Tuesday 27th April 2021
It is estimated that 250 million women around the world are entrepreneurs. In low-income countries 38 percent of working-age women aspire to become entrepreneurs compared to 12 percent in high-income countries, suggesting that entrepreneurship is central to the economic empowerment of women.
However, female entrepreneurs lag male entrepreneurs in the rate of business start-up, growth and productivity. Globally, men are 25 percent more likely to start a business than women and once in business, they are 36 percent more likely to believe they have access to high-growth opportunities. Women-led businesses, on the other hand, face a $1.7 trillion financing gap globally.
Taken together, the unrealized potential of female entrepreneurs and the resulting drain on the global economy is immense. BCG has calculated that if women and men participated equally as entrepreneurs, global GDP could rise by 3 to 6 percent, boosting the global economy by $2.5 trillion to $5 trillion.
Add to this the impact of COVID-19 on women, in particular entrepreneurs: McKinsey & Company has estimated that if no action is taken, global GDP growth could be $1 trillion lower in 2030 due to the regressive impact of COVID-19 on women. In some countries, up to 60 percent of female entrepreneurs have seen their income dry up during the crisis – compared to half or a third of men.
A Promising Model: The UK’s Investing in Women Code
In 2018, UK Treasury commissioned Alison Rose, CEO of NatWest to lead an independent review of female entrepreneurship in the UK. The goal was to identify ways to tap into women’s unrealized economic potential by making the UK a global destination for them to start and grow a new business.
One of the eight recommended initiatives was to promote greater transparency in UK funding allocation through a new Investing in Women Code. The Code has already been signed by 100 institutions, including the UK’s major banks, and its first report was published last week. This is the first time most of these organizations have provided a public accounting of their financing for female entrepreneurs and taken action to better meet their needs. It has also reinforced NatWest, a long-standing Alliance member, as being the bank of choice for women-led businesses in the UK.
The next CEO Roundtable explores the opportunity Alliance members have to lead such an initiative in their countries of operation. The session will begin with a short presentation by McKinsey & Company to frame the topic before opening the floor for discussion.
This is part 1 of 2 CEO Roundtables in 2021. The second one will take place in October at the opening of the Financial Alliance for Women Annual Summit.