Striking Gold with Women Entrepreneurs

Women don’t know how to manage Small and Medium-Sized Enterprises (SMEs).
Women can only run retail or services businesses.
Women-led businesses don’t create jobs.
Women don’t really want to grow their businesses – it’s just a hobby for them.

How many times have we heard these and similar sentiments?

There are indeed far fewer businesses led by women compared to men; female-led businesses do tend to be smaller and less profitable; and they do concentrate in the low-productivity retail and services sectors. Yet it is a vast oversimplification to underestimate the already-strong and potentially even greater economic contribution of women entrepreneurs. Even worse is the assumption that the underperformance of women-led enterprises is always something done by choice, or due to something inherently female.

A recent World Bank research report on supporting growth-oriented women entrepreneurs adds nuance to the dispiriting facts above. It focuses exclusively on growth-oriented women entrepreneurs and identifies the crucial elements needed to effectively support them. What merits the focus on growth entrepreneurs? Simply put: their ability to generate jobs, enhance national productivity, and stimulate socioeconomic transformation is greater. What merits the focus, specifically, on women growth entrepreneurs? Simply put: their immense untapped potential. There are an estimated 812 million women in the developing world (according to well-researched projections) with the potential to contribute more fully to national economies as workers and job creators, but who are unable to do so.

We find that firms led by women and men survive at the same rate, women-led firms employ more women as a share of their workforce, and far more dramatically, women and men lead equally productive firms . . . as long as the firms operate in the same sectors.

Unraveling these trends allows us to identify the underlying obstacles that result in both the underperformance of women-led enterprises and their comparable performance in specific sectors. We find that women growth entrepreneurs are held back by a complex intersection of factors – driven both by individual preferences and external constraints. These include gaps in management skills and knowledge, limited financial literacy, lack of access to finance, lack of mentoring, over-representation in low-productivity and low-growth sectors, restricted access to networks and supply chains, and legal and regulatory obstacles. While we now know more about what holds women entrepreneurs back, the support programs by the World Bank and others do not always adequately reflect this knowledge in program design and delivery.

What can we, through the World Bank, do to ensure that our programs have greater impact, are more relevant to women growth entrepreneurs, and demonstrate a replicable model for other development actors and client governments?

The answer: We should start by “gendering” our programs.

In the case of business education for example, “gendering” means more than just limiting program participation to women. Program content must explicitly speak to gender-related challenges like interacting and negotiating with buyers and suppliers in male-dominated markets, navigating team dynamics in a culture where women are not considered “leaders,” and managing intra-household dynamics and mobility constraints. In a related concern, program delivery must also be gender-sensitive: That includes offering in-class examples of successful women-led businesses, inviting successful women as guest speakers, and addressing the patriarchal attitudes of the people implementing the program.

 

 

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Trends in Private Participation in Infrastructure

The private sector has long been a major player in infrastructure projects around the globe. Its contribution is important on many levels: besides making financial, technical and managerial resources available for infrastructure projects, its participation has policy implications that impact investment and development.

The World Bank’s Public Private Partnership Group and the Public-Private Infrastructure Advisory Facility (PPIAF) support public discussion on the role of private participation in infrastructure, or PPI. To provide relevant information on this topic, they maintain a PPI database that includes information on over 6,000 infrastructure projects implemented from 1984 through 2013 in 92 emerging economies. The information is useful for analysts, policymakers, private sector firms involved in infrastructure, donors, NGOs and other stakeholders.The data can be used to identify regional or sectoral trends. The recently-released 2013 Global PPI Update, for example, shows that PPI in 2013 in emerging markets fell by 24 percent in comparison with 2012, with decreases in Brazil and India accounting for much of the change. The data also show that investments in telecom and energy top the list, each accounting for 38 percent of global PPI.

 

 

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Is Somaliland truly “Open for Business”? Moving past the conventional narrative of a fragile state

Somalia has the reputation of being a mysterious and conflict-ridden land. Who hasn’t heard of the infamous “Black Hawk down” episode, the militant group al-Shabaab or the pirates off the Somali coast?

But in the northwest corridor of war-ravaged Somalia lies Somaliland, a self-declared independent state that claims to be open for business. Really?

It’s easy to dismiss the “open for business” claim by Somaliland’s Ministry of Planning as mere fantasy or wishful thinking. Flying from Nairobi on a painfully slow UN-chartered plane, being greeted at the hotel by Kalashnikov-armed guards, or traveling to your meeting in an armored car is enough to discourage even the most adventurous entrepreneur.

At first sight, Somaliland has all the characteristics of a fragile and conflict-affected situation (FCS). However, you never want to judge a book by its cover. In Somaliland, I’d argue that the conventional narrative of fragility needs to be revisited.

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A New Model to Chip Away at the Infrastructure Financing Gap: Brazil Leads the Way

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Infrastructure bottlenecks have created seemingly perpetual traffic jams in and around São Paulo. Photo credit: Marcelo Camargo/ABr.

There’s a lot of time for innovative thought when you’re stuck in traffic in São Paulo.

Perhaps that’s why, in the words for Deborah L. Wetzel, World Bank Country Director for Brazil, “São Paulo has continuously innovated to overcome its infrastructure bottlenecks, often becoming a model to other states in Brazil.”

With a loan signed last month between the state and Banco Santander, and insured by the Multilateral Investment Guarantee Agency (MIGA), the state is at the vanguard of infrastructure financing.

Forty-one million people use the state’s transportation networks. While the network is one of the most developed and modern in Brazil, it is still insufficient for the state’s needs.

The State of São Paulo has sought to address the situation for some time, and the World Bank has played an important role through lending and technical assistance. An important component of this work is the São Paulo State Sustainable Transport Project that aims to rehabilitate roads in several key corridors and to reconstruct two bridges.

Yet, with a total cost estimated at $729 million, this project has faced a major financing hurdle. In September 2013, the World Bank approved a $300-million loan toward the initiative. But with growing demand for loans from Brazil’s poorest states, the bank was unable to commit additional funds. The State of São Paulo itself committed $129 million. That left a shortfall of $300 million.

How was the state going to mobilize these funds at a cost that would be acceptable to taxpayers?

A partnership with MIGA was a natural answer. In addition to political risk insurance, MIGA provides credit-enhancement products that protect commercial lenders against non-payment by a sovereign, sub-sovereign or state-owned enterprise.

In an unprecedented move, the State of São Paulo bid out the project to commercial banks with a requirement that their loans be backed by MIGA’s credit-enhancement instrument.

The result:  MIGA issued guarantees to Banco Santander on a $300-million loan. With MIGA’s credit enhancement, the cost of the commercial loan was lower, and the length of the loan was longer, than São Paulo could have achieved on its own. The additional financing will be used to increase the scope of the project’s activities.

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Credit for All: Increasing Women’s Access to Finance

Financial inclusion is important for accelerating economic growth, reducing income inequality, and decreasing poverty rates. Unfortunately, women face more difficulty than men in access to credit, limiting the development of their full market potential and hindering economic gain and entrepreneurship. Discriminatory practices in the granting of credit may mean that qualified applicants do not have the same opportunity to receive credit simply due to their gender.

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Building for Development: Could Infrastructure Draw Unexpected Investors to Africa?

Only one out of every 40 dollars of foreign direct investment (FDI) since the 1990s has gone to Sub-Saharan Africa. This is dwarfed by the one out of every eight dollars that went to Latin America and the Caribbean, or the more impressive one out of every four dollars invested in Asian countries. Yet recent studies point to increasing levels of investor interest in African countries. In the last decade, the continent has experienced a notable expansion in the level of FDI inflows, which in 2012 were almost as high as Net Official Development Assistance levels. International investors seem to be noticing the opportunities offered by a rapidly expanding African market.FDI and Development Assistance to Sub-Saharan Africa

Source: Authors’ calculations based on World Development Indicators

In an effort to boost trade and investment relations between Africa and the United States, President Barack Obama this summer hosted the first-ever US-Africa Summit in Washington, D.C. The meeting resulted in $33 billion of public and private commitments to expand trade and investment in the African continent. Remarkably, US companies accounted for half of these pledges, including commitments by General Electric, Blackstone Group (in a joint deal with the Nigerian firm Dangote Industries) and the Carlyle Group to invest in energy infrastructure and to complement the $300 million per year announced by President Obama for the expansion of his administration’s energy initiative, Power Africa. The World Bank and the government of Sweden announced an additional $6 billion in support for enhanced access to electricity in Africa.

This is good news for Africa. FDI inflows will undoubtedly contribute to the technological development, industrial diversification, and economic growth of host countries. And the specific target of these investments – infrastructure – is particularly heartening. The state of Africa’s infrastructure is an important constraint to the continent’s economic development.

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