A gender gap in the labor market is not new news, but what is new news is the Women’s Global Development and Prosperity (W-GDP) Initiative.

 

ECONOMIC PARTICIPATION

 

Economic participation is measured by the number of individuals who are currently employed and who are actively seeking employment.

 

Over the latter half of the 20^th century, the economic participation of women increased substantially – from 37% to 61%. All women – regardless of age, race, ethnicity, marital status, number of children, or education – began participating. Beginning in the early 2000s, however, the economic participation of women declined, dropping to 49%. For men, it’s 75% – a difference of 26 percentage points.

 

 

This difference exists for three reasons: first, women bear a disproportionate amount of responsibility for unpaid care and domestic work; second, women lack the training that men possess often because of self-segregation into traditional male and female fields of study; and third, women are treated differently than men because of biased beliefs about their qualifications, or fear of the additional “costs” associated with female employees.

 

 

ECONOMIC EMPOWERMENT

 

Economic empowerment refers to an individual’s capacity “to participate in, contribute to and benefit from growth processes in ways that recognize the value of their contributions, respect their dignity and make it possible to negotiate a fairer distribution of the benefits of growth. Economic empowerment increases women’s access to economic resources and opportunities.”

 

MOVING FORWARD – W-GDP INITIATIVE

 

One thing is clear: “when women are empowered, they spur economic growth and help create stable societies.” In fact, research has shown that “promoting women’s economic participation could boost global economic growth by $12 trillion by 2025.”

 

For this reason, President Trump introduced the W-GDP Initiative, an initiative focused on promoting the economic empowerment of women across the globe.

 

The W-GDP is built on three core pillars.

1. “Women prospering in the workforce” – This pillar aims to increase the global labor force participation and advancement of women in the workforce by providing them with quality education, training, and support.

2. “Women succeeding as entrepreneurs” – This pillar aims to increase access to financing, market opportunities, and training so women can establish and grow their businesses.

3. “Women enabled in the economy” – This pillar aims to reduce barriers and enhance protection in policies, laws, regulations, and practices to facilitate women’s participation in the economy.

 

WOMEN SUCCEEDING AS ENTREPRENEURS

 

The economic might of women entrepreneurs is significant and growing. According to a recent census, the number of women-owned businesses in the U.S. has increased 26.8% to 9.9 million businesses. This is compared to the 14.8 million male-owned businesses. It was also reported that the female-owned businesses employ nearly 9 million people and contribute an estimated $1.4 trillion to the economy annually.

 

 

Unfortunately, women entrepreneurs do not enjoy equal access to the financing mechanisms that men do, nor do they enjoy equal access to the services or business networks necessary to sustain and expand their businesses. As a result, there is an estimated loss of $220-360 billion in unmet financing needs.

 

FINANCING HER BUSINESS

 

An entrepreneur must determine whether she will borrow money or sell ownership interests to investors.

 

The first option an entrepreneur has is herself. Self-financing includes tapping into personal savings and retirement accounts, leveraging personal assets, and opening zero interest credit cards.

 

After exhausting her personal resources, an entrepreneur can turn to those who know her best, her friends and family. Borrowing from friends and family can be advantageous since they will be easier to persuade than banks and less likely to demand stringent repayment terms or high interest rates. Borrowing from friends and family, however, can be risky, especially if the company fails and the investors lose their money.

 

The next option is debt financing. This includes bank loans, SBA loans, and microloans.

 

To obtain a bank loan, the entrepreneur should have a detailed business plan, an expense sheet, and financial projections for the next five years to present to the bank for consideration. One benefit of bank loans is that the entrepreneur retains complete control of her business.

 

If the entrepreneur cannot obtain a bank loan, she should look into SBA-guaranteed loans. The SBA partners with lenders, community development organizations, and micro-lending institutions to provide loans when a bank thinks the entrepreneur’s business is too risky to lend money to. This partnership reduces the lender’s risk and makes it easier to access capital. To be eligible, the business must be officially registered and operate legally, the business must be physically located and operate in the U.S. or its territories, the business owner must invest their own time and money into the business, and the business must have exhausted all of their other financing options.

 

Microloans are small loans for entrepreneurs who cannot obtain a traditional business loan from a bank. Microloans are provided through local, community-based intermediary lending organizations such as include the SBA Microloan Program, Accion, and Grameen America.

 

If a company requires additional rounds of financing, an entrepreneur can seek assistance from venture capitalists (VCs). VCs make substantial equity investments in non-public enterprises in exchange for a stake in the business. Having a VC on board can be advantageous as they tend to be very experienced in their respective field and have a deeper supply of capital, connections, and talent. VCs include the BBG Ventures, 500 Women, and Women’s Capital Connection.

 

An entrepreneur can also try to attract an angel investor. An angel investor is a high net worth individual who invests in and who provides sound business advice to an entrepreneur during the early stages of the business. Usually, the investment an angel makes will not represent more than 10% of their portfolio. Angel investor include 37 Angels, Pipeline Angels, and BELLE Capital USA.

 

NEW PROGRAMS AND PARTNERSHIPS

 

As a part of the W-GDP initiative, the Trump Administration announced the following programs and partnerships.

-The W-GDP Fund

-The USAID-UPS Memorandum of Understanding

-The Department of State’s Office of Global Women’s Issues

-Overseas Private Investment Corporations

-Peace Corps

 

Sources:

The Women’s Global Development and Prosperity Initiative: Will it work?

https://www.brookings.edu/wp-content/uploads/2017/10/es_101917_the51percent_full_book.pdf

https://www.census.gov/library/visualizations/2017/comm/women_owned_businesses.html

https://www.census.gov/content/dam/Census/library/visualizations/2017/comm/women_owned_business.pdf

https://www.census.gov/newsroom/blogs/random-samplings/2016/03/women-owned-businesses-on-the-rise.html

https://www.oecd.org/gender/Closing-Gender-Gaps-in-the-Labour-Markets-of-Emerging-Economies.pdf

https://www.entrepreneur.com/article/297341

https://www.devex.com/news/us-launches-women-s-economic-development-initiative-questions-remain-94276

https://www.ilo.org/infostories/en-GB/Stories/Employment/barriers-women#global-gap

https://www.state.gov/s/gwi/priorities/econ/258463.htm

http://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures

https://www.usaid.gov/what-we-do/gender-equality-and-womens-empowerment

https://www.entrepreneur.com/encyclopedia/venture-capital

https://www.forbes.com/sites/georgedeeb/2016/07/18/what-exactly-is-venture-capital/#6c2ac6c42501

https://www.fundera.com/business-loans/guides/small-business-loans-for-women