norway, Saudi Arabia, South Korea, United Arab Emirates, United Kingdom, and the United States.
1) What is the objective of the Women Entrepreneurs Finance Initiative (We-Fi) and why is it needed? Women entrepreneurs play a critical role in economic development by boosting growth and creating jobs, particularly for the poorest 40 percent of the population. Yet, women 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.
The Women Entrepreneurs Finance Initiative (We-Fi) seeks to address barriers to financial access and to provide complementary services that address constraints at multiple levels from legal reforms to skills enhancements and market access for women-owned and women-led small and medium enterprises (SMEs), which are key sources of potential job growth in developing countries.
2) What sort of constraints do women entrepreneurs face? One of the major constraints limiting female-led enterprises is access to financial services. 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.
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. This results in a nearly $300 billion annual credit deficit to formal women-owned SMEs.
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.
3) What is the size of We-Fi? This is the first major global fund or facility dedicated to a holistic public and private approach to eliminating barriers to women’s economic empowerment. We-Fi will enable more than US$1 billion of financing to improve access to capital, provide technical assistance, and invest in other projects and programs that support women and women-led SMEs in World Bank Group client countries. We-Fi originally targeted $200 million in grants from donors, with an additional $800 million in IFI and commercial financing by working with financial intermediaries, funds, and other market actors. However, this target will be significantly exceeded at the time of the launch event on July 8, 2017. For more info: http://www.worldbank.org/en/programs/women-entrepreneurs
4) What would it finance? Given the need for both public and private sector interventions to address the constraints women entrepreneurs face, We-Fi will support complementary approaches through both the public and private sector. We-Fi will also enable innovation around new financial and non-financial services for women entrepreneurs in emerging markets.
We-Fi would not only provide dedicated resources to foster innovation and new approaches to removing these constraints for women entrepreneurs, but also help to elevate the issue to spur action by governments and private sector.
5) How will it be governed? We-Fi will be established and managed as a Financial Intermediary Fund (FIF) at the World Bank, drawing on the World Bank’s strong track record in designing and managing Funds to ensure best practice in terms of governance and efficiency. A Governing Committee would set the Facility's operational policies, eligibility and resource allocation criteria, approve allocations to Implementing Partners, provide regular monitoring, and review evaluations. Those who contribute above a threshold to be determined by the founding contributors, would occupy voting seats on the Committee.
6) When will it be operational? The World Bank Group’s Board of Executive Directors, which represents 189 member countries, approved the facility last Thursday. We’re aiming to get it operational as quickly as possible. The first meeting of the Governing Committee would be in October 2017.
7) What is the role of the World Bank Group? The Bank will be the Trustee for the Facility, drawing on its financial platform and extensive experience with the provision of such services for other FIFs; it would also serve as the Secretariat. Leveraging the extensive sectoral and gender expertise of the World Bank Group, both the Bank and IFC would be Implementing Partners, along with other multilateral development banks. We-Fi is well-aligned with the WBG’s ambitious gender strategy and can create meaningful opportunities for female entrepreneurs and female-led firms.
8) What is the relationship of the Facility with the G20? The U.S. Administration initiated the idea for The Facility, and they serve as founding members along with other donor countries. The facility will be announced by the founding members during the G20 Summit and is expected to be endorsed by G20 Leaders. However, its operations and governance would be fully independent from the G20.
The World Bank Group works with public- and private-sector clients to close gaps between males and females globally for lasting impact in tackling poverty and driving sustainable economic growth that benefits all. In the last two decades, the world has narrowed the divide between men and women, especially in primary education and health. Yet critical gaps remain.
Learn more about the World Bank Group’s work on gender.
World Bank Group Gender Equality Strategy
Gender equality is central to the World Bank Group’s goals of ending extreme poverty and boosting shared prosperity. No society can develop sustainably without transforming the distribution of opportunities, resources and choices for males and females so that they have equal power to shape their own lives and contribute to their families, communities, and countries.
The World Bank Group has deep experience working on gender equality and women’s economic empowerment in countries around the world. This includes:
2012 World Development Report on Gender Equality and Development
The 2012 World Development Report on Gender Equality and Development finds that women's lives around the world have improved dramatically, but gaps remain in many areas. The report examines progress to date, and recommends policy actions
Voice and Agency : Empowering Women and Girls for Shared Prosperity
This report identifies promising opportunities and entry points for lasting transformation, such as interventions that reach across sectors and include life-skills training, sexual and reproductive health education, conditional cash transfers, and mentoring.
Women, Business and the Law
Women, Business and the Law is a World Bank Group product that collects data on laws and regulations constraining women's entrepreneurship and employment.
Investing in Women
Investing in Women: New Evidence for the Business Case highlights how equal opportunities for women and men not only benefit the private sector, but also families, communities, and local economies.
EDGE Assess Certification for Gender Equality
Economic Dividends for Gender Equality (EDGE) is the leading global standard for gender equality in the workplace. The World Bank Group headquarters in Washington, DC, has earned the first level of EDGE certification, EDGE Assess, and is the first location of an international financial institution to attain this certification.
Banking on Women
Banking on Women works with an extensive network of financial institutions to increase access to finance for women entrepreneurs – especially those leading small-and-medium-sized businesses. As of June 2017, Banking on Women has invested, mobilized investment, and provided advisory expertise to 55 financial institutions in 36 countries, with a portfolio totaling US $1.44 billion. Banking on Women is strengthened by partnerships like the $600 million Women Entrepreneurs Opportunity Facility with Goldman Sachs and the US Overseas Private Investment Corporation.
Gender Innovation Lab
Gender Innovation Lab (GIL) conducts impact evaluations in four key areas including agriculture, private sector development, land & assets and youth employment, as well as a handful of impact evaluations that explore new areas of research or provide specific support to an ongoing project. The lab is currently working on more than 50 impact evaluations across Sub-Saharan Africa.
Making A Difference
Building up women-owned businesses in the Dominican Republic
Bertha Souri and her sister made all their daughters’ dresses at home. They received so many compliments about their home-sewn dresses that they decided to try selling to a local store. Like other women entrepreneurs in the Dominican Republic and around the world, the Souris had difficulty securing the loans to fund their business. Backed by a World Bank Group program, the bank extended the sisters a loan to order their first shipment of imported fabric. The loan was critical, enabling the company to work with the quality fabrics they needed to stay competitive with larger manufacturers.
Getting to yes in India
Dr. Seema Garg quit her well-paying job and used her life savings to launch SB Hospital and Healthcare Private Limited, a company that designs, builds and renovates hospitals. In 2014, she won a large contract for a 150-bed hospital in Delhi. In order to get the funds needed to get the project off the ground, Seema approached several banks only to hear that they were wary of extending credit to a single woman. Then, YES Bank stepped forward with the financing. The World Bank Group provided YES Bank with US$50 million to boost its efforts to lend to women such as Seema and unleash the potential of women entrepreneurs. Read More.
Increasing monthly profits in Ethiopia
Serkalem Belay owns an industrial machinery workshop. In Serkalem’s workshop, old vehicle parts are refurbished for re-sale. Under the Women’s Entrepreneurship Development Program (WEDP), Serkalem applied for a loan from Wasasa, one of the program’s microfinance institutions. In three months, Serkalem’s workshop has grown from six to twelve full-time employees, and her monthly profits have increased by 50%.
Knocking down barriers in Pakistan and Nigeria
Thanks to their business acumen and determination, Ishaq and Alim have become successful entrepreneurs. But their path wasn’t easy. Pakistan is a tough place for women entrepreneurs; in 2012, only 5% of the entrepreneurs in the country were women. Among other social and economic challenges, lower rates of education, limited access to finance, and limited exposure to professional networks represent key obstacles for women entrepreneurs in the country. To help women like Ishaq and Alim overcome these issues and launch their businesses, the World Bank Group launched WomenX. A key component of the program is a four-month business training designed to teach women core business skills, such as accounting, marketing, operations management, and basics of legal affairs. WomenX has launched similar initiatives to support 300 women in Lahore, 50 in Peshawar, 100 in smaller districts across Punjab, and 400 in Nigeria.
Getting technical in Albania
Erlisa Zherka is a 22-year-old finance math student from Kosovo. She recently landed a full-time contract with a US-based startup through the Women in Online Work (WoW) program, a World Bank pilot program funded by the Korea Green Growth Trust Fund and implemented by Danish firm CodersTrust and that aims to train beneficiaries on technical (information technology) and soft skills, which are in high demand.
A sample of WBG women’s economic empowerment projects around the world
The World Bank
India: A decade of World Bank support to the state of Bihar has transformed the lives of rural women who previously struggled to access credit from formal sources. More than 7,000 participated in groups self-help groups that saved nearly $64 million and leveraged $511 million from the formal financial sector. The project paved the way for a national women’s economic empowerment initiative in 13 of India’s poorest states. Delegations from more than 30 countries have visited the project, interested in replicating its success.
Nicaragua: 458,557 people, more than half women, benefited from a project to strengthen property rights through improved land titling and registry services from 2012 to 2015. More than 42,000 families have received legal documents for their property.
Pakistan: From 2009 to 2016, 359,887 new borrowers accessed micro-credit loans through the Pakistan Poverty Alleviation Fund. Women made up 78 percent of borrowers.
Senegal: 870,902 hectares of forests in Senegal were being sustainably managed in 2014, up from 400,000 hectares in 2008. The project led to an increase in charcoal-making revenue going to villages from 6 percent in 2009 to 52 percent in 2013, and also helped increase the share of income going to women from 3 percent in 2009 to 12 percent in 2013.
Solomon Islands: From 2010 to 2016, construction of community infrastructure employed 12,000 young people from vulnerable communities and created more than 664,000 days of employment in the Solomon Islands. 60 percent of the people employed were women and 53 percent were between the ages of 16 and 29.
Afghanistan: The World Bank and the Afghanistan Reconstruction Trust Fund support rural enterprise groups and small to medium-sized enterprises through the Afghanistan Rural Enterprise Development Program. The program helps strengthen market linkages and value chains for rural enterprises across Afghanistan by providing technical support to over 1,400 enterprise groups (63 percent female) and 500 small and medium-sized businesses (14 percent female), selected for their potential as key drivers of rural employment and income generation. The project also supports the Microfinance Investment Support Facility for Afghanistan, which provides microfinance to about 2,500 customers, 35% of which are women.
India: With 400 million people cut off from the electricity grid, IFC helped build a market for off-grid lighting products under its Lighting Asia/India program. Women entrepreneurs helped built a network of “solar sisters” to distribute low-cost solar products to thousands of people in remote areas.
Turkey: IFC partnered with the country’s largest retailer, Boyner Group, to help train women-owned suppliers in financial management—boosting their ability to obtain finance and improve business performance.
West Bank/Gaza: The IFC and the Bank of Palestine launched the Felestineya Mini-MBA program, an initiative to boost access to finance for female entrepreneurs and spur economic growth by promoting women-led businesses. Forty women graduated from the first cohort.
India: The IFC partnered with the with mobile-payments company FreeCharge to encourage more women entrepreneurs to sell their products on online retailer Snapdeal, improving their financial access through technology and digital payments.