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Boosting Businesswomen in the Bottom Billion

by Isobel Coleman
September 19, 2013

A woman at work in Nieuw Aurora, Suriname, September 2012 (Courtesy Reuters/Ranu Abhelakh). A woman at work in Nieuw Aurora, Suriname, September 2012 (Courtesy Reuters/Ranu Abhelakh).

Extreme poverty, defined as living on less than $1.25 per day, has declined significantly in recent decades. Thirty years ago, more than half of the world’s population lived in extreme poverty – today, less than a quarter do. Still, that translates into some 1.2 billion people living in extreme poverty, and a disproportionate number of them are female. Overall, seventy percent of the world’s poor and about two-thirds of the world’s hungry and malnourished population are women and girls.

This is surprising given the fact that many women are employed: they make up forty percent of the international labor force. In the developing world, there are eight to ten million small and medium-sized women-owned businesses, and millions of other women work in the informal economy. However they earn less than ten percent of the world’s income and own less than one percent of the world’s property. On average, women’s businesses tend to be smaller and less productive than male-owned operations.

Boosting the productivity of businesswomen in the bottom billion could reduce poverty, grow economies, and create jobs. But what is the best way to support women-owned enterprises? Do poor women need more capital, more skills training, or both? A Roadmap for Promoting Women’s Economic Empowerment – a new report from the ExxonMobil Foundation and the UN Foundation explores these questions and offers some interesting insights. The report is unique in that it takes a comprehensive look at both effective and ineffective strategies aimed at helping women launch, sustain, and grow small businesses.

Based on empirical evidence from eighteen commissioned studies across four categories (entrepreneurship, farming, wage employment, and young women’s employment), the Roadmap identifies proven, promising, and high-potential interventions that increase women’s productivity and income in developing economies. The report also lays out a diverse set of “lessons learned” derived from the research – including the finding that giving electricity and mobile phones to the ultra-poor  increases their productivity, and the realization that providing capital or skills training alone is usually not enough to help women grow and sustain their businesses.

The Roadmap report pays extra attention to agriculture.  According to the World Bank, agriculture employs sixty-five percent of Africa’s labor force and accounts for thirty-two percent of the continent’s gross domestic product. And sub-Saharan Africa still accounts for more than one-third of the world’s extreme poor. It is also the only region where the number of poor people has increased significantly over the past three decades, rising from 205 million in the 1980s to 414 million as of 2010.  Improving African agricultural productivity is critical for reducing poverty.

Numerous studies, including some cited in the Roadmap, show that investing in women-owned smallholder farms not only gives women a source of income, but also alleviates malnutrition and hunger. Women account for forty-three percent of the agricultural workforce, but women-run farms underperform those owned by their male counterparts, most likely because female farmers do not have the same access to resources that male farmers enjoy. The Food and Agriculture Organization (FAO) estimates that giving women equal access to agricultural resources could increase yields by twenty to thirty percent. Eliminating gender inequalities in agriculture could raise total output in developing countries by up to four percent, and reduce the number of hungry people in the world by about fifteen percent.

As the authors of the Roadmap report point out, “By expanding and sharing knowledge of what is most effective, funders, implementing organizations and policymakers will be better equipped to achieve greater impact for women, and the benefits for families and communities made possible by women’s economic participation and empowerment.” The Roadmap itself is an excellent contribution to that effort.

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