The Numbers Don’t Lie: The $300 Billion Enterprise Case for Banking Ladies-Owned SMEs

Throughout the globe, there are about 10 million women-owned small and medium enterprises (SMEs) within the formal enterprise sector, which signify roughly 30% of all SMEs in rising markets. 70% of those women-owned SMEs report being unbanked or underbanked, which interprets to a roughly $300 billion market alternative for monetary service suppliers.

These statistics had been quoted by Angela Lumanau of Worldwide Finance Company (IFC), who spoke on a panel at Ladies’s World Banking’s Making Finance Work for Ladies Summit, held in Berlin, Germany this previous November. She was joined by Simla Unal of Turkish Financial system Financial institution (TEB), Annastacia Kimtai of Kenya Business Financial institution (KCB) and moderator Christine Bogdanowicz-Bindert. It was fascinating to listen to the experiences of those ladies and their respective establishments in offering monetary providers tailor-made to satisfy the precise wants of ladies and women-owned enterprises.

As somebody who works on the finance staff at Ladies’s World Banking, I beloved Angela’s statistics, which she introduced with the tidy mnemonic “10-30-70-300.” I heard different indicators, too, reminiscent of how ladies enterprise homeowners repay loans at a equally excessive charge to males regardless of receiving loans which can be 25% smaller in mixture, have shorter compensation cycles, and require rates of interest which can be on common 0.7 share factors larger than these provided to males.^[i] These knowledge factors resonated with me; they bolstered my understanding of the monetary entry hole for women-led SMEs whereas underscoring the tangible alternative for monetary service suppliers to fill that hole. I discovered myself nodding alongside because the panelists spoke “my language,” utilizing arduous numbers and data-based proof to additional show the enterprise case for serving ladies. Ladies’s World Banking’s personal analysis into world greatest practices in banking women-owned SMEs has confirmed that gender-disaggregated knowledge is crucial for monetary establishments in search of to serve this section successfully.

Earlier than I turned too fixated on the facility of this knowledge, Annastacia reminded the viewers (I ought to say, me) that we can’t merely use “loans disbursed,” “accounts opened” or different statistics as widgets representing monetary inclusion. With a view to efficiently meet the wants of women-owned SMEs specifically, upscaling – rising the enterprise right into a business, worthwhile enterprise – is essential. To get there, monetary establishments should spend money on ladies from a holistic perspective and supply a collection of monetary and non-financial providers to satisfy their complicated wants and constraints. Any such women-focused SME banking proposition might embody enterprise loans, financial savings accounts, job expertise coaching, mentoring, and extra.

As with all funding, reaching the break-even level requires time, financial and human assets, and persistence. What the panel made clear, nonetheless, is that the potential return on funding (ROI) for serving this section is large from each a monetary and societal perspective: creating providers to enrich the monetary providing of an establishment can contribute to elevated income and shopper projections, in addition to facilitate a constructive cycle of development for ladies as they develop their companies and achieve better participation within the markets.

Lastly, whereas the numbers present a compelling rationale for banking women-owned SMEs, it’s also essential to do not forget that some priceless outcomes – like the arrogance a enterprise proprietor feels as she expands her enterprise – can’t be measured.

[i] “Ladies-Owned SMEs: A Enterprise Alternative for Monetary Establishments,” IFC (2014), pg. 29-30