Six lessons on what works in supporting women-owned businesses
Throughout the world, economic opportunities are less available to women than to men. Not only is the worldwide female labor force participation rate lower than it is for men, working women earn 10 to 30 percent less than their male counterparts. The share of girls who enroll and complete primary school remains less than boys'. Women hold only 22 percent of national parliament seats around the world. In a recent World Bank study, 90 percent of 173 surveyed countries had at least one law (e.g., prohibitions on women taking up certain jobs) preventing women from taking full advantage of economic opportunities.
While gender equality has improved in some respects, minimizing gender-based violence, early and forced marriages, and property-rights violations will take more work. The full realization of women’s economic potential is essential for achieving the ambitious United Nations Sustainable Development Goals, which will drive the global development agenda until 2030.
UN Secretary General Ban Ki-moon recently announced the first-ever High-Level Panel for Women’s Economic Empowerment to provide “action-oriented recommendations on how to improve economic outcomes for women” through expert consultations and civil-society engagement. The panel has identified “fostering female entrepreneurship and enhancing the productivity of women-owned enterprises” as one of six priorities for issues like legal barriers, the care economy, gender pay gaps, the informal economy, and financial and digital inclusion.
To support the panel with evidence-based input, the Urban Institute, Canada’s International Development Research Centre, and WEConnect International convened leading researchers and practitioners from development organizations, nonprofits, and the private sector to explore ways of supporting female entrepreneurship and improving the productivity of women-owned businesses. The group highlighted the following priorities:
- We need more evidence on effective strategies to grow women-owned businesses sustainably. The evidence for what works in financing, training, and mentoring female entrepreneurs is rising but remains limited in understanding how women-owned businesses can grow. Well-designed interventions that address gender-specific constraints can enhance women’s skills and capabilities. But single-sector interventions have limited impact, as women face multiple and intertwined constraints. For instance, improved access to credit without skills training will have limited positive impact.
- Stakeholders from across the value chain should be included in conversations about women’s empowerment. Women entrepreneurs do not operate in a vacuum, so while greater trade could support women-owned businesses in principle, legal barriers still hinder market entry and business growth in practice. Public procurement systems disadvantage small and women-owned businesses, and more transparent procurement policies and actions could help level the playing field.
- The private sector is more interested than ever in promoting women’s economic inclusion. Many players in the private sector are committed to working with women-owned businesses. There is also increasing knowledge on the successes, failures, and practical challenges of doing this, which is being used to improve the design of new programs. We know that better preparing female entrepreneurs through targeted training programs improves their capacity to run more competitive businesses.
- Own-account workers, who are self-employed and lack continuous employment, face extreme vulnerabilities and lack capacity to avail business opportunities. Knowledge on what works for what type and size of enterprises is limited, and only a handful of women’s organizations and market facilitators such as India’s Self-Employed Women’s Association are equipped to help bridge this gap. As reconfirmed by a recent Urban Institute study focused on four Pakistani cities, women workers in the urban informal economy are particularly challenged and have limited access to public services and receive little support to foster sustainable livelihoods.
- Governments need to collect more and better data, including labor force and enterprise surveys. The lack of gender disaggregated data poses a significant challenge. Existing datasets focusing on women entrepreneurs, such as the Global Entrepreneurship Monitor, are growing rapidly, but coverage in low- and middle-income countries remains limited. Recent commitments by the Bill & Melinda Gates Foundation and other donors to support data collection will help make women workers more visible, facilitating greater public and private procurement from smaller women-owned enterprises.
- The discussion on female entrepreneurship should include the broader discourse on gender inequality. Many of the major constraints women face in business are embedded within more general gender constraints, such as access to assets for collateral, gender-based violence, and lack of safe public transit. Women’s choice between wage employment and starting their own business is directly informed by care responsibilities, which depend on social and cultural norms.
A trainee works at the Women's Development Center in Cambodia, a project focused on reducing poverty through increased access to services that support women's social and economic empowerment. Photo by Pring Samrang/Asian Development Bank/Flickr Creative Commons