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The UK economy can thrive by supporting women

£250bn would be added to the UK economy if women started and scaled up businesses at the same rate as men.

In the past two years, with the economy disrupted by a pandemic and lockdowns, many people have had to find new ways to make ends meet. One less-told side of that story is that Companies House data shows 140,000 businesses were started by women in 2021, compared to 56,000 in 2019. The NatWest SME (small and medium-sized enterprise) Taskforce devoted its most recent event to discussing how women entrepreneurs can be better supported and financed to build on this.

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NatWest’s A Springboard to Recovery report highlighted that increasing female entrepreneurship and the productivity of women-led businesses is one of the biggest opportunities for growing UK gross value added (GVA). More than doubling the number of women-led businesses and increasing their productivity by about 40 per cent would drive around £50bn in GVA, adding around 50,000 new female entrepreneurs and 260,000 more women-led businesses in the UK economy by 2030.

There have been a series of efforts to support more women entrepreneurs and to remove the barriers to them. In 2019, Alison Rose, chief executive of NatWest Group, was asked by the Treasury to look into why women face more barriers in entrepreneurship. In response to her report, the government announced an ambition to increase the number of women entrepreneurs by 50 per cent to 600,000 by 2030.

“The headline from the initial report many of you will remember was that if women were to open and scale businesses at the same rate as their male counterparts, it would add £250bn to the UK economy,” said Julie Baker, head of enterprise, climate engagement and partnerships at NatWest.

Baker set out some of the work she has been doing with strategic partners from both the private and public sector to support entrepreneurs, especially those from “harder-to-reach” communities and minority communities. “Two years into the pandemic, female entrepreneurship has proven to be exceptionally resilient. And in fact, I think we were all surprised when we saw the number of female-founded firms that were created last year,” she said.
“We know that a lot of females were impacted by furlough,” Baker continued, with around 58 per cent of all those furloughed being women. Many worked in lower-paid jobs and in sectors that were badly affected by the lockdowns, such as retail, health and beauty. “They all sat at home thinking ‘what can I do with all this time’ and they set up a business,” she said.

However, one of the persistent issues for women-led businesses is how to scale up, and it is not yet clear whether these new businesses will carry on as “side hustles” or scale up. Baker said NatWest is launching a Gender Index, which will keep a live count on women-founded companies, and that it will be updated on a regular basis.
One of the main barriers to women is still access to finance. Data shows women-led businesses got less money on average from, for example, the Start-up Loan and Bounce Back Loans schemes, and women often do not ask for the amount of capital they need, Baker explained. This disparity in funding is an issue “across the board” she said.

“Women tend to be more conservative than men, even though they tend to outperform men,” added Demi Ariyo from lending platform Lendoe. “We’ve seen that across the board in our portfolio, particularly with repayments as well.”

The Investing in Women Code launched with 20 members in 2019 and commits financial institutions that sign up to share their data on lending to women and report annually. This means they are committed to focusing on making their processes simple for women to access finance. The Investing in Women Code now has 134 signatories, including mainstream banks and venture capital, such as the UK Business Angels Association. Members are also making more funding available to women entrepreneurs. NatWest Group’s Rose launched a £2bn SME fund at the bank and other banks are now following suit. Alongside this are best practices in place to support entrepreneurs, such as event programmes, mentoring, and access to markets and networks.
Childcare is another key issue for women entrepreneurs, with many women taking on even more caring responsibilities during the pandemic. Women entrepreneurs took on an average of six to ten hours more caring responsibilities than their male counterparts, and 62 per cent are less likely to recover financially as a result of that inequality, Baker said.

The UK Business Angels Assoication is working with NatWest and other partners on a women angel investment campaign, with a focus on regional events supporting mentoring and work with stakeholders. The organisation’s executive chair, Jenny Tooth, said they are currently mapping out the picture of women angel investors and running a “women backing women” campaign to encourage women investors to invest in companies led by women.

In a challenging economic environment, investing in women entrepreneurs and women-led businesses can deliver huge economic and social benefits. The challenge is to remove those long barriers that keep women from starting up or expanding and ensuring that the impact of economic uncertainties in 2022 does not halt or reverse the progress we are making as a business community.

By Andrew Harrison

Source: The New Statesman

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The World Bank’s new Women Entrepreneurs Finance Initiative: Recycling a broken model?

In July at the G20 meeting in Hamburg, the World Bank announced the Women Entrepreneurs Finance Initiative (We-Fi), a financial intermediary facility housed and managed by the Bank, that seeks to “advance women’s entrepreneurship” in developing countries by providing “increased access to the finance, markets, and networks necessary to start and grow a business”. The brainchild of Ivanka Trump, daughter of US president Trump, the facility aims to “leverage donor grant funding of over $325 million and mobilize more than $1 billion in international financial institution and commercial financing, by working with financial intermediaries, funds, and other market actors”.

The Bank will act as We-Fi’s trustee and secretariat whilst, “Multilateral development banks, including the World Bank and IFC [International Finance Corporation, the Bank’s private sector arm], are eligible as implementing partners to propose private and public sector activities”, and apply for funding. A governing committee, composed of the founding donors, such as United Arab Emirates and Saudi Arabia, will make its allocation decisions. The first meeting of the governing committee is planned in October 2017.

Concerns raised about facility’s ability to reach poorest women

In July, Devex reported concerns that “We-Fi’s mission will overlap” with pre-existing initiatives such as the joint IFC and Goldman Sachs’ Women Entrepreneurs Opportunity Facility (WEOF) and the Banking on Women program (see Update 85). While We-Fi is dubbed, “the first World Bank-led facility to advance women’s entrepreneurship at this scale”, the IFC’s 2014 WEOF press release stated that its 10,000 Women programme, comprised a $600 million global facility, would, “increase access to finance to as many as 100,000 women entrepreneurs in emerging markets”. It further stated that it “is the first of its kind to be dedicated exclusively to financing women-owned small and medium businesses in developing countries”.

Women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the populationCINDY HUANG, CGD

In July, Nancy Lee of the Center for Global Development (CGD) raisedquestions about how the success of We-Fi and the previous Bank initiatives are measured, stating that, “It would be helpful to know more about the track record of IFC’s WEOF so far”. There are no updates available on WEOF, which makes it difficult to assess the outcomes of the programme and use lessons learned for We-Fi. Cindy Huang of CGD made detailed suggestions in August on how We-Fi can learn from existing research on women’s economic empowerment, reminding the Bank that, “a well-designed approach to empower women must recognise and incorporate the rich evidence base that supports the connections between economic outcomes for women and investments to improve their health and education, decrease gender-based violence and unpaid care work responsibilities, and promote women’s voice and agency in advocating for their own rights” (see for example GADNBreaking Down the Barriers). Huang questioned whether the Fund will reach poor women, stating that “women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the population”.

Elaine Zuckerman of Washington-based NGO Gender Action also expressed concerns about the facility’s target audience, saying: “While We-Fi may empower some women it is questionable whether it will contribute to achieving the Bank’s goal of ending extreme poverty. We-Fi loans will target small to middle-sized enterprises, which evidence shows fail to reach poor women. We-Fi aligns with the Bank’s ‘Gender Equality as Smart Economics’ framework that supports female enterprises as instruments of economic growth without complementarily promoting women’s and men’s equal human rights”

Source: Bretton Woods Project