USAID WLSME

The Women's Leadership in SMEs site captures new learning in gender and enterprise development, disseminates it among practitioners, USAID mission staff, and other donors, and connects those actors to each other in order to improve development outcomes around the world. Why women entrepreneurs? Women entrepreneurs make up vital parts of their economies. The International Finance Corporation estimates that small and medium enterprises (SMEs) with full or partial female ownership represent 31 to 38 percent (8 to 10 million) of formal SMEs in emerging markets. These firms are responsible for a significant share of employment generation and economic growth potential. Furthermore, it is estimated that failure to achieve Millennium Development Goal (MDG) Target 32 on the promotion of gender equality and empowerment of women could reduce per capita income growth rates by 0.1 to 0.3 percentage points.Entrepreneurship also provides a means to reduce inequalities among men and women. Women's increased economic activity results in better bargaining power in the home. In transition economies, entrepreneurship is important from the perspectives of job creation, private sector development, and wealth creation. Women's participation in entrepreneurship can help expand these economies while also leading to greater equality in society. Women and SMEs Although the number of formal, women-owned SMEs is increasing, the average growth rate of women's enterprises is significantly lower than the average growth rate for SMEs run by men. Structural barriers and inefficiencies, such as lack of access to government and financial services, limit women entrepreneurs' contribution to the economy and affect their potential employees, customers, and business partners. These barriers-including external constraints, human capital constraints, information and network constraints, and risk appetite constraints-vary greatly across contexts.Among formal firms in Eastern Europe, Central and East Asia, and Latin America, the size of the gender gap in ownership is not significantly different across firm size. In the Middle East, North Africa, and South Asia, a higher proportion of small and medium formal firms are women-owned than microenterprises, and in Sub-Saharan Africa, fewer medium formal firms are women-owned, showing differential patterns of accessing the formal sector. Finally, in low-income countries, 54 percent of women entrepreneurs have not completed secondary education. In high-income countries, by contrast, women with graduate education are the most likely (34 percent more likely) to start a new business. Furthermore, research shows that women are involved in relatively low value-added sectors, like garment manufacturing, retail trade, and restaurants.USAID's WLSME initiative plans to expand the frontiers of this field to generate new learning about which business models for women's entrepreneurship in SMEs work best in different developing country contexts.