Marijn Wiersma

Marijn Wiersma is change agent and innovation manager at FMO, the Dutch development bank. Previously she worked at PharmAccess International, a non-profit organisation striving to increase access to antiretrovirals (ARVs) for HIV/AIDS patients in developing countries, as program manager for Africa. Marijn also co-founded several social networks for the financial sector, such as Fier, Boom and BankoftheFuture, and set up the Lusaka Health Institute in Zambia. She is also a license holder for TEDxLeiden, an independently organised TED talks event organised annually.

The Gap is a bit like the hole in the ozone layer

meltingice_versusthegapThe total funding gap for women owned businesses is estimated around 290-360 billion USD according to the G20 and IFC (2011). To illustrate, that is nearly half the entire GDP of the Netherlands. What is more, the credit gap is not about to go away. In fact, unless we act today, it will only get bigger… Not unlike the gap in the sky.

One reason is that women are the fastest rising group of entrepreneurs worldwide. Globally, there are approximately 187 million female entrepreneurs within 59 economies (GEM 2010). Eight to ten million formal SMEs in emerging markets are fully or partially owned by women, representing 31-38 percent of all SMEs according to IFC. In the United States alone female owned businesses have been growing at a rate of 1,5 times the national average (American Express 2013). And the global “birth rates” of female-owned enterprises are higher than those of male-owned ones according to OECD (2012).

Despite women’s increasing presence on the business stage, research has consistently shown that women-led businesses receive less funding than companies led by men. The IFC estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions. In Kenya for instance, 48 percent of business owners are women, yet they receive only 7 percent of formal credit (2011).

Financial institutions and investors stepping up their efforts to serve women business owners can make the difference between an opportunity gained and one lost.

Exciting research by Goldman Sachs (2014) points out the enormous impact of closing the gap for women owned SMEs on economic development. The researchers find a strong relationship between SME credit and income per capita growth. According to the World Bank, SMEs are the biggest contributors to employment across countries, especially in developing countries.

Taking this as a starting point GS estimates that closing the credit gap for women-owned SMEs across the developing world as a whole could boost income per capita growth rates by over 1,1% on average. Depending on other factors some countries would benefit more. On the higher end are Vietnam and Brazil, increasing their per capita growth by 1,7%-1,85%. Naturally closing the gap will take time, nobody knows exactly how much. But hypothetically speaking, gradually increasing funding for female SME owners could mean Brazils per capita income would wind up 28% higher by 2030.

This means everyday our economies are leaking money because companies owned by women are not capitalized to their fullest. What is even worse is that human potential, talents and innovation capacity are being lost. Therefore, in the face of the current global environmental, social and financial challenges, we cannot afford not to invest in women. Let’s start now.

Join us on the 31st of October for the Bridge the Gap event.

Sign our declaration to Bridge the Gap

 

Further reading

Giving credit where it is due How closing the credit gap for women-owned SMEs can drive global growth February 2014

http://www.goldmansachs.com/our-thinking/public-policy/giving-credit-where-it-is-due.html

IFC to present Women Entrepreneurs Opportunity Facility

IFC and Goldman Sachs 10,000 Women program recently launched a $600 million global facility that will increase access to finance to as many as 100,000 women entrepreneurs in emerging markets. The Women Entrepreneurs Opportunity Facility (WEOF) is the first of its kind to be dedicated exclusively to financing women-owned small and medium businesses in developing countries.

IFC will invest an initial $100 million and the Goldman Sachs Foundation will provide $32 million. IFC will manage the facility, which is expected to mobilize up to an additional $468 million from public and private investors. How is that for Bridging the Gap?

The facility is part of the World Bank’s overall strategy to promote gender equality and ensure the social and economic welfare of one-half of the world’s population. IFC, through its Banking on Women Program, is playing a catalyzing role to help women-owned businesses access capital and capacity building. Since its inception in 2010, the program has invested more than $800 million in more than 20 countries.

Patience-Photo160x160IFC will be represented at Bridge the Gap by Patience Marime Ball and Yakhara Sembene. Patience is Principal Investment Officer, who developed and closed the Fund. Patience initiated and is building IFC’s Banking on Women Program through which IFC structures and makes financial investments to women entrepreneurs via local financial institution intermediaries. Yakhara Sembene, an Investment Officer in the Financial Institutions Group, is responsible for Investor Relations for WEOF.