World Bank Uses Data, Digital Tools to Support Female Entrepreneurs in Emerging Markets

“Societies aren’t fully tapping their potential if they’ve got half of the population on the sidelines.”

That statement by Wendy Teleki, head of The Women Entrepreneurs Finance Initiative (We-Fi) Secretariat at the World Bank, is a direct reference to women, and particularly women-owned small and medium-sized enterprises (WSMEs) in emerging economies, who she said have long been under-recognized and subjected to a myriad of constraints that have held them back and at the same time deprived society of their contributions.

From social norms and biases in investment decision-making processes to the lack of access to digital technologies, WSMEs in emerging markets have had to navigate obstacles and challenges that their male counterparts have been largely spared.

“And that is a huge problem for our society because we don’t get the growth and the innovation that we can see coming from these markets,” Teleki told PYMNTS in an interview, adding that “these untapped resources are a big drag on our economic growth.”

What society is missing out on, she added, are the services that women entrepreneurs provide to their communities, including the fact that WSMEs are far more likely to hire women as employees and help reduce unemployment across communities.

Read also: Visa On Bringing More Female Founders Into The Reinvention Of Retail

To help women entrepreneurs do more, the We-Fi Secretariat has been working with multilateral development banks (MDBs), including the World Bank, the International Finance Corporate (IFC) and the African Development Bank, to fund programs in developing countries that enable women entrepreneurs to grow their business, get financing and thrive in the marketplace.

The programs vary from enabling women in fragile, war-torn countries to get the training, skills and the capital that they need to grow their businesses and helping FinTechs and banks issue gender bonds to engage with governments on policies and regulations and mobilizing capital and bonds from financial institutions and the capital markets to support these businesses.

Launched at the G20 in 2017, the global initiative is a partnership project between 14 governments and various MDBs and public and private sector stakeholders. “It [We-Fi] really runs the gamut of different kinds of activities to address the needs that women entrepreneurs have in emerging markets,” Teleki said.

Technology and Data for Digital Transformation

There’s no doubt the pandemic-induced boom in eCommerce has given a huge boost to online businesses around the world. Still, Teleki said, more needs to be done to enable WSMEs to take full advantage of the ongoing digital transformation and stay competitive in their respective markets.

One way to achieve this is to leverage eCommerce platforms to boost sales and adapt to consumer demand, a goal We-Fi has committed to by collaborating with platforms to facilitate market access and the onboarding of female business owners onto their platforms.

Another key strategy that We-Fi has been using to advance its mission is through collaborations with partner institutions, banks, venture capital (VC) funds, and eCommerce firms to help them gather data from their systems and then analyze it effectively to make better and informed decisions.

“Most financial institutions have a wealth of data [but] they’re not always able to disaggregate it by sex and [as a result] they can’t analyze what the needs [and] behavior patterns are or how they can improve their products and services for [women],” she explained.

She added that very few banks, for example, can provide information on how much exactly they’ve been lending to women-led businesses.

“Even FinTechs [which] you would expect to be able to do that very easily because they’re data driven organizations have a hard time being able to segment that data and then learn from it so that they can improve their products,” she pointed out.

But with We-Fi’s help, these institutions can now better understand the data they have, obtain additional data where it’s lacking, and then conduct market analysis to develop sustainable products for women entrepreneurs, Teleki said.

Gender Lens Investing

Before the pandemic, women entrepreneurs already faced many challenges, but data shows that the crisis has worsened the situation for women-led businesses.

“[What] I find really astounding is that during the crisis, women-led businesses, who generally are more cautious about applying for loans, have had their loan applications rejected at twice the rate of men,” she revealed.

This, she added, goes to show that the crisis has sent the progress made by women entrepreneurs backward as financial institutions are reverting to former practices of “who have you known for a long time and how do we keep the money going to them?”

In addition to that negative trend, VC funding targeted at women-led businesses remains very low — at about 5% — and even though VC funding increased last year, the percentage of that amount that went to women dropped, she said.

But according to Teleki, the only light at the end of the tunnel is the growing movement for Gender Lens Investing (GLI), which ensures that most of the funds being raised consider more gender-based factors in the investment decision process.

“So, we’re hopeful that as that money gets out [and] put out in the market, we’ll start to see those numbers grow significantly going forward,” Teleki said.

Sign up here for daily updates on all of PYMNTS’ Europe, Middle East and Africa (EMEA) coverage.