Disappearing businesses and the long road to recovery: catalyzing women’s entrepreneurship
OECD Forum Network
As COVID-19 restrictions have started to ease in Bangkok, I stepped out this morning to get my usual stock of vegetables and fruits. As I walked down the street, I noticed that three businesses, all of them owned by women—a florist, stationery shop and a vegetable vendor—had shut down. Enquiring about the friendly businesswomen who were part of my morning routine chat, I learned that because of the pandemic, and since two of the three businesses were not registered formally, they did not receive much in terms of subsidies to sustain their businesses and had to sell their assets to pay debts.
This story might resonate with many businesses across the region and beyond, but it has a sharper sense of connection to those that operate in the informal and micro segments of economies. The difficulties that women entrepreneurs faced before the pandemic mostly remain, but their intensity has significantly increased. Diverse factors—such as women’s lack of access to finance, limited access to information and communication technology and discriminatory legislative frameworks—coupled with restrictive cultural and social norms impede women’s ability to start, sustain and expand their businesses. Even before the COVID-19 pandemic, women in the Asia-Pacific region were doing up to four times as much unpaid care work as men; with the onset of lock-down measures, this imbalance has widened considerably and has led to greater risk of women-led businesses closing down.
The gaps in accessing information and support measures by women entrepreneurs have been further highlighted during the pandemic. For example, ESCAP’s study on the impact of COVID-19 on Micro, small and medium sized enterprises (MSMEs) in Viet Nam has shown that only 2 per cent of the surveyed enterprises benefitted from state-supported schemes. At the same time, women-led MSMEs found it harder to access funding due to complicated admin procedures, producing formal documentation and limited networking opportunities.
The Catalyzing Women’s Entrepreneurship (CWE) Programme is more relevant than ever, recognizing the escalated challenges women entrepreneurs face and adopting an ecosystem approach to design solutions that are not only effective but also sustainable. Working with women entrepreneurs, CWE enhances access to capital through innovative financing mechanisms, increases participants’ knowledge of information and communication technology through relevant training and tools, and supports the development of gender-responsive business development policies and programmes.
Here are some reflections on what could potentially enhance the enabling environment for women entrepreneurs across the Asia-Pacific region:
Beyond traditional partners. In all the countries where ESCAP is implementing this initiative, the policy reforms are being initiated through local SME agencies. Breaking away from the traditional lens of placing the responsibility with women’s ministries/agencies, the programme has been able to secure commitments to review, revise and implement women-centric MSME policies and laws. For example, in Cambodia, the National SME policy has been revised to include specific provisions for women-led MSMEs. In Viet Nam, the SME law has been evaluated to assess its implementation effectiveness, and a new decree has been drawn up to include targeted provisions for women-led MSMEs.
Expansion of existing service delivery mechanisms. Our recent studies have shown that access to information and services remains one of the significant challenges that women entrepreneurs face, for example in registering their businesses, obtaining finance or accessing training and networking opportunities. ESCAP recently facilitated a dialogue on existing service delivery mechanisms in the region, such as One-Stop Hubs that offer a streamlined platform for MSME services. Based on a compilation of good practices from seven countries in Asia and the Pacific, we discussed ways of building on these One-Stop Hubs to cater to the specific needs of women entrepreneurs. For example, in the Philippines, the Department of Trade and Industry’s Negosyo Centre Programme brings all its services into a single portal and ensures that women entrepreneurs are a target group for them. Viet Nam, meanwhile, has established a dedicated portal for women entrepreneurs under the National SME portal, supported by the CWE programme. In addition to a range of services that are provided to women entrepreneurs, specific areas such as psychosocial support services are now being offered to women entrepreneurs. With increased internet connectivity and mobile penetration, these One-Stop Hubs are also leveraging the potential of e-commerce markets, linking women MSMEs to broader markets and consumer bases.
Whole of government approach. The CWE programme has established advisory committees at the country level that serve as institutional mechanisms for collaborating with all stakeholder groups that impact women entrepreneurs. These multi-ministry committees, with representatives from central banks as well as women entrepreneurs, have not only set the tone for structured and inclusive dialogue on the topic, but also garnered commitment at the highest political level for advancing women’s entrepreneurship.
Addressing barriers at all stages of the entrepreneurial journey. We must keep in mind the overall life-cycle and journey of women entrepreneurs. Considering the different stages and challenges—such as lack of financing options, overcoming socio-cultural barriers or limited digital skills and capacities to name a few—has been an integral part in designing an ecosystem approach at the national and regional level. For example, in addressing the challenges in access and use of finance, the programme has established partnerships and used blended finance to support a range of gender-smart investment mechanisms, including a FinTech challenge fund, impact investment fund and a women’s livelihood bond. Simultaneously, support is being provided through the CWE programme to equip women entrepreneurs with digital and business skills that are critical for business and financial management. For example, in Cambodia, CWE is helping women entrepreneurs to use the Kotra Riel mobile app, which allows them to record income and expenses and, more importantly, to prepare financial records for loan and financing applications.
Importance of data and evidence. Every country context is different, even within the same region. For example, when we embarked on the programme in Samoa, the main challenge for policymakers to make meaningful policy interventions for women entrepreneurs was the complete lack of data and statistics on women-led businesses. A report is underway that assesses available data points and suggests ways of using existing surveys, such as the population census, to collect more robust information on women entrepreneurs. Similarly, the research undertaken in the different countries before and during the pandemic has helped design context-relevant interventions, as well as pave the way for creating indicators that measure the impact of various initiatives at the country level.
Given the scale of this problem—exacerbated as a result of the COVID-19 pandemic—the spread of good practices is only possible through partnerships. In addition to the work in the targeted six countries, ESCAP is working with regional bodies such as the Association of Southeast Asian Nations (ASEAN) to replicate these good practices in more countries. While it is extremely important in the policy domain to influence governments to recognize and address the challenges women entrepreneurs face, more investment is needed by development partners across the board to bring these conversations to scale. The role of partnerships and increased investments is critical to ensure women entrepreneurs build back stronger and are resilient to any future shocks.
This article was originally written for the OECD Forum Network.