Women entrepreneurs are poised to transform their local economies and contribute significantly to the global economy.
Expansion of the SME sector is critical to boosting employment and reducing poverty in low income countries. Yet SME owners in these markets face significant challenges in building their businesses, from the high cost of doing business and the pervasiveness of the informal economy, to a lack of supporting infrastructure and skilled capacity. However, at the top the list of challenges for SMEs in most emerging markets is a severe lack of access to finance, which can greatly limit their ability to invest in growing their businesses and hiring additional employees.
This is particularly true for women-owned businesses. Women entrepreneurs are poised to transform their local economies and contribute significantly to the global economy. However, women face numerous challenges to accessing markets, financing, owning and growing a business, including access to capital and technology, lack of networks and knowledge resources, limited market linkages, challenging social and cultural norms, as well as legal and structural barriers.
Although banks in some markets are starting to move into SME lending, some segments are still underserved. This includes SMEs in fragile and conflict-affected markets, women-owned businesses, education and health-care SMEs, and firms in rural markets.
SME and Gender blended finance facilities offer guarantees to lower the risks faced by financial institutions moving into SME markets They also provide dedicated credit lines to reach specific segments—including women-owned SMEs—and performance incentives to motivate financial institutions grow their SME portfolios.
Global SME Finance Facility
The Global SME Finance Facility (GSMEF) is a blended-finance partnership focused on helping to close the financing gap faced by SMEs in emerging markets. By providing investment and advisory services to financial institutions, the Facility helps them expand lending to SMEs in challenging markets and segments. The Facility focuses on the most underserved SME segments that are not normally reached by financial institutions. These include SMEs in fragile countries, Very Small Enterprises, climate-smart SMEs, and women-owned SMEs. In addition, the Facility aids governments to improve their nations' financial infrastructure, thus enabling capital to flow more efficiently to SMEs.
A global partnership, the Facility was launched in 2012 in response to a G-20 call for expediting SME financing and growth,and aims to generate one million new jobs in the SME sector. To support this growth, the facility provides funding, risk mitigation and advisory assistance to financial institutions. This helps institutions expand lending to SMEs in challenging markets and segments. In addition, the facility aids governments with improving their nations' financial infrastructure, enabling capital to flow more efficiently to SMEs.
GSMEF is funded by the following government partners: UK Foreign, Commonwealth & Development Office (FCDO) and the Netherlands Ministry of Foreign Affairs.
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Women Entrepreneurs Finance Initiative (We-Fi)
The International Finance Corporation as Implementing Partner of the Women Entrepreneurs Finance Initiative (IFC We-Fi) uses We-Fi funds to support private sector clients with investment and advisory services to expand financial services and market access for women-owned/led firms, as well as increasing the capacity of women entrepreneurs to run high-growth businesses. IFC is one of the Implementing Partners for the We-Fi program, which is a collaborative partnership among 14 governments that have made financial contributions, six multilateral development banks that serve as implementing partners, and other public and private stakeholders. We-Fi was formally established in October 2017 as a Financial Intermediary Fund hosted by the World Bank.
The We-Fi Secretariat granted IFC a total of $69.15 million to provide investment and advisory support, complemented by global research to support WSMEs across 3 funding rounds:
Round I. Creating finance and markets for all (US$49.4 million)
Round I aims to (i) champion gender-lens investing through funds, incubators, and accelerators; (ii) support financial institutions with blended finance investments to reach more WSMEs and provide advisory services to design and deploy solutions for women entrepreneurs and; (iii) integrate WSMEs into domestic and international value chains and producer networks.
Note: IFC did not receive funding from We-Fi for Round II
Round III. Enhancing seed capital, technology, and value chain solutions for WSMEs (US$8.8 million)
Round III aims to: (i) increase access equity financing for women-led startups and increase ability for startups to scale operations; (ii) provide tailored financial services to WSMEs through fintech companies and other financial intermediaries; and (iii) enhance seed capital, technology and value chain solutions for WSMEs.
Round IV. Leveraging Finance, Data and Technology Solutions to Grow Women Entrepreneurs (US$10.95 million)
Round IV helps to enables IFC to promotes capacity to sex-disaggregate data in the financial sector as well as increase access to finance for WSMEs.
The IFC We-Fi program is implemented under three thematic pillars as follows:
- Strengthening Entrepreneurial Ecosystems
Fostering an inclusive legal, regulatory, and policy framework for WSMEs; supporting women entrepreneurs at every stage of growth through training, mentoring, and peer networks; championing gender-lens investing through funds, incubators, and accelerators; and providing direct investments in high-potential women entrepreneurs - Expanding Financial Services
Supporting banks, fintechs, and insurance companies with blended finance investments to reach more WSMEs; providing advisory services to design and deploy products and services for women entrepreneurs - Improving Market Access
Integrating WSMEs into domestic and international value chains and producer networks; increasing procurement opportunities for WSMEs
Women Entrepreneurs Opportunity Facility (IFC WEOF)
In partnership with the Goldman Sachs’ 10,000 Women (GS10KW) initiative, IFC launched the WEOF in March 2014 - the first-of-its-kind global facility dedicated to promoting access to finance for women-owned SMEs (WSMEs) through financial institutions. IFC uses WEOF funds to provide investment and advisory support, in line with Blended Finance principles. These efforts are enriched by global research and partnerships. Leveraging the resources, reach, and expertise of IFC and GS10KW, WEOF was created to expand and deepen financing for WSMEs in developing countries, empower women entrepreneurs through access to capital and expertise, and demonstrate the commercial viability of investing in women by attracting external investors.