Businesses today focus heavily on productivity, maximizing potential, tapping every last resource. Yet the global economy still underutilizes a staggering 48.4 percent of its available productive potential: women. IFC recognizes that creating opportunity for women in the private sector is essential for economic growth.
Change cannot come soon enough for women in developing countries, who often face economic exclusion and legal discrimination. But it is equally critical for economies seeking to grow. IFC has worked across many developing countries to strengthen women’s education, rights, health, and access to the workforce. This is not just a moral imperative. It’s also good economics.
When women gain education, opportunity, and income, they help lift themselves—and their families—out of poverty. They spend differently than men—buying higher-quality food, health care, and education for their children. They also save more. According to a Goldman Sachs study, narrowing the gender gap in employment could raise per capita income in emerging markets by up to 14 percent by 2020.
When companies have women on their boards and invest in women-friendly workplaces, they financially outperform those without female leadership. They also see lower rates of absenteeism and less staff turnover. These companies develop better reputations, attract better talent, and increase innovation. IFC’s Women on Boards initiative is raising awareness of how companies and economies benefit when corporate boards include similar numbers of women and men. For example, IFC helped launch Pakistan’s first training program for women directors and inspired policy makers to revise the country’s Code of Corporate Governance to encourage gender diversity on boards.
Likewise, the World Bank Group’s WINvest program works to improve employment opportunities and working conditions for women. IFC launched a WINvest report to show how employing women increases productivity in the workforce and a country’s economy. For example, the report found that a Vietnamese garment factory, Nalt Enterprise, reduced staff turnover by 30 percent after establishing a kindergarten for workers’ children.
But change remains slow. More than 70 percent of women-owned businesses in developing countries are underserved by financial institutions: the overall gap in financing stands at $300 billion. To help close this gap, IFC’s Banking on Women Program has invested more than $800 million to create opportunities and improve access to finance for women entrepreneurs.
Bukky George is one of these women. Although she was ready to expand her pharmacy business in Nigeria, she lacked sufficient cash flow. Most local banks refused to finance her on the basis her pharmacy—HealthPlus—was a new woman-owned business with minimal collateral. Through IFC’s partnership with a local lender, she was able to secure a loan. HealthPlus now has 25 branches, with plans to establish 17 more in 2014. Sixty-five percent of her employees are women.
Bukky George at her HealthPlus pharmacy in Nigeria.
Bukky George was fortunate—she was legally entitled to use her house as collateral. Of the 143 economies studied in the Women, Business and the Law report, 90 percent have at least one legal difference that restricts women’s economic opportunities. Countries incur economic harm when they require married women to obtain their husband’s permission to work, or when property rights are unequal for women and men. HealthPlus’s expansion is just one example of how strengthening women-owned businesses supports economic growth.
To expand opportunity for more women entrepreneurs, this month IFC and the Goldman Sachs 10,000 Women program have partnered to launch a $600 million global facility dedicated to supporting women-owned small and medium enterprises in developing countries. Such initiatives help women become a powerful force for development—agents of the economic growth that will eradicate global poverty.