A staggering statistic reported by the McKinsey Global Institute has caught the attention of prominent development agencies and major corporate entities. In 2015 the institute reported that advancing women’s equality in trade, investment, and commerce could add $12 trillion to global Gross Domestic Product (GDP) by 2025 if a “best-in-region” scenario were met worldwide. Even more eye opening: In a “full potential” scenario—one in which women played an identical role to men in the labor market globally—the report found that as much as $28 trillion could be added to the global economy. To put this in context, that amounts to 26 percent of global GDP, nearly the equivalent of the economies of the United States and China combined. When taken in tandem with issues outside of economics, it is clear that women’s equality is not just a political issue, but one of unrealized opportunity that demonstrates how transformative change is possible by placing this issue on the global agenda.
For female business owners worldwide, often the issues are less about lofty ideas and more about practical concerns. For example, societal norms and sometimes regulations often prevent them from accessing finance, owning land, and/ or earning equal pay for equal work, which can significantly hinder their entrepreneurial efforts. With limited access to information and markets, women find it harder to meet regulatory requirements and are also less likely than men to register businesses. Moreover, those businesses tend to be smaller and with limited access to capital. For instance, it is estimated that female-led small businesses face a credit gap of around $300 billion.
These issues are being addressed by a number of prominent development institutions and private enterprises, all of which recognize the boon to global development and trade these untapped entrepreneurs and businesswomen represent.
In 2017, the World Bank launched the largest fund ever to support women’s access to capital called the Women Entrepreneurs Finance Initiative (We-Fi). We-Fi partners with 14 governments, eight multilateral development banks, and other public and private sector stakeholders to address the constraints that women-owned or women-led SMEs face in developing countries. The 14 governments alone have committed over $350 million thus far.
Similarly, the U.S. government has instituted the Women’s Entrepreneurship and Economic Empowerment Act of 2018. The bill invests in global female entrepreneurship by, among other things, making it U.S. policy to improve women’s economic contributions and opportunities. It cites the necessity of improving women’s access to financial tools, resources, and rights in order to increase decision-making power and self-sufficiency—especially for women living in poverty.
Likewise, in 2018, the G-7 nations committed to investing in female entrepreneurs and business leaders. As part of the 2X Challenge: Financing for Women, the G-7 nations committed to mobilize $3 billion by 2020 towards advancing women’s economic empowerment. And finally, corporate giants including Walmart, Coca-Cola, and Intel plan to support and leverage women-owned businesses through various programming. What is clear from all of these efforts is that our largest global institutions and companies recognize the upside to investment in women. So what about more developing nations?
Through its Strategic Development Goals (SDGs), United Nations Member States committed to “ending extreme poverty and boosting shared prosperity in a sustainable manner.” SDG 5—the “achievement of gender equality and empowerment of all women and girls”—is key because of its critical role in achieving these goals. Recognizing this vital role, the World Bank’s Strategy on Gender Equality has made significant strides in the fight for women’s labor participation in middle-income countries. The organization has forged partnerships and initiatives to reduce occupational sex segregation and create solutions to make public transportation safer for both women and men.
The World Bank Group is also collecting data and producing reports to influence both public and private sector audiences to invest and support female workforce participation. For example, research has produced actionable results on issues such as the provision of child and elderly care services for employees. Such reports include “Golden Aging: Prospects for Healthy, Active,
and Prosperous Aging in Europe and Central Asia” and the International Finance Corporation’s (IFC) “Tackling Childcare.” According to the IFC’s report, the Bank of Tokyo-Mitsubishi UFJ, Ltd. saved an estimated $45 million in employee turnover costs by offering childcare initiatives.
And it is not only the World Bank Group. Aid for Trade is an initiative backed by the World Trade Organization (WTO) and aid agencies worldwide to help developing countries build trade and infrastructure. Associated funding has helped women entrepreneurs in Africa by connecting women-owned firms to markets and women to jobs in the export sector. Aid for Trade has also built partnerships between smallholder farms run by women on the continent, and is mentoring women entrepreneurs in business export markets. In doing so, these women entrepreneurs are considered less of a risk by lenders and more able to secure quality financing. Initiatives are also underway to help women harness digitalization so that they can scale their businesses through e-commerce platforms for global reach and greater competitiveness.
These efforts are all set to elevate women to a higher plane in the global trade landscape. The motivations behind them are driven in large part by the tremendous upside potential and benefits for communities worldwide. These efforts and the subsequent prosperity they provide are not just to the betterment of individuals and businesses, but represent real opportunities to take on some of the world’s greatest challenges, from sustainability to eliminating extreme poverty. While there are still cultural challenges to achieving these goals, there are just as many reasons to commit to helping realize women’s equality in trade, investment, and commerce— by some estimates, 28 trillion of them.
This article was originally published in the World Trade Centers Association newsletter, The Meridian. Click here to access the entire publication.