Closing the gap: Investing in women can drive economic growth
Gender equality is not just a moral issue; but also a key driver of economic growth and development. Investing in women entrepreneurs and addressing the deepening inequalities they face can create a more stable, resilient, and inclusive society that benefits everyone.
This message is part of Mari Elka Pangestu’s keynote speech in the Women with Impact by East Ventures, celebrating International Women’s Day 2023. Mari is the Former Managing Director of Development Policy and Partnerships at World Bank & Board of Trustee at United in Diversity Foundation. Women with Impact is East Ventures’ initiative to promote gender equality, particularly for women founders and professionals in the technology industry.
Following the speech, Mari revealed that promoting gender equality can generate trillions of dollars and increase long-term per capita GDP by nearly 20% across countries, according to the World Bank and other studies.
Women’s participation in the economy as policymakers, employers, workers, and community leaders benefits society as a whole, including by creating employment opportunities for other women and increasing investment in children’s health and education.
That inequality affects women entrepreneurs in the following ways:
- Women are 25% less likely than men to start a business.
- Women also tend to work in lower-margin, slower-growth industries, so their productivity and profits in SMEs are roughly half that of men-owned businesses.
- Women are 36% less likely than men to have high growth expectations. While early-stage companies that can access capital grow 30% faster, women entrepreneurs face barriers to accessing capital.
To address these issues, she added, we need a holistic ecosystem approach that focuses on four key pillars: financing, skills and networks, markets and technology, and an enabling environment. We can unlock an estimated US$ 5 trillion to US$ 6 trillion in net added value generated globally by removing barriers and providing equal opportunities for women to start and grow businesses.
Women face greater barriers to finance and capital than male entrepreneurs. We have discovered a US$ 1.7 trillion funding gap worldwide. A genuine and impactful collaboration between financial education and training programs is needed, to provide gender intelligence for banking and financial services employees. Thus, we can address gender bias in lending decisions.
2. Skills and networks
Women often lack the confidence to do something or take on a leadership role, especially since female bosses are uncommon, so there is a cultural issue and silent resistance. We need a targeted training program integrated with mentoring and networking for their business, training programs, and the empowerment of social-emotional skills, especially when they (women entrepreneurs) are just starting.
3. Markets and technology
Less than 2% of global value chain purchases are from women-led firms. Therefore, we need to create empowerment programs to support women entrepreneurs to gain access to corporate venture capital, public procurement opportunities, and assistance in gaining admission to domestic and international markets, including e-commerce opportunities.
4. An enabling environment
According to The World Bank’s findings, women worldwide face significant practical and regulatory barriers to becoming female entrepreneurs. The issue relates to gender bias discrimination, credit access, and starting a business. Thus, we must amend laws and regulations that contribute to gender bias.
In conclusion, investing in women is not just the right thing to do; it is also a smart thing for the economy and society. We can create a more equitable and prosperous future for all by working together to address the inequalities women entrepreneurs face. This goal requires partnerships between the government, the private sector, and all the groups who care about empowering women.