The Women Entrepreneurs Finance Initiative, or We-Fi, announced its first funding allocations yesterday at the World Bank Spring Meetings, dedicating $120 million to programs that support women entrepreneurs in developing countries. Inaccurately characterized as a pet project of the Trump administration, We-Fi’s rapid progress and inclusive approach merit increased investment from donors ready to champion women globally.
Announced at the July 2017 Hamburg G-20 Summit with $340 million in initial pledges from 13 donor countries, We-Fi is the first significant fund to focus on both financing for and systemic barriers to women’s entrepreneurship. The multilateral fund aims to mobilize at least $1 billion in direct and leveraged financing for women-led and women-owned businesses in developing countries by 2022.
Why We-Fi: Women make money move
The Women Entrepreneurs Finance Initiative, or We-Fi, is to hand out $120 million in funding split between the World Bank, Islamic Development Bank, and Asian Development Bank to support work on women's economic empowerment. At the World Bank Spring Meetings, gender experts came forward with suggestions for how the fund can best operate in the sector.
We-Fi’s success cannot come soon enough. Recent World Economic Forum analysis found that if current trends persist, it will take 217 years to close the economic gap between men and women. And should human rights arguments not carry weight with governments, it will cost them dearly. The McKinsey Global Institute estimates that if women played as equal a role in the economy as men, it would add $28 trillion to global annual GDP in 2025.
What drives this loss of economic opportunity? A cumulative credit gap of $1.5 trillion for women-owned small and medium-sized businesses in developing countries. This manifests practically when women entrepreneurs cannot prove collateral without the legal right to own property, open a bank account without the permission of a male family member, or even access financing at all due to their gender. Far from the policies of repressive regimes alone, last month’s Women, Business and the Law 2018 report found that more than one-third of the world’s economies limit women’s agency and freedom of movement.
From financing to legal barriers, We-Fi takes on the full range of obstacles facing women entrepreneurs. They also go a step further, mobilizing governments to develop programs that help women entrepreneurs access training and break into profitable sectors that they are usually shut out of, such as technology or construction.
And should aid watchdogs worry that We-Fi will not benefit women most in need, 58 percent of its first round of funding will support female entrepreneurs in countries impacted by fragility, conflict, or violence. With funding efforts in Yemen, Mali, Nigeria, Sri Lanka, Bangladesh, Côte d’Ivoire, Mozambique, Pakistan, Senegal, Tanzania, and Zambia, We-Fi expects their first round of allocations to mobilize an additional $1.6 billion in funds from the private sector and other donors.
Moving fast and breaking barriers
Under World Bank President Jim Yong Kim’s tenure, the World Bank has accelerated long-overdue efforts to help women earn, lead, and build businesses globally. Kim has also done what many men in leadership fail to do even in this era of #TimesUp and #MeToo: be an ally of women leaders in their organizations, especially at critical and often risky moments of scaling and growth.
We-Fi brings together 14 donor governments, eight multilateral development banks, and key nongovernmental partners and stakeholders. The sheer complexity of navigating the bureaucracy of all these institutions required Kim’s visible patronage of We-Fi and support of its newly installed head, Priya Basu, a longtime advocate for women in business at the World Bank.
At a startup phase when most multilateral funds struggle with governance or actually receiving donor funds promised at a summit podium, Basu and her small-but-mighty We-Fi team deserve credit for doing a lot with a little. As of the end of March 2018, We-Fi had a total of $358 million in pledges from 14 countries and had received $170 million from donor governments into the fund.
We-Fi’s blistering pace from its first announcement to initial allocations in just nine months is laudable, all the more so with the usual plodding timelines at the World Bank and other global institutions. With Kim’s direction to World Bank staff to take on additional work to support a rapid scale up, We-Fi managed the impossible with a secretariat that only hired its second staffer in February: standing up the first comprehensive, multilateral fund for women entrepreneurs globally.
Women: ‘Show us the money’
Within less than a year, We-Fi has shown it’s able to deploy capital to projects that support women entrepreneurs in the poorest and most fragile communities globally. With this positive progress, what’s the next move for donor governments?
First, countries should accelerate their pledges if We-Fi shows continued momentum and measurable results from its investments. The United Kingdom, China, and South Korea have not yet put their respective checks in the mail for modest contributions. Another laggard is Saudi Arabia, who pledged $50 million to much press attention, but has sent only $10 million to date. Other outstanding pledges to be received total $188 million, a small sum in international development aid flows. In this global era of women’s empowerment, donors have an opportunity to walk the talk and accelerate substantive investments in this first-ever fund.
Second, the drumbeat of all successful multilateral funds is a relentless focus on replenishment. We-Fi’s current cycle of activity runs for five years through 2022. Global donors to We-Fi should expect and welcome a replenishment request, alongside the fund’s continued timely deployment of capital and measurable success in tackling legal and policy barriers to women’s economic participation.
Lastly, in the United States, bipartisan congressional leaders should champion We-Fi in the tradition of other worthy multilateral funds such as the Global Fund to Fight AIDS, Tuberculosis and Malaria and GAVI, the Vaccine Alliance. From stalwart supporters of women’s empowerment to “teach a man to fish” parable tellers, there’s value here for everyone. While the Trump administration’s initial $50 million contribution deserves recognition, U.S. leadership is only possible through stronger financial support. Members of Congress should track the impact of the allocations announced yesterday by We-Fi and, with good results, increase the U.S. FY 2019 contribution to the fund. Women globally are a smart bet.