For the global economy to fully build back from the pandemic impacts, transition to a low carbon economy, and achieve the UN Sustainable Development Goals, a new report by Citi GPS says building a gender-balanced entrepreneurship ecosystem playing field is critical.
According to the report, lack of access to finance and capacity underutilization are some of the major challenges hurting women-led businesses.
“Women-owned micro, small, and medium-sized enterprises (MSMEs) make up 23percent of the total number of enterprises but account for 32percent of the total MSME finance gap,” the report says.
“Access to finance is only part of the story, and simply improving access to finance is no guarantee that the entrepreneurial gender gap will close. Women’s entrepreneurial capacity is also materially under-leveraged,” the report further says.
The report states that the International Labour Organisation estimates that 50percent of women’s entrepreneurial potential is underused, compared with 22percent of men, adding that 104 out of 190 countries still have legal barriers to women’s entrepreneurship.
The report notes that the barriers limiting women entrepreneurs come with different considerations in different countries, especially in developing economies.
The barriers across legal, cultural, and practical limitations on women’s participation in commerce; the difficulty of accessing national and international markets; challenges in building personal networks, and with links to mentors who can help navigate the business ecosystem, the report states.
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Others identified by the report are; less access to education and training, especially in business and digital skills; and disproportionate caring and domestic responsibilities, especially among married women.
According to the findings of the report, closing the gender gap in business growth globally could add up to $2.3 trillion to GDP and up to 433 million jobs on a conservative estimate of the substitution effect in the labor market.
It adds that women’s economic empowerment also drives much wider social and economic multiplier benefits across families and communities.
“Women-owned or led businesses generally employ more women employees, which can help drive a virtuous circle in further boosting women’s economic empowerment,” the report says.
“In addition, women tend to invest more of their income than men in the health, education, and welfare of their families and communities.”
“Empowering women entrepreneurs are itself an exercise in development as they will create jobs, generate income, build human capital, and drive growth while reducing inequalities leading to reductions in poverty and hunger, and improving health and wellbeing.”
The report states that women are also an underused source of knowledge, perspective, and innovation, and the businesses they create can provide innovative solutions to global challenges.
The report recommends that legislators, public and private capital help promote more gender-balanced outcomes.
It also says financial institutions such as microfinance initiatives, banks, venture capital and private equity firms as well as institutional investors will be crucial to unlocking the opportunities around women entrepreneurs.
“Unlocking the potential of women’s entrepreneurship requires micro-level interventions alongside a dismantling of macro-level constraints.”
“It also requires concerted actions across the law, public policy and the private sector. Only by partnerships can we put all our resources to productive use and achieve scalable and sustainable impact.”
