Last week at the G20 Summit, the World Bank announced the creation of a new $1 billion fund to help support women’s entrepreneurship in developing nations, thanks in part to the work of Ivanka Trump. According to the World Bank, currently 70% of small and medium-sized businesses in developing countries owned by women simply can’t get the financial services to meet their needs, or they are altogether shut out by financial institutions. This fund is a very important step in addressing some of the challenges women in developing nations are up against when starting and growing a business. If it is done right, the fund has the potential to improve the economic outlook for all citizens in these countries.
The fund should be commended for its broad approach to addressing the barriers that women entrepreneurs face. It will include a range of services for women entrepreneurs, including access to loans, insurance, and training. And it will engage government leaders to change policies that make it harder for women to start businesses. These are important ingredients for success.
But in this time of growing inequality and polarisation, it is critical for the fund to reach poor women in order to have the needed impact. Women who own small and medium-sized businesses (10-500 employees) are not typically among the poorest segments of the population, and so it is important that the fund makes a concerted effort to reach microentrepreneurs who are the vast majority of women business owners in developing nations. Some microenterprises have significant potential to grow and create jobs, especially if this initiative can help them connect to the supply chains of larger businesses. It is promising that this fund commits to supporting businesses at early stages of growth, which means that it can reach women who own or want to start smaller businesses. But time will tell how much it focuses on poorer women, who often require a grant of seed money, rather than loans. With the right design, the fund could benefit businesses along the spectrum by helping women make the transition from micro to small businesses, and by increasing access to financial and other resources for all women.
Just as important, while the new fund might represent two steps forward, it could easily mean three steps back for women if other programs, such as family planning, are cut in the meantime. A well-designed approach to empower women must recognise that positive economic outcomes for women are deeply tied to improved health and education, decreased gender-based violence, and increased autonomy over their own lives. With President Trump’s proposed 30%-plus cut to USAID, the elimination of the budget for the State Department’s Office of Global Women’s Issues, and the reinstitution of the global gag rule which effectively limits the availability of contraception in the developing world, it’s difficult to understand how this new fund is part of a coherent strategy to advance women’s empowerment. In fact, just days after the G20 announcement, Melinda Gates and other leaders met at the Family Planning Summit in London and expressed deep concern over the planned cuts.
As Ivanka Trump and World Bank President Jim Kim recently wrote, women are “an untapped source of growth” and “supporting women’s economic participation has enormous dividends for families, communities, and whole economies.” This new fund can advance this vision, but only if it is well-designed to address these challenges. If done correctly and with complementary programs that enable women’s empowerment, the fund can have a positive impact on millions of women around the world who are working every day toward a better future for themselves, their families, and their communities.
Cindy Huang is a senior policy fellow at the Center for Global Development. Previously, Huang was the Deputy Vice President for Sector Operations at the Millennium Challenge Corporation where she led the strategic direction and technical oversight of a $2 billion portfolio of social sector investments, and also served in the Obama Administration as the director of policy of the State Department’s Bureau of Conflict and Stabilisation Operations.