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FEATURE STORYMarch 27, 2024

WE Finance Code: Data-Driven Transformation to Close the Gender Finance Gap

CSW68 side event at the United Nations featuring the WE Finance Code. Photo credit: Suzanne Perez / World Bank

CSW68 side event at the United Nations featuring the WE Finance Code. Photo credit: Suzanne Perez / World Bank

A transformation at the fundamentals of finance unfolded last week in the United Nations headquarters, as women from across the globe embraced WE Finance Code (the Code), a new initiative to close the global $1.7 trillion financing gap for women entrepreneurs.

Organized by We-Fi and co-sponsored by the Permanent Representation of the Kingdom of the Netherlands to the United Nations, the meeting on the sidelines of the 68th annual Commission on the Status of Women (CSW68) drew about 150 people who wanted to learn more about the Code.

“It is all about dismantling unfair social norms and legal barriers,” said Bärbel Kofler, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development, Germany, and Chair of the We-Fi Governing Committee. She added that Germany, a We-Fi partner, continues to support the partnership, and she called on other countries to do the same.

What Is the Code?

Read the text of the WE Finance Code here.

The Code is a commitment by financial service providers, regulators, development banks, and other financial ecosystem players to work together to increase funding provided to women-led micro, small and medium enterprises (WMSMEs) around the world, so that they can grow and add value to the economy and their communities. 

The Dominican Republic and Indonesia were the first two countries to adopt the Code.

Dalma Hernández, Social Banking and Relationships Manager at the Dominican Banker’s Association, said she has already seen changes in her country, including the creation of a database of all women-led enterprises, and an agreement on how to define women-led SMEs. As a result, people in the banking sector are thinking more holistically and are more interested in accessing an underserved market, she said.

“We are already seeing new products for women,” Hernández said. “Banks are seeing (they have a role) in a more inclusive financial system.”

Worldwide Innovation in Finance

The Code is being piloted during a period of global innovation in finance for women entrepreneurs, including the 2019 development of the United Kingdom’s Investing in Women Code, an inspiration for the global WE Finance Code.

The Netherlands is also leading in financial innovation. It adopted Code-V in December. With 64 signatories, it is a shared commitment to support women entrepreneurs, built on and inspired by what We-Fi is doing, said Ambassador Yoka M.G. Brandt, Permanent Representative of the Kingdom of the Netherlands to the United Nations in New York. Speaking at the event in New York, she said the Netherlands is an innovator, but it still has progress to make.

For instance, expected wealth accumulation of women is only 40 percent that of men, and the number of women CEOs in the Netherlands is less than the number of CEOs named Peter, she said. Adding to the Ambassador’s remarks, Chantal Korteweg, Director of Inclusive Banking, ABN AMRO, offered a glimpse of the implementation of Code-V, including forming a panel of women entrepreneurs as a feedback group to check whether suggestions and improvements actually help to solve their problems.

Framing the $5-6 Trillion Opportunity

Asya Akhlaque, Manager of the Global Investment Climate practice at the World Bank, shared new data drawn from the Bank’s unique data set that sheds light on how difficult a problem gender inequality in entrepreneurship is. Based on gender disaggregated data from 95 countries, she said, about one in four businesses are owned by women; about 38% of sole proprietors are women. But, between 2006 and 2022, the period covered by the Bank’s data, “we didn’t see much movement.” She noted that the Bank has incorporated the gender disaggregated data thanks to We-Fi support.

The high interest in adopting the Code speaks to the awareness of governments, banks and other financial actors of the opportunity for growth that women entrepreneurs represent. There are an estimated 400 million women entrepreneurs worldwide, but they face a persistent barrier to growth: A finance system largely established for men.

Collateral is a commonly cited example of the way gender inequality plays out in finance, to the detriment of women entrepreneurs and economic development. Though many banks lend to businesses based on collateral, women typically own less property than men. In aggregate, policies such as this create a huge financing shortfall for women-owned businesses.

If women entrepreneurs had equal access to finance, the growth of the companies could generate a $5-6 trillion expansion in global GDP. It would also unlock innovation rooted in women’s active role in communities, including in the green and care economies.

How the WE Finance Code Works

The WE Finance Code takes a systemic and unprecedented approach to the problem. It focuses on activating a community of leaders, on collecting and using gender disaggregated data, and sharing knowledge within that global community about how to adopt flexible policies and products in response to data.

The Code incorporates new awareness of how important a holistic approach is.

“We will try together to dismantle the patriarchy … and we will push forward,” said Sima Sami Bahous, Executive Director, UN Women, noting that for her organization, joining the WE Finance Code is a step to push forward to a more equitable future for women. “As UN Women, we are proud to join the Code to show our commitment to partner with stakeholders to increase access to finance for women entrepreneurs.”

The stakes are even higher as artificial intelligence is growing quickly, said Mary Ellen Iskenderian, CEO, Women’s World Banking, a financial industry association instrumental in designing the Code. She described a visit to two fintechs that were consistently underserving women.

“There was so much money being left on the table, because they weren’t lending to creditworthy women,” she said. The fintechs weren’t deliberately leaving women to the side; rather, their algorithms were basing decisions too heavily on data drawn from the experiences of male entrepreneurs. Worldwide, she pointed out, women are 20 percent less likely to have smartphones, so if algorithms are trained on smartphone data, the algorithms are flawed from the beginning.

Implementation Stories: Data Means Power

Advocates for women who are also experts in data and finance were aware of the power of the change unfolding in the room.

Eseta Nadakuitavuki, Permanent Secretary for the Ministry of Women, Children and Social Protection, Fiji, said she will return to Fiji as a champion of the Code, ready to help people in her country understand the importance of the discipline of collecting data. With a nod to her long career and knowledge of women’s resilience, she said, “Whatever situation comes makes us a stronger person.”

Other panelists spoke of how being armed with data has enabled them to overcome challenges.

“The devils are in the data,” said Lenny N. Rosalin, Deputy Minister on Gender Equality, Ministry of Women Empowerment and Child Protection of Indonesia, playing off the saying: “The devil is in the details,” but turning the saying on its head.

 “If you don’t have the data, the devils will destroy you.”

The Code is instrumental. It shows you where the path is, but it also takes your hand to help you build the [sex-] disaggregated data.
H.E. Hanan Ahil
H.E. Hanan Ahli
Managing Director of the Federal Competitiveness and Statistics Centre (FCSC) of the United Arab Emirates

Toward a Gender Equal Future

Hana Brixi, World Bank Global Director for Gender, offered closing thoughts. She noted the Bank will soon issue a scorecard including sex-disaggregated data on 20 indicators. The WE Finance Code, she said, is an example of the World Bank Group’s upcoming gender strategy in action, with its strong emphasis on innovation, finance and collective action. “Congratulations to many financial institutions already participating and many millions of women entrepreneurs who will benefit,” she said.


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