Small Business Saturday, a day dedicated to supporting U.S. small businesses, is a great opportunity to highlight the importance of women-owned and managed small businesses around the world. According to the Center for Women’s Business Research, women-owned businesses in the United States contribute nearly $3 trillion to the economy annually, and have been growing at more than twice the rate of businesses owned by men. According to the International Financial Corporation, in emerging markets, women own or co-own about one-third of formal small and medium enterprises (SMEs), but most of these tend to be smaller than men-owned businesses.
At USAID, we are committed to supporting women’s entrepreneurship in developing countries, where it can raise incomes while reducing poverty and inequality, for the women, their families, their employees, and their employees’ families. Women tend to spend more of their earned income than men on the health and education of their families. National economies can’t afford to waste the talents of half the population.
Acknowledging this, USAID recently launched the Women’s Leadership in Small and Medium Enterprises (WLSME) initiative in partnership with the World Bank, and the non-governmental organizations ACDI/VOCA, CARE, and Grupo de Análisis para el Desarrollo (GRADE). The aim of USAID’s $8.5-million investment in these and related partnerships is to find innovative ways to remove some of the barriers to women owning and managing small and medium enterprises.
What are some of these barriers that stop women in the developing world from getting beyond a one-woman enterprise? They include: access to finance; legal and regulatory constraints; cultural practices; and women’s tolerance for risk in managing their businesses. Two important constraints that WLSME will focus on are: women’s access to and role in business information and knowledge networks; and women’s business and technical skills, education and experience.
ACDI/VOCA will use technical assistance and support for business associations to improve women’s access to larger loans in Kyrgyzstan. CARE will support the growth of women’s enterprises within the cashew value chain in India through training, networking and building family support. GRADE will compare the effectiveness of mentoring and peer networks for women looking to grow their businesses into SMEs.
In keeping with USAID’s learning agenda, these partnerships will be evaluated to tell us what worked and why, helping to improve future efforts to place women in leadership roles in enterprise development, economic growth and poverty reduction around the world.