Increasing Women’s Participation in Small and Medium Enterprises
Currently underrepresented as heads of small businesses, women in Latin America could help drive growth by becoming entrepreneurs.
With women as a “driving force” behind Latin America’s prosperity, can female entrepreneurs help stave off effects from the global economic crisis? Some say yes. A November 16 report from the Organization for Economic Co-operation and Development’s (OECD) explains that one way for the region to weather the storm involves encouraging the growth of small and medium-sized enterprises (SMEs). Efforts to expand women’s participation in these businesses aim to drive the expansion of SMEs and economic growth in Latin America.
Though SMEs account for 99 percent of Latin American businesses and employ 67 percent of workers, they “contribute relatively little to GDP.” Moreover, women are less likely to open and run SMEs; worldwide, females run 25 percent of small businesses and only 8 percent of medium-sized enterprises. Facing hurdles such as lower access to credit, childcare responsibilities, and less work experience, women in Latin America sometimes experience difficulties opening a business.
Access to finance and credit often proves a hurdle for women entrepreneurs. Currently, SMEs in Latin America receive only 12 percent of the total credit in the region. A 2012 study by the Inter-American Development Bank (IADB) found that 39 percent of credit given to SMEs tended to be businesses run by men. Only 7 percent of banks said women-run businesses represented more than half of their credit portfolios.
Consequently, efforts are in place to expand female-run SMEs. The Women’s Entrepreneurship in the Americas initiative—a major public-private partnership launched at the Summit of the Americas in Colombia, in April—helps support and create small- and medium-sized businesses owned by women by providing training and expanding market and finance access. Participating organizations range from Goldman Sachs’ 10,000 Women program, which trains female entrepreneurs, to the Walmart Foundation, which so far gave $1.5 million in grants to develop women-run businesses.
One key element of the program involves ensuring credit access to women entrepreneurs. An IDB project on women entrepreneurshipBanking (weB) initiative plans to provide $5 million in technical assistance to encourage lending to women-run SMEs, as well as $50 million in loans and partial credit guarantees for lending to female entrepreneurs. Since the Summit of the Americas, weB gave $5.1 million to Banco Pichincha in Ecuador, while $550,000 in technical assistance was approved for Scotiabank in Jamaica. The IDB also is also considering partnering with Brazil’s Itau Unibanco to connect women entrepreneurs with financing.