Global Challenges and OpportunitiesWomen Entrepreneurs Finance

Matthew Gamser, HeadSME Finance Forum/ Women’s Finance Hub

Moscow – May 2013

An integral part of SME Finance Forum

Virtual Platform to share knowledge and promote best practices in women's access to finance

promote collaboration successful business models disseminate research, data information address goals of the G20 SME Finance Sub-Group

Accelerate Financial Inclusion for Women Owned SMEs

What is the Women’s Finance Hub?

There are 29-35M formal and 101-124M informal MSMEs with at least one female owners in developing world, representing 32-39% of total MSMEs

SOURCE: McKinsey-IFC MSME database; Enterprise Survey; ILO, Human Development Report; team analysis

Number of formal and informal MSMEs with 1+ female ownersMillions

Proportion of MSMEs with 1+ female owners Percent

130-15929-35

Middle East &North Africa 1-2

Total(ex-high income)

1

South Asia 5-64

Central Asia &Eastern Europe 7-84-5 3

Sub-Saharan Africa 10-133-4 7-9

Latin America 24-296-7 18-22

East Asia 84-10214-17 69-85

32-39

13-16

11-14

37-45

25-30

38-46

40-48

32-39

3-4

5-6

31-38

26-32

48-59

45-56

Formal Informal

• Largest proportion of women MSMEs come from East Asia• Women representation lowest in South Asia and Middle East & North Africa

3

101-124

1

1

Global Representation – Women Owned MSMEs

Data from 34 IFC client banks in 25 countries covering 6 regions shows that about 16% of our client bank SME portfoliosare loans to women-owned SMEs (with 51%+ women ownership)

Regional percentages allow for establishment of minimum regional thresholds Regional numbers also enable regions to fine tune SME and BOW strategies and establish IDG3 gender targets

Region % of women-owned SMEs in IFC

client bank portfolios

East Asia and Pacific 26.6%

Latin America and the Caribbean 22.2%

Europe & Central Asia 18.1%

Sub-Saharan Africa 15.1%

South Asia 9.5%

Middle East & North Africa 5.7%

Global 16.4%

Sizing the market: IFC Portfolio

Clients

Sizing the market: IFC Portfolio

Clients

IFC’s Gender Baseline Survey of Portfolio Clients

Low Access to Finance for Women

Credit Access and Gap

UnservedUnder served

Well servedDo not need credit

Latin America

Sub-Saharan Africa

53-65 8-10

5-6

23-29 27-33 23-28 12-15 28-34 21-25 31-38 17-21 21-26

Central Asia and Eastern Europe

East Asia

South Asia

MENA

14-17 43-53

15-18

18-22 11-13 55-68 14-17

10-12

4 62-76 14-17

11-13

55-67 18-22

6-7

12-14 49-59 17-21

7-8

18-22 24-30 33-40

15-18

18-22

17-21 35-43 13-16 24-30 24-30 31-37 13-15 23-28 11-13 43-53 19-23 17-20

25-31 11-14

11-14

42-52 21-26 14-17

12-14

43-53 27-34 19-23

10-12

34-41

18-22 36-44 10-12 26-31 29-35 27-33 7-9 27-33 19-24 46-56

9-11

16-20

Very small Small Medium

Credit needs and access for formal SMEs with at least one female owner by region1, Percent

• Sub-Saharan Africa and East Asia report the highest rates of unserved women enterprises• Underserved rates are highest among medium enterprises, since most already have access to finance

1 Definitions (see appendix): Unserved: Do not have a loan AND applied OR needed loan; Underserved: Have a loan but access to finance is a constraint (but not necessarily a “major” or “severe” constraint, which is a separate question); Well-served: Have a loan AND access to finance is not a constraint; No need: Do not have a loan AND did not apply AND did not need

SOURCE: IFC SME database, Enterprise Survey, team analysis

In ECA 50-65% un-or under-servedEstimated credit gap $40 – $80 billion

High-growthsegment

In Georgia women enterprises represent over

40% of registered businessesIn Moldova, women

entrepreneurs represent 53% of registered businesses

In developing countries Women-owned businesses represent 38% of the total number of registered small

and medium enterprises (MSME)

In Turkey women businesses represent over 40% of

registered firms, but less than 15% have access to

commercial Bank finance

Excellent repayment rates

Economic performance with most gender-

diverse management teams greatly

outperforms industry averages

Chart

Investing in Women Entrepreneurs is Good Business

Untapped market

In Russia women businesses represent over 33% of

registered firms, but less than 10% have access to commercial bank finance

Deposits

Personal Loans

Financial Planning

SME Banking

Financial Products for the Women-owned business segment – Opportunity for cross selling

7

Women-targeted marketing

Train Bank staff and managers

Tailor existing products

Business strategy

Enter untapped markets

Increase market share

Greater brand visibility

Enhanced profitability

• Provides source of market differentiation in competitive SME markets• Establishes reputation as an innovator • Entry and differentiation in specific sectors where concentration e.g. retail , mobile, youth, health• Creates strong community-based advocacy and enhances corporate social responsibility

Opportunities for Banks Targeting the Women’s Market

• Female customers have a higher propensity to save both as business and personal customers• Deposits from female customers typically grow at higher rate and stay with the Bank longer• Net funding surplus as a segment

Information Services

• Once main banker status achieved, higher cross-sell ratio’s (between 1 and 2 times)• Higher footings obtained per relationship and higher fee generation • Respond well to relationship management-based models and willing to pay for it• Demonstrate stronger retention rates in many clients

• Take the business relationship, high likelihood that will take majority of family wallet • High advocacy creates strong conversion rates for husband business and personal FS• Up to 85% of family financial decisions made by the women globally

Market Share Growth

• Female customers have lower risk tolerance as both business and personal customers• Women-led businesses outperform those led by men, including start-ups• Stronger business plans can create higher acceptance rates and reduced processing costs• Default rates are either the same or better than male counterparts depending upon market

Information ServicesHigher Cross-Sell

and Loyalty

Strong Savings Propensity

Positive Risk Behavior

Information Services

Linkage to Family Wallet

Factor* Description

* - Source: IFC Analysis

Gender Portfolio: $164M invested 20 clients with gender projects Strong pipeline: about $741M Gender champion structure

in place in HQ and Regions Gender SME Baseline established

A global footprint with investment & advisory projects supporting women entrepreneurs

$63 $80

$741

FY06 - 10 FY11-12 Pipeline

FM Gender Financing by Year($million)

IFC Results to DateIFC Results to Date

The Way Forward

and

Potential of both relationship and transactional-based strategies