How Empowering Women Entrepreneurs Reduces Poverty


SEATTLE — Economic empowerment for women can significantly reduce poverty. Domestically, diversifying household incomes to include paid work from more than one member of the household creates greater financial stability and women tend to invest more of their income back into their families.

On the national level, economies with high levels of female participation are more resilient with less slowdowns in economic growth.

Despite these positives, seventy percent of women-owned small businesses in developing countries struggle to access credit from financial institutions, and the number of women entrepreneurs is equal to the amount of male entrepreneurs in only seven countries. Constraints such as lack of financial funding, socio-cultural barriers and lack of training and education can prevent women from becoming successful entrepreneurs.

For women in developing countries, starting a business is often the best way out of unemployment and poverty. Levels of female entrepreneurship tend to be higher in developing countries than in developed countries, and it is in the poorest regions that the highest rates of female entrepreneurship can be found.

Stronger support for women entrepreneurs at the individual and policy level can help lift individual women, families and entire communities out of poverty.

So what are the best ways to empower women entrepreneurs?

Microloans provide women with the startup capital they need to start a business. Researchers have found that lending to women creates a ripple effect that improves health and education for all members of a household, and in gendered studies on microfinance, women are shown to be more likely to repay loans in a timely manner and are less likely to default than men.

Because larger financial institutions underserve female clients, microloans allow women entrepreneurs to access startup capital otherwise denied to them.

Influential Programs and Organizations

Savings clubs and programs like the Goldman Sachs 10,000 Women initiative also address the issue of startup capital. Savings clubs allow women to borrow money from family and friends or other women entrepreneurs, allowing them to circumvent discriminatory banking systems and receive business support.

Targeted programs providing loan-funding specifically to women like the 10,000 Women program also bridge the access gap. By building a focus on women entrepreneurs into the loan system, Goldman Sachs is ensuring institutional support for women-owned businesses.

Socio-Cultural Barriers

Addressing socio-cultural barriers to women’s entrepreneurship can be just as important as access to startup capital. In many cultures around the world women are expected to care for the domestic space and carry the burden of unpaid work like housework and childcare. Women expanding their role outside of this domestic space can meet serious societal resistance— backlash may even be violent.

Without adequate cultural education and support, female business owners can receive threats or be forced to quit, becoming targets in their communities.

Solutions Arise From Equality On All Levels

It sounds counter-intuitive, but for women entrepreneurs to succeed, programs need to engage men as well. Value for Women, a group promoting women’s economic participation, says that without men’s involvement, women’s drop out rates for the program increase significantly. Countering resistance from male family members is critical to create an environment in which women entrepreneurs can thrive.

Expanding networking opportunities is another way to empower women entrepreneurs. Networking opportunities often happen in male-dominated spaces like bars where it is socially unacceptable for women to go, or venues may be too far from the home to be accessible. Choosing local, women-friendly spaces to host events at times that don’t conflict with domestic life gives women entrepreneurs the chance to network and succeed.

Outside of traditional networking, mentorship structures are another powerful way for women entrepreneurs to connect. Having role models and discussions about work-life balance can be invaluable, and the pooling of knowledge and expertise from women who have overcome the hurdles new entrepreneurs are facing is important.

The 10,000 Women initiative reported that ninety percent of graduates from their program pay it forward and mentor other women in their communities.

Education and skills training is critical to the success of women entrepreneurs. Without education or business training, even the perfect environment for women entrepreneurs would fail to empower. Business training and financial literacy help women understand the nuances of the loans they take out and allow them to make informed decisions to grow their businesses.

Many women in developing countries are living in poverty because they have been disadvantaged by educational systems, and when considering best ways to empower women entrepreneurs, education is the key to ensure their success.

Addressing barriers for women entrepreneurs like lack of financial funding, socio-cultural barriers and lack of training and education can empower them to start new businesses or improve existing ones. Supporting women entrepreneurs on all levels creates lifesaving economic opportunities — poverty disproportionately affects women, and their financial empowerment helps reduce poverty worldwide.

Irena Huang

Photo: Flickr


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