Female Focused Financing - A Recap of Flagship Global SME Finance Forum Fireside Chat
Female-headed SMEs struggle to achieve their growth goals in a way that male-headed SMEs do not. Within the broadly defined SME financing gap, there exists another gap, greater than $1 billion, that blocks women from participating in markets at the same level as men. Yet, women are an integral part of any market, and particularly emerging markets. By decreasing the credit gap for female-owned businesses in emerging markets, countries could achieve over 12 percent GDP growth in a matter of a decade. Local economic growth, too, would skyrocket – estimates suggest that women reinvest income back into their families and communities at a rate of 90 percent. In light of these figures, Cristina Shapiro, Head of Global Strategy, Management and Employee Engagement for the Goldman Sachs Foundation, has helped to spearhead a globalized program aimed at eliminating the finance gap for female entrepreneurs, to the benefit of all.
The Women Entrepreneur Opportunity Facility (WEOF) – a project launched in partnership between The Goldman Sachs Foundation and the IFC – was the first global facility of its kind, dedicated to tackling financial challenges women face. It has served as a resource center in terms of both education and financing, empowering women to grow their small and medium businesses. In the five years that it has operated, the Facility has invested $1.45 billion in female-led businesses, close to $500 million of which came from third party investors that organizers such as Shapiro have successfully formed relationships with on behalf of WEOF. These investments have reached over 53,000 women in 33 countries, and Shapiro has the goal of reaching 100,000 women in the next five years.
Shapiro’s work is shaping the way traditional lenders, such as banks, think about lending to women-owned businesses. Since its inception, WEOF has reported an increase in volume of loans made to women by banks, a central metric of success for the project. As the initiative continues to grow, Shapiro hopes that WEOF will be able to work with banks to produce better gender-disaggregated data to more accurately measure rates of loans and other metrics of success for female SME financing.
By breaking down barriers for women in the world of SME financing through The Women Entrepreneur Opportunity Facility, partners Goldman Sachs and IFC are fundamentally reshaping local and national economies. Their work educates and empowers women to see the same level of success in the growth of their businesses as men do. Moreover, WEOF is changing attitudes towards lending to women at an institutional level in traditional banks. With so many lives and communities touched within five short years of operation, prospects are only looking up for WEOF to accelerate their positive impact in the coming years.
Main points:
- Women are at a particular disadvantage in the SME lending space, facing a disproportionate lending gap in addition to the overall SME financing gap
- Partnerships like WEOF are possible through the passionate collaboration of institutions like Goldman Sachs and IFC, with the help of generous third-party donors
- Decreasing the credit gap for female-owned businesses has a multitude of benefits at the community and national level – both local economies and GDP have been proven to grow as women achieve equal access to finance
- Data remains a challenge for initiatives such as WEOF because most reports from banks and other FIs do not disaggregate their data by gender
- Lending to women represents an opportunity for banks and FIs to diversify their portfolios, get deeper into their customer base, and conjure up innovative new business models that are able to reach this underbanked population
Day 2 of #SMEFF starts with Goldman Sachs 10,000 Women: Learn about this global initiative by @GoldmanSachs that provides women-led businesses around the world with a personal education program with speaker Cristina Shapiro @GS10KWomen #SMEFF19 pic.twitter.com/8SrHZszm7B
— SME Finance Forum (@SMEFinanceForum) October 8, 2019
<p> “The power of a partnership is that the whole is greater than the sum of its parts, and that’s exactly what we’ve found here with IFC. What we brought to the table was our experience and understanding… what we didn’t have was the presence in market… that IFC has.”</p>
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<p>“With the right capital and very clear goals comes innovation.”</p>