The problem of underinvestment in Women-Led Enterprise

The problem of underinvestment in Women-Led Enterprise

Results of the M4 Research ProjectPresented by:

Norman Sarria, Value For Women

Overview

• Objective• Research Process And Focus• Results– Characteristics and focus– Barriers and underinvestment– Potential impacts

• Recommendations

Objectives

• Understand the problem of underinvestment in women-led enterprises in the investment range of 5,000 – 50,000 USD

• Explore characteristics and context of women-led enterprises

• Inform the design of investment funds and support programmes

Research Process and Focus

• Process– Literature Review– Interviews with actors– Focus groups with women in small enterprises in

Guatemala, Haiti and Colombia• Focus on Latin America and the Caribbean

Results - Sectors

• Traditional sectors of women-led enterprises– Agriculture– Food processing– Textiles– Handcrafts

• 70% of Investors expressed preference in investing in agriculture and food sectors

Results – Characteristics ofWomen-led Enterprises

• Smaller• Lower income• Well organized• Comparable efficiency and growth• Comparable financial need for growth• Informal – not registered

“Returns are higher when women are part of the decision making

team” - Investor

Results – Characteristics ofWomen Entrepreneurs

• NGO’s– Time poor– Collaborative– Responsible, reliable and committed– Invest in families and communities– Less financial literacy

• Investors– Risk averse– Less self-confident

• Women in small enterprises– Risk takers– High self esteem– Persistent, resourcefulness, able to recover from crises

“I don’t know if we have more self-esteem than men but we do have a lot of self-esteem and we believe in ourselves a lot” – Woman in focus group

Barries And Discrimination

• NGO’s and Investors– Chauvinistic cultural norms– Time constraints, multiple roles– Inadequate access and control

of resources– Unequal access to financial

education and services• Women in Small Enterprises– Lack of governmental support

“If you go to a bank as a woman, they do not consider your request seriously, or they direct you towards a micro credit institution when what you really need is a $20,000 USD loan” - Woman in focus group

Reasons for Underinvestment

• NGO’s and investors– No consensus about the range (5,000 – 50,000)– High risk and costly

• Women in small enterprises– Financial needs within the range– Higher interest rates– Collateral– Credit models– Unfair treatment

Loan request denied when presented by a woman and later approved for their male counterparts with the same documentation

Benefits• To women

– Empowerment at the household level– Empowerment at the community level– Growth in self esteem– Growth in independence/autonomy– More respect from men

• To their families– Improved living conditions– More investments in children’s education, food and health

• To the community– Job creation– Less migration– Contribution to the environment– Role modeling

“Men respect you more because you have your own money and you don’t depend on them. You don’t need to ask them every time you need something” – Woman in focus group

Risks

• Gender based violence• Marital conflict• Achieving a work/life balance• Time poverty

Kabeer (2007) explains that the balance of power in marital relationships relies on female dependence, and when women want to earn economic independence they might encounter resistance from their partners.

Recommendations

• Programmes and policies need to assess barriers faced by women entrepreneurs

• Develop specialized financial services tailored to needs and capacities of women

• Governments need to better support formalization of women-led enterprises

• Flexibility toward dealing with associations• Increased communication among actors to address

misconceptions• Programmes and policies need to be attentive to potential risks• Promote women’s economic empowerment and communicate

benefits

Other Outcomes

• Multi stakeholder meetings in countries promoted collaboration between diverse actors

• Support the development of the WiSE fund and country proposals

• Generated interest to continue research and design process for other regions with additional partners