Assessing and Mapping the Global Finance Gap for Women-owned MSMEs June 20, 2011 G20 “Strengthening Access to Finance for Women-owned SMEs” Preliminary Findings Workshop CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited. This information, while based on sources that McKinsey consider to be reliable, is not guaranteed as to accuracy and does not purport to be complete. This information shall not be construed, implicitly or explicitly, as containing any investment recommendations.
Transcript
Assessing and Mapping the Global Finance Gap for Women-owned MSMEs
June 20, 2011
G20 “Strengthening Access to Finance for Women-owned SMEs” Preliminary Findings Workshop
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited. This information, while based on sources that McKinsey consider to be reliable, is not guaranteed as to accuracy and does not purport to be complete. This information shall not be construed, implicitly or explicitly, as containing any investment recommendations.
McKinsey & Company 1|
Context and objectives
Leaders at the G20 Summit in Seoul endorsed the Financial Inclusion Action Plan and the creation of the Global Partnership for Financial Inclusion
The SME Finance task group of the GPFI has introduced a workstream to address the unique challenges women entrepreneurs face in growing their businesses, which are major bottlenecks to growth and development
This work is building off of the previous MSME finance gap and mapping exercises complete by IFC and McKinsey last year
Context Objectives of the effort
Understand how access to finance for women-owned MSMEs differs from men-owned MSMEs by mapping women-owned MSMEsworldwide and their ability to access to finance
Evaluate the quality and nature of this financing, and the resulting effects on growth for women-owned MSMEs
Illustrate best practices for promoting growth of women-owned MSMEs by providing access to finance
Build fact base to enable policy discussions
Provide input to the G20 Data Working Group about potential data gap
Key question to be answered: What proportion of total MSMEs are owned by women? How does access to finance for women-owned MSMEs differ from overall MSMEs? What are the best practices for growing women-owned MSMEs through access to finance?
McKinsey & Company 2|
Summary of findings and key messagesWomen-owned MSME landscape Globally, there are 29-35M formal and 101-124M informal MSMEs with 1+ female owner outside of high-income OECD,
representing 32-39% of total MSMEs1
– Female ownership is relatively high in East Asia, Central Asia & Eastern Europe, and Latin America, and very low in MENA and South Asia – the proportion is related to both female participation rate in labor force and level of equity in legal rights
– Enterprise with 1+ female owners are more concentrated in smaller firms, and in retail and other service sectors, compared to manufacturing
Access to finance for women-owned MSMEs Globally, MSMEs face finance constraints – 45-55% of formal SMEs are unserved, and 21-24% are under-served The level of access to financial products and loan application and acceptance rates of firms are fairly consistent across
gender lines– Potentially because women entrepreneurs who persevered to overcome barriers and were able to set up a business
may outperform– Overall, firms with at least one female owner collectively face $292-357Bn credit gap, representing around 30% of
total gap in emerging markets, slightly less than total proportion of firms with 1+ female owners However, there are differences between women and men owners and across regions
– Literature and anecdotal evidence suggest that women are disadvantaged in the formation of MSMEs due to systematic biases in the enterprise creation process
– Women entrepreneurs are more likely to cite access to finance as a major or severe constraint– Quality and nature of financing that women entrepreneurs have access to are different from those of male
entrepreneurs but in inconsistent ways– There are significant differences across regions in terms of how well-served enterprises are and the significance of
gender differences
Implications and actions for the future Given this fact base, there are three ways to better aid women entrepreneurs and their access to finance:
– Facilitate potential women entrepreneurs to start up business– Improve data availability for more robust analyses– Provide targeted-intervention to improve access to finance
McKinsey & Company 3|
Notes on data sources and limitations
Estimated number of MSMEs, formal and informal, around the world Estimated degree of access to finance and value of credit gap Used Enterprise Survey as a starting point, triangulated with interviews and additional data
points; informal sector extrapolated using multiple assumptions For countries without Enterprise Survey data, used regional average as proxy No gender disaggregated data included
Primary data source for global data
IFC-McKinsey MSME model (2010)
Enterprise Survey (latest available)
Additional data sources
ILO: Women and Men in the Informal Economy: A Statistical Picture Country and region specific studies (e.g., Women’s Entrepreneurship in the Philippines, Serving the Financial Needs
of Indonesian SMEs, Women-owned Businesses in Asia/Pacific, Middle East and Africa: An Assessment of the Business Environment)
Expert interviews (McKinsey, IFC / World Bank, external)
Most comprehensive global dataset with gender-disaggregated information– Rural and agribusiness not covered
Question used to define women ownership – “Is at least one owner female?”– No indication of the actual percentage of female ownership– No indication of key decision maker– Analyses replicated with alternative definitions where possible (e.g., woman sole
proprietor, top manager) Very limited information on informal enterprises (same as last year) Several countries, most notably China, did not include gender-related questions India and Middle Eastern and North African countries (except for Yemen) have separate
questionnaire, and some variables from the standard sets are not available
McKinsey & Company 4|
Contents
Landscape of women-owned MSMEs
Access to finance gap for women-owned MSMEs
Implications and questions for discussion
McKinsey & Company 5|
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 ownersPercent
1
1
130-15929-35 101-124
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
McKinsey & Company 6|
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Argentina
Botswana
Bolivia
Brazil
3226
Female share of total employment (%)Women as percent of total work force
525048464442403836342422200
Uruguay
Woman ownershipPercent of formal MSMEs with 1+ woman owners
3028
Ukraine
Turkey
Syria
South Africa
Slovakia
Russia
Poland
Philippines
PeruParaguay
Panama
Niger
Nicaragua
Nepal
Moldova
Mexico Mali
Macedonia (the former Yugoslav Republic of)
Lithuania
Kyrgyz Republic
KenyaIndonesia
India
Honduras Georgia
El SalvadorEcuador
Croatia
Colombia
Macedonia
C. Asia / E. Europe
Sub-Saharan Africa
Latin America
East Asia
South Asia
MENA
r2 = 0.35
“Fair share”
There are many countries, particularly in Sub Saharan Africa, where women entrepreneurs are underrepresented relative to their share in the labor force
Female ownership generally increases as the female share of total employment goes up, but women entrepreneurs are under-represented in some regions
SOURCE: McKinsey-IFC MSME database; Enterprise Survey; ILO, team analysis
Higher representation of women in MSMEownership than labor force
McKinsey & Company 7|
1 Used 6 questions to determine: Do men and women have : 1) The same personal income tax liability?; 2) Equal capacity by law? 3) Equal capacity by law (married men and married women)? 4) Equal ownership rights over moveable and immoveable property?; 5) Equal inheritance rights over moveable and immoveable property?; 6) Can women work in all industries?
Average percent of formal enterprises with 1+ woman owner in countries categorized by women rights (percent)
45
40
3137
11
16
37
42
59
31
18
East Asia
South Asia
Middle East &North Africa
Latin America
Central Asia & Eastern Europe
Sub Saharan Africa
No (0-2 “yes”)
Equal (3-5 “yes”)
Yes (6 out of 6 “yes”)
6
16
# of countries
2
5
9
1
1
2
5
4
4
In C. Asia/E. Europe and Latin America, countries where women have equal rights have a slightly higher proportion of MSMEswith 1+ woman owner
In Sub-Saharan Africa, proportion of MSMEs with 1+ woman owners is much lower in countries where women have inferior rights
In other regions, sample is too small for conclusions
Legend – women rights compared to men
SOURCE: IFC MSME database; Enterprise Survey; Women, Business and the Law database; team analysis
Within regions, women entrepreneurs are better represented wherewomen have equal or at least partially equal legal rights
McKinsey & Company 8|
Women entrepreneurs are more concentrated in smaller enterprises
Proportion of formal enterprises with 1+ female owners by sizePercent
Clear trend in East Asia and Sub-Saharan Africa, some in Latin America The trend would be more pronounced if we focus on true women-owned enterprises (50%+ women
ownership) since the Medium enterprises likely to include multiple owners An exception is in South Asia where there are more firms with 1+ female owners for medium enterprises
East AsiaLatin America
Central Asia & Eastern Europe
Middle East & North Africa South Asia
Sub-Saharan Africa
Total(ex-high income)
36-44
38-46
39-47
32-40 38-46
37-46
37-45
38-46
10-12
19-24
25-30
27-33 12-14
17-20
15-18
15-19 10-12
22-27
13-16
5-6
18-22
29-35
32-40
33-40
SOURCE: McKinsey-IFC MSME database; Enterprise Survey; ILO, Human Development Report; team analysis
33-40Medium(50-250)
Small(10-49)
40-49
Very small(5-9)
39-47
Micro(1-4 employees)
37-45
McKinsey & Company 9|
Women entrepreneurs are also more highly represented in retail sector, than manufacturing or services
Proportion of formal enterprises with 1+ female owners by sectorPercent
Clear trend in Latin America, Central Asia & Eastern Europe, and MENA An exception is in South Asia where there are more firms with 1+ female owners in manufacturing sector
East AsiaLatin America
Central Asia & Eastern Europe
Middle East & North Africa South Asia
Sub-Saharan Africa
Total(ex-high income)
Services 39-48
Manufacturing 40-49
Retail 48-59
SOURCE: McKinsey-IFC MSME database; Enterprise Survey; ILO, Human Development Report; team analysis
32-39
37-45
42-51
36-44
36-44
36-44
25-31
23-28
29-36
5-6
10-12
11-14
10-13
18-22
6-7
30-36
31-38
33-40
McKinsey & Company 10|
Contents
Landscape of women-owned MSMEs
Access to finance gap for women-owned MSMEs
Implications and questions for discussion
McKinsey & Company 11|
Our work last year confirmed that globally, SMEs face finance constraints – 45-55% of formal SMEs are unserved, and 21-24% are under-served
1 The number of MSMEs unserved or under-served is calculated based on MSMEs’ access to bank loans and overdraft only (i.e., not including MSMEs’access to trade financing, leasing, factoring and other forms of credit). However, the value of the credit gap computed in Section 3 takes into consideration credit available through loans, overdraft, leasing, factoring and trade finance
21-24
Well-served:Have a loan and/or overdraftand no financing constraint
8-10
100
Total formal SMEs in emerging markets
Do not need a loan
16-20
Unserved:Do not have a loan or overdraft but need a loan
45-55
Under-served:Have a loan and/or overdraftbut financing constraints
Formal SMEs use of financial institution loans and financing constraints1
Percent of total enterprises in emerging markets (i.e., excluding high-income OECD)
SOURCE: McKinsey-IFC MSME database; team analysis
McKinsey & Company 12|
There is limited usage of formal credit for firms with and without 1+ female owners…
51-62
38-46
62-76
49-60
81-99
72-88
11-13
10-12
23-28
12-15
71-87
45-56
Loan44-53
44-53
Overdraft45-55
46-56
Checking82-100
82-100
24-30
26-32
11-13
9-12
57-70
64-79
30-46
19-23
23-28
22-26
85-100
74-90
15-19
77-94
16-20
14-17
18-22
71-87
1+ woman owners
No women owner
Latin America
Sub-Saharan AfricaSouth Asia East Asia
Central Asia & Eastern Europe
Middle East & North Africa
Proportion of formal enterprises with access to financial productsPercent (not weighted by size)
31-38
25-31
28-34
22-27
69-84
68-83
Total (ex-high income)
In Latin America and Sub-Saharan Africa, firms with 1+ female owners have higher usage to all three products, than firms with no female owners
Across the board firms with 1+ female owners have higher usage of overdraft and loans than firms with no female owners
SOURCE: McKinsey-IFC MSME database; team analysis
McKinsey & Company 13|
… and the application and acceptance rates for loans are fairly consistent across gender lines
SOURCE: McKinsey-IFC MSME database; team analysis
“Did you apply for a loan in the past year”
“Was your loan accepted?” (of those who applied for a loan)
Larger proportion of women firms have applied for a loan across four regions Of those who applied, the rates of acceptance are equal between firms with and without female owners Sub-Saharan Africa in general have much fewer proportion of firms applying and getting accepted
Latin America
Sub-Saharan AfricaEast Asia
Central Asia & Eastern Europe
Difference in loan application and acceptance1, 2
Percent
1 Data not available for MENA and South Asia (questions never asked); 2 Regional simple averages due to low sample size in responses to these questions
38-46
37-45
75-91
79-97
1+ woman owners
No women owner
33-41
27-33
75-92
73-82
41-51
37-45
83-100
82-100
21-25
17-21
62-75
63-77
McKinsey & Company 14|
Part of the reason may be that in regions where it is more difficult to set up a business, those who persevere may manage to get access to loan
SOURCE: McKinsey-IFC MSME database; team analysis
In South Asia, becoming an entrepreneur is a major challenge
However, the existing firms with female owners have better access than firms without female owners1
Firms with 1+ women owners represent 11-14% of total formal enterprises in South Asia and 13-16% in MENA
Compared to the labor participation rate in the region, women ownership is under-represented
– In India, where 27% of formal sector employment is women, only ~7% of formal enterprises have 1+ female owners
This is also supported by customary barriers that do not promote women’s entrepreneurship
– Lowest ranking regions on the Gender Equity Index for economic activity (SA – 35, MENA- 47) and empowerment (SA - 20, MENA- 19)2
– Although the sample size is small (2 for SA and 2 for MENA), Women, Business, and the Law data suggests these regions tend to have less equitable legal environments
MENA C. Asia/E. Europe
Formal MSMEs that consider access to finance a major/sever barrierPercent
293026
32
2423
1413
2529
4643
SSA
No women owners
1+ woman owners
East AsiaSouth Asia
Latin America
MENA C. Asia/E. Europe
Formal MSMEs with loansPercent
45
56
3226 3031
2230
1816
SSA East AsiaSouth Asia
Latin America
49 52
1 Data accuracy - +/- 10% (not included here to make the graphs legible)2 Index of 100 indicates no gender gap
McKinsey & Company 15|
Overall, firms with at least one female owner collectively face $292-357Bncredit gap, representing around 30% of total gap in emerging markets, slightly less than total proportion of firms with 1+ female owners
SOURCE: McKinsey-IFC MSME database; team analysis
Value of formal enterprises’ credit gap in emerging marketsUSD Billions
By geography By size
Total292-357
South Asia 5-6
Sub-Saharan Africa 21-26
Middle East & North Africa
25-30
Central Asia & Eastern Europe
62-75
Latin America 70-86
East Asia 109-134
Total292-357
Medium 49-60
Small 110-134
Very Small 54-65
Micro 79-97
Overall credit gap of ~31% is less than the total proportion of women enterprises (32-39%), indicating firms with female owners have slightly less (but not materially different) credit gap than firms with no female owners; this is partially driven by lower revenues (and thus lower credit needs)
Largest credit gap in value in East Asia and small enterprises
% of total credit gap
% of total credit gap
34%
39%
38%
20%
21%
9%
31%
34%
33%
29%
28%
31%
McKinsey & Company 16|
However, anecdotal evidence suggests that women entrepreneurs have even harder time starting and growing businesses than male counterparts
“Though they own 43% of micro and small enterprises, only 5 percent of women reported having access to bank finance in a 2006 Finscope survey.”-Voices of Women Entrepreneurs in Tanzania
“27% of male-owned businesses in Tanzania have access to bank finance vs. 8% of female-owned businesses”-Tanzania GGA
“Women entrepreneurs face a clear gender bias in access to credit, particularly for women who wish to grow their enterprises. The high interest rates, small loan sizes, and short-term nature of the loans mean that women can become… unable to expand their businesses.”-Uganda GGA
“Women-owned businesses start with lower levels of overall capitalization and lower ratios of debt finance. The level of start-up capitalization used by women in the US is, on average, just a third of that used by male-owned businesses”- Global Banking Alliance for Women
“A cross country study using firm level data finds that in ECA region, female-managed firms are… charged 0.6 percent higher interest rate than men… [another study shows] women-owned firms are likely to be charged at least 0.5 percent higher interest rates”- Heidrick and Nicol, 2002
“A recent survey of female and male businesses in Papua New Guinea found that fewer women apply for loans (23% compared to 28%) and that more women than men (25% compared to 17%) say that they did not apply because ‘they thought they could not obtain a loan”- FIAS 2008
SOURCE: G20 Literature Review; GGA; Global Banking Alliance for Women
McKinsey & Company 17|
Women entrepreneurs are more likely to cite access to finance as a major or severe constraint
Total(ex-high income) 31-37
25-31
East Asia
20-25
23-28
Latin America36-44
20-25
Sub-Saharan Africa 47-57
48-58
MENA144-53
90-89
18-22
South Asia220-25
80-98
Central Asia and Eastern Europe
15-18
No women owner
1+ women owner
27-33
44-53
25-31
30-36
23-28
17-21
13-16
46-56
28-34
19-24
22-27
21-26
15-19
20-24
21-26
26-32
25-30
13-16
27-33
29-35
13-16
14-17
31-38
29-35
32-39
30-37
46-56
42-52
Micro Very small Small
Proportion of firms that responded “access to finance is a major/severe barrier”Percent (region weighted average)
18-22
26-32
23-28
13-15
29-35
28-34
8-10
7-8
24-30
24-30
27-33
22-27
45-55
35-43
Medium
28-34
25-30
17-21
14-17
21-26
23-29
35-43
22-27
47-57
46-56
72-88
2421-26
66-80
38-47
Total2
Clear trend in Latin America, MENA, East Asia and South Asia, as well as Micro segment Overall Sub-Saharan Africa has high proportion of firms who consider access to finance as a barrier
1 Small sample size – Yemen only; 2 - Micro enterprises (with small sample size) weigh heavily into total
SOURCE: McKinsey-IFC MSME database; Enterprise Survey, team analysis
McKinsey & Company 18|
n/a
17-21
10-12
9-11
11-14
11-13
14-17
10-13
14-17
16-20
18-22
21-25
n/a
11-14
8-10
13-16
10-12
10-12
11-14
21-25
12-15
14-18
16-20
15-18
21-26
21-26
Middle East & North Africa1
4-5
29-35
Latin America9-11
9-11
Central Asia & Eastern Europe 11-14
13-16
East Asia17-21
13-16
Sub-Saharan Africa 16-19
16-19
South Asia
Quality of financing may vary – women entrepreneurs in some regions and sectors get smaller loans
Services Retail
Average loan size indexed to revenue Percent, (region weighted average - not weighted by size due to small sample)
1 Small sample size - based on Yemen only; 2 Weighted by country using number of firms with/without 1+ W owner in region with loan; data not available at industry level
Manufacturing
1+ women owner
No women owner
4-5
20-24
10-12
9-11
11-13
11-13
16-20
14-18
17-21
15-19
14-17
16-20
Total
SOURCE: IFC MSME database, Enterprise Survey, team analysis
Retail in East Asia and Latin America and Manufacturing in MENA (although data accuracy low) are three areas where firms with 1+ female owners have significantly smaller loan size, adjusted for the revenue level, than firms with no female owners
Firms with 1+ female owners in manufacturing and Services in East Asia, on the other hand, have larger loan sizes
Total2
Women’s loans larger
Women’s loans smaller
McKinsey & Company 19|
Services RetailManufacturing
23-29
22-28
South Asia40-46
42-48
Central AsiaandEastern Europe 33-39
36-42
Sub-Saharan Africa 26-32
25-31
Latin America
44-50
43-49
31-37
31-37
22-28
26-32
25-31
20-26
33-39
34-41
31-37
36-42
21-27
19-26
25-31
18-24
Quality of financing may vary – results are similarly varied when looking at loan terms
Average loan term Months (region weighted average - not weighted by size due to small sample)
In general, firms with and without 1+ woman owner have similar loan terms (although data accuracy is low) In Latin America, firms with 1+ woman owners tend to have slightly longer loan terms, particularly in retail In Central Asia and Eastern Europe, retail firms with 1+ woman owners have slightly shorter loan terms
Women’s terms longer
Women’s terms shorter
SOURCE: IFC MSME database, Enterprise Survey, team analysis
1+ women owner
No women owner
McKinsey & Company 20|
Credit needs and access for formal MSMEs by region1, Percent
1+ womenowners
10-18
33-41
14-22
15-23
No womenowners
44-52
20-28 25-33 7-15
There are significant differences across regions (1/2)
1 Definitions (see appendix for detail): Unserved: Do not have a loan AND applied OR needed loan; Underserved: Have a loan but access to finance is a constraint; 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; Data accuracy - +/- 10% (not included here to make the graphs legible)
2 Small sample size – based on Yemen only
Unserved
Underserved
Well served
Do not need credit
SOURCE: IFC MSME database, Enterprise Survey, team analysis
LatAm
MENA2
Sub-Saharan Africa
Very small Small MediumMicro
Firms with 1+ women owners are less served than firms with no women owners
11-19 46-54
14-22
14-22
38-46 11-19 23-3113-21
2-10
9-17
0-551-59
1+ womenowners
31-39
No womenowners
11-19 34-42
35-43
2-107-15 13-21
62-70
1+ womenowners
No womenowners
0-6
68-76 12-20
6-14
52-609-1711-19
13-21
6-14
6-14 59-67 13-21
40-48
60-68
0-63-11
5-132-10
38-46
23-31
1-9
59-67 11-19
0-11
10-18
65-73
5-13
12-20
20-2810-18
52-60
0-8 63-71 17-25
4-12
2-10
9-17 38-46 10-18 28-36
13-21 30-38 7-15 35-43
15-23 38-46 26-34 5-13
2-10 30-38 41-49 11-19
0-8
20-28
8-16
30-38
56-64
13-212-10
40-48
3-1114-2214-22
37-45
52-60
15-2324-32
8-16
In Latin America, across sizes, firms with 1+ women owners are more underserved than firms with no women owners In some sizes and regions (SSA for micro and medium; SA for micro and medium), firms with 1+ women owners are
more underserved than firms with no women owners In MENA, there are larger numbers of women enterprises that say they do not need a loan from a financial institution
McKinsey & Company 21|
Credit needs and access for formal MSMEs by region1, Percent
7-15
No womenowners
20-28 41-49
4-12
19-271+ womenowners
20-2832-40 25-33
There are significant differences across regions (2/2)
1 Definitions (see appendix for detail): Unserved: Do not have a loan AND applied OR needed loan; Underserved: Have a loan but access to finance is a constraint; 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; Data accuracy - +/- 10% (not included here to make the graphs legible)
2 Small sample size – based on Yemen only; 3 Data to be vetted by experts
Do not need credit
Unserved Well served
Underserved
SOURCE: IFC MSME database, Enterprise Survey, team analysis
Central Asia and Eastern Europe
East Asia
South Asia3
31-39
16-24
24-3215-2314-22
18-2637-4513-21
23-311+ womenowners
55-63 4-12
2-10
No womenowners
21-2954-62
3-116-14
19-27
1+ womenowners
21-29 11-19
6-14
45-53
No womenowners 11-19
5-1349-57
32-40 9-17 22-30
15-23 40-48 20-289-17
21-29
11-19
6-1450-58
3-11
24-32
53-614-12
15-23
14-22
7-15 46-54 18-26
13-31
9-17 46-5415-23
15-2324-32
20-28
22-3024-32
16-24 16-2432-40
23-31
12-20
39-4719-272-10
8-4
68-760-4
20-2815-23
25-33
9-1740-48
24-3212-2023-31
8-16
46-54
54-62
10-18
13-2110-18
18-26
10-18
20-28
17-25
26-349-17
3-11
30-38
50-58
13-21
Firms with 1+ women owners are less served than firms with no women owners
Very small Small MediumMicro
In Latin America, across sizes, firms with 1+ women owners are more underserved than firms with no women owners In some sizes and regions (SSA for micro and medium; SA for micro and medium), firms with 1+ women owners are
more underserved than firms with no women owners In MENA, there are larger numbers of women enterprises that say they do not need a loan from a financial institution
McKinsey & Company 22|
Contents
Landscape of women-owned MSMEs
Access to finance gap for women-owned MSMEs
Implications and questions for discussion
McKinsey & Company 23|
Implications from our analyses (1/2)
Facilitate potential women entrepreneurs to start up businesses
Promote women entrepreneurship capacity building so that women owned-enterprise represent the ‘fair share’ of the workforce, particularly in South Asia and MENA
Improve legal and regulatory environment to provide equal footing for women to start a business
Develop financial institutions’ capacity to better segment, target, and serve women entrepreneurs
Tailor financial services and products to women entrepreneurs for easier access (marketing materials, products catered to women’s needs)
Enable women to better access financial infrastructure (e.g., collateral, credit report)
Improve data availability for more robust analyses
Modify the question for the future Enterprise Survey to match IFC’s definition of gender ownership (e.g., “is more than 50% of your firm owned by women?”)
Differentiate between entrepreneurship by choice vs. entrepreneurship by necessity
Encourage other research data to include gender disaggregation (e.g., Gender Growth Assessment)
Commission a deep-dive research (or work in conjunction with ongoing efforts) to collect objective, robust data set to allow gender comparison including quality of financing
FOR DISCUSSION
Implications Possible recommendations
McKinsey & Company 24|
Implications from our analyses (2/2)
Latin America: ensure needs of women entrepreneurs are met (while women entrepreneurs have access to finance as well as male entrepreneurs, greater proportion of women identify access to finance as a major barrier)
Sub-Saharan Africa: expand the reach to micro, very small, and small enterprises regardless of gender of ownership (a large proportion of MSMEs are unservedtoday), and address distinct disadvantage for women (e.g., medium enterprises); provide risk mitigation and capital mobilization programs for women entrepreneurs to facilitate business growth
East Asia: expand the reach to micro and very small segment (still a large proportion of unserved), particularly in retail sector for women entrepreneurs
South Asia and MENA: continue to foster existing entrepreneurs and help create success stories so that more women would be interested in becoming entrepreneurs
Central Asia & Eastern Europe: overall needs exist for MSMEs across gender lines; need to improve financing for MSMEs in general
Implications Possible recommendations
FOR DISCUSSION
Provide targeted-intervention to improve access to finance
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The definition of women ownership is imperfect; alternative definitions are equally inconclusive, requiring further data improvement
Middle East &North Africa 11-13
10-12
Sub-Saharan Africa16-20
14-17
South Asia30-36
19-23
East Asia24-30
26-32
Latin America51-62
38-46
Central Asia & Eastern Europe 44-53
44-53
Proportion of formal enterprises that have access to loansPercent (region weighted average - not weighted by size due to small sample)
No women owners vs. 1+ women owners
Male sole proprietors vs. female sole proprietors
n/a
n/a
28-34
9-11
22-26
14-18
27-33
26-32
40-48
35-43
36-44
42-52
Male top manager + no female owner vs. Female top manager + 1+ female owner
n/a
n/a
n/a
n/a
30-36
15-19
35-43
38-42
57-69
58-70
37-45
42-52
SOURCE: McKinsey-IFC MSME database; team analysis
No clear trend in any of the three definitions (in all cases, female owners/managers tend to have slightly better access)
None of the definition truly captures “female majority stake”
No W owner
1+ W owner
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Discussion questions
What is most surprising to you from the data? What is most interesting to you?
What actions can the G20 and development partners take to promote women entrepreneurs’access to finance to start and grow a business?
How realistic do you think the suggestions to the Data Working Group are? What needs to happen for the improved data collection to happen?
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Appendix
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K8. Do you have a loan (or an overdraft)?
K30. Is credit a constraint?
K16. Did you apply for a
loan last year?
Yes46%
No54%
K17. Did you need a loan?
Yes13%
No87%
Yes50%
No50%
Underserved
Well served
Unserved
Yes91%
No9%
Unserved
Does not need credit
Segment
42%
4%
7%
24%
24%
Enterprise Survey – Approach to segment enterprises based on access to creditExample: Argentina 20-99 employees
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Even with a different definition of access to finance as barrier, the results are mixed
Total Small (<20) Medium (20-99) Large (100+)
8-16
9-17LatinAmerica
MENA
C. Asia/E. Europe 10-18
12-20
Sub-SaharanAfrica 6-14
4-12
7-15
0-8
S. Asia11-19
33-41
E. Asia35-43
34-42
1 + W owners
No W owners
29-37
45-53
37-45
36-44
10-18
11-19
6-14
5-13
10-18
1-9
8-16
11-19
14-22
21-29
31-39
26-34
17-25
13-21
1-9
2-10
0-4
0-7
4-12
6-14
10-18
23-31
1-9
5-13
14-22
14-22
0-5
0-6
0-8
0-8
17-25
7-15
SOURCE: IFC MSME database, Enterprise Survey, team analysis
Proportion of formal enterprises that consider access to finance to be top barrierPercent (region weighted average)
East Asia has highest proportion of firms that consider access to finance their top barrier In MENA, more than double the proportion of firms with 1+ woman owners consider access to finance their top barrier
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Credit needs and access for informal MSMEs by region1, Percent
There are significant differences across regions (informal sector)
1 Definitions (see appendix for detail): Unserved: Do not have a loan AND applied OR needed loan; Underserved: Have a loan but access to finance is a constraint; 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; Data accuracy - +/- 10% (not included here to make the graphs legible)
2 Small sample size – based on Yemen only; 3 Data to be vetted by experts
SOURCE: IFC MSME database, Enterprise Survey, team analysis
MENA
Sub-Saharan Africa
Firms with 1+ women owners are less served than firms with no women owners
