Opinion: The business case for investing in women entrepreneurs

The coronavirus pandemic risks losing decades of progress on women’s economic justice and rights. Despite the unprecedented impact of COVID-19, this is not the first time that many women entrepreneurs have faced a crisis. Many have coped with civil war, the Ebola epidemic, or natural disasters.

Women entrepreneurs are resilient and are already identifying ways to adapt and diversify their businesses to get through the pandemic. COVID-19 creates an even greater urgency for investing in women entrepreneurs.

The data shows that there are multiple reasons why more investment in women entrepreneurs is needed.

Firstly, women mean business. This is particularly the case in low-income countries, or LICs, where 37.8% of women intend to start a business within three years. Women are committed to their businesses: Participants in CARE’s Women in Enterprise program reinvested 39% of their income back into their business. And the proportion of women entrepreneurs using their savings for business purposes increased from 53% to 78% between 2017 and 2020.

Also, women stay in business. Across 59 countries, the average rate for business discontinuance is about 10% lower for women than for men. Women entrepreneurs are generally known for strong survival skills in business compared with men, which could be explained by a more carefully planned approach to business strategy.

Secondly, investing in LICs creates impact. Over 92% of women entrepreneurs said training helped improve their businesses. Our data shows that groups and networks build women's agency, providing them with increased access to finance, knowledge, and skills. There were multiple examples of community impact during the program, such as in Côte d’Ivoire, where one women’s group built a community health center with their group savings.

Thirdly, women represent the biggest opportunity for economic growth. Research finds that, in a full-potential scenario in which women play an identical role in labor markets with men, as much as $28 trillion could be added to annual global GDP in 2025.

Women are also good customers. Data from banks serving 22 million customers in 18 countries shows that women outpace men in overall growth in volume of credit — 15% versus 10% — and volume of deposits — 17% versus 14%. Women are strong savers and prudent borrowers, with a lower rate of nonperforming loans than men — 2.9% versus 4.2%.

And lastly, entrepreneurship is empowering. Running a business and having an income helped women gain a stronger position at home and in the community. Data shows that women’s achievements make them feel empowered: having more income, paying the bills without problems, being able to make decisions, and being respected by family and community members. We also saw a 33% increase in women taking up leadership positions within their communities.

The case for investing in women entrepreneurs is even stronger when considering the multitude of barriers they face. These include but are not limited to harmful gender norms, limited access to finance, a lack of business assets, unpaid care, a lack of education and skills, an inaccessible business environment, and a pandemic resulting in an economic crash.

As we navigate through the pandemic, we call on decision-makers to support women-led micro and small enterprises as an explicit part of international response. And more immediately, this should include providing immediate financial support and ensuring women’s voice, co-leadership, and balanced representation in decision-making bodies and processes.

With the right support, women entrepreneurs living in poverty can contribute to community resilience and economic recovery during and after this crisis.

Here are some specific recommendations:

● Include low-income communities. When funding or supporting women's enterprise development, ensure this includes women in LICs. Enterprise development in these communities provides a pathway to ending extreme poverty, advances gender equality, and improves women's economic justice and rights.

● Invest in skills development. Support women with effective business, management, and life skills training to help them advance their businesses and provide a valuable contribution to their families, communities, and economies.

● Listen to women. Strengthen women’s visibility, collective voice, and representation, such as by supporting role models. Take a participatory approach with women in the development of programming. Invest in redressing harmful social norms that restrict women and in peer support — women’s groups and networks that can help strengthen women's agency and increase access to finance, knowledge, and skills.

● Improve financial inclusion. Develop gender-specific financial products and services — for example, by removing collateral requirements or offering alternative solutions, such as loans based on savings group transactions and activities.

● Engage men and boys. Men are critical partners in increasing women's agency by sharing unpaid care responsibilities, supporting enterprise development, and increasing women's access to markets, products, and services.

● Improve the business environment. Work together with local, regional, and national governments to allocate funding, increase participation in decision-making, and improve accessibility for women in business registration processes and markets, among others.

● Support the business case and knowledge base. Gather evidence on value generation and business development and collect sex- and age-disaggregated data on enterprise development.

We will not wait

The women whom we work with across the globe have shown themselves to be astute in business, with their success meaning they are able to support their families and even elevate whole communities out of poverty.

Before the pandemic, the World Economic Forum predicted that it would take 257 years before there was economic parity between men and women. This will no doubt be pushed even further back as a result of the crisis.

We cannot and will not wait. More investment in women entrepreneurs is urgently needed, now more than ever.