HAMBURG — The World Bank officially announced the creation of a more than $1 billion women’s economic empowerment facility — the brainchild of Ivanka Trump — at the G-20 Summit in Germany this weekend.
Officially known as the Women Entrepreneurs Finance Initiative, or We-Fi, the idea for the facility first emerged in April when Ms. Trump, the daughter of United States President Donald Trump, mentioned it at a Women 20, or W-20, meeting in Germany. Quickly dubbed “The Ivanka Fund,” it soon drew the attention of World Bank President Jim Kim, who specifically thanked her at the launch event Saturday for “bringing us the idea of forming this facility and being such a strong advocate for women entrepreneurs.”
“We’re always trying to find new ways to make it easier for women to start and grow businesses,” he said.
The speed with which the proposal has been adopted has raised questions about whether the fund might be Kim’s bid to broker good relations with the new Trump administration.
Regardless of the impetus, Sucharita Eashwar, who is the chair of the financial inclusion working group for the W-20, said she was glad to see the facility introduced. Some 70 percent of women-owned small and medium enterprises in the developing world cannot get the capital they need, according to World Bank figures. In many cases, they are completely blocked from financial institutions.
The news that Ivanka Trump and the World Bank have teamed up to launch a women's economic empowerment facility has caused a stir in the Washington development community. Devex delves into the issues at stake.
“I think this will be a great move for financial and economic empowerment of women,” she said. “It will help get them into the mainstream economy.”
The facility’s goal is to leverage funding worth $325 million and mobilize more than $1 billion through international financial institutions and commercial financing.
World Bank officials initially said they expected to draw $200 million in seed funding, half of which would come jointly from Saudi Arabia and the United Arab Emirates. The bank announced that initial funding had exceeded that original goal, but has not yet stated by how much.
The bank is slated to house the facility and also to serve as its secretariat. But it will be governed by the founding donors, who are expected to dole out low-interest loans ranging from hundreds of dollars to hundreds of thousands of dollars to women-owned enterprises, according to a senior World Bank official who spoke to the press about the announcement in a background briefing.
According to the We-Fi website, the founding donor and collaborator countries are likely to include Australia, Canada, China, Denmark, Germany, Japan, the Netherlands, Norway, South Korea, the United Kingdom and the U.S., in addition to Saudi Arabia and the UAE.
Eashwar said W-20 contributors had pushed for the facility to focus on loans in this range — bigger than popular micro-loans, which do not offer enough capital to really grow a business, but not so big as to be unmanageable.
“Banks and financial institutions are typically not interested in the loans that women entrepreneurs need,” she said. “It’s a lot of work to process such a small loan.”
The facility will also include a mentorship program, as well as an advocacy component, to push for changes to laws that prevent or limit female business ownership.
See more related topics:
Though Ms. Trump was involved in the unveiling of the facility, which was approved unanimously by the World Bank Group’s board of executive directors the week before the Hamburg summit, a senior White House source who also spoke at the background briefing said she does not expect to be involved in administering it or fundraising for it. She does plan to continue to highlight the work of the companies that receive support from the fund.
It is unlikely her early involvement will be forgotten, though. The bank has already received criticism from some quarters for what was seen as an attempt to curry favor with the White House. An editorial in the Financial Times called it an “obvious trading of favours.”
There are also concerns that the We-Fi’s mission will overlap with existing World Bank structures, including the $600 million Women Entrepreneurs Opportunity Facility, which is run by the International Finance Corporation — the private sector arm of the World Bank. Such concerns have bolstered criticism that the decision to move forward with We-Fi was primarily a political one.
According to the launch announcement from the bank, We-Fi might ultimately operate similarly to the IFC facility, but in his remarks Saturday, Kim said a separate initiative was needed.
“For the first time, we have a major global tool that will provide complementary public and private solutions to potentially unlock billions in financing for women entrepreneurs,” he said.
The first meeting of We-Fi’s governing committee is scheduled for October 2017. The senior bank official said the facility’s first loans could be announced as early as the end of the year or the beginning of 2018.
Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you free every business day.