Women-owned businesses are underrepresented, despite their growing contributions to the world economy; according to the Global Entrepreneurship Monitor, there has been no increase in the number of women-owned firms over the last decade, and only 3% of the 10 million new businesses started each year in emerging economies are owned by women. This shows that gender equality in the industry leaves far more to be desired and the importance of women entrepreneurs understated, despite women-run businesses being contributors to many impoverished economies. Financing women-owned small and medium enterprises will ensure that more women can realize their entrepreneurial potential and contribute significantly to building local economies and driving sustainable growth in developing countries and emerging markets.
Gender Equality in Business
In a perfect world, there would be equality for all. In reality, we live in a world where there are still many battles to fight for equal rights. One area where we see inequality is in the field of finance. Women-owned businesses face more challenges than their male counterparts when borrowing money from banks or venture capitalists. The average women-run business will have to deal with seven times as many rejections as its male counterpart due to gender discrimination.
Boosting Economic Growth
Inspiring female entrepreneurs to start their own businesses not only benefits them but also strengthens the economy. It’s estimated that Women-owned businesses generate USD1.8 trillion (RM 8.01 trillion) in annual revenue, which is more than double the amount they were making just a decade ago. In an effort to further grow this number, there are development agencies that acknowledge the importance of women entrepreneurs and provide financial assistance exclusively to women-owned small and medium enterprises, offering loans, grants, technical assistance and policy advice, so that women-owned small and medium enterprises can develop sustainable products or services tailored to the needs of their communities.
Dealing with Microcredit Risk
Microcredit is not a risk-free strategy for building wealth. There are many ways that it can go wrong, from a change in the political climate to poor business skills. However, one way to mitigate some of that risk is by focusing on women-owned small and medium enterprises. These businesses are more likely to be successful because they have lower debt levels than male-owned SMEs, which means they are less risky investments. This is one of the biggest ways of inspiring female entrepreneurs to start their own businesses.
Reducing Poverty Rates
Poverty rates are highest in developing countries. Poverty is an urgent problem that affects a significant number of people worldwide, but it disproportionately affects women. Looking to the West in a so-called developed nation, women in the United States are at 14.3%, this rate jumps to 45 per cent for American Indian or Alaska Native women, and 54% for African American or Black women. In addition, statistics show that more low-income women are prone to being victims of violence by an intimate partner at some point in their lives.
While our cultures and ethnicities are different, Southeast Asian markets are considered ‘emerging markets’ where poverty is still a norm, therefore the focus to make it something other than a statistic is even more important.
Improving Access to Capital Markets
Women-owned small and medium enterprises have increased economic power in many countries but lack access to capital markets. Many countries have been working with financial institutions to remove barriers for women-owned small and medium enterprises to access capital.
Encouraging women to start their own businesses is no short-term solution—women are still underrepresented as business owners, despite their growing influence on the global economy. But we can all help change this by supporting women-owned businesses and encouraging more women to explore entrepreneurship. And the best way to do this right now is through financing because money can’t grow ideas, but it can help them spread like fire. Find out more about getting financing for your women-owned small and medium enterprises here.