Women entrepreneurs can make the world $6 trillion richer

For that, there needs to be systemic change. Many financial systems simply weren’t built with small borrowers – and particularly women – in mind.

And those systems are rife with bias from lenders who can still legally discriminate against women in 96 countries. When a woman walks through the door with a good idea, a smart business plan, and a dream to improve her future, lenders too often see only risk.

And the women who do get loans often receive far smaller ones than men — even though evidence from M-Kopa, an asset-financing company serving customers across Africa, shows that women are 10 per cent less likely than men to default on their repayments.

Fortunately, there are a number of reforms leaders can pursue that would address the financing gap.

First, governments should remove the barriers facing responsible lenders trying to serve low-income customers while still protecting people from predatory lenders.

That means creating systems in which minimum capital requirements and compliance expectations increase along with the size and complexity of the lender in question – because it doesn’t make sense to treat a small microfinance lender the same as a full-service bank.

Second, the development community should make funds from donor countries available to lenders to help manage their perception of risk. If lenders know they’re partially covered in case of default, they’re more likely to invest in a more diverse range of entrepreneurs.

By providing those guarantees, donors can also incentivize larger financial institutions to loan to smaller, more nimble ones in their own countries.

Third, governments should invest in digital infrastructure so that lenders can add customers more cheaply and assess creditworthiness in new ways. Women are less likely than men to have formal credit histories — but they may have informal ones, built by paying bills on time and saving and pooling money in community groups.

With digital tools, lenders can evaluate customers based on less traditional data and share that information securely with other lenders. Think of it as a credit bureau designed around the realities of the informal economy that exists across the Global South.

Finally, donor countries must fully fund the World Bank’s International Development Association (IDA), which in turn must prioritize the lowest-income countries in its efforts to reduce poverty and spur economic growth.

By offering loans on better terms than the broader market, the IDA helps lay the foundation for those countries to build stronger financial systems – and in turn, invest back in their people and businesses.

Getting capital to women is not just the right thing to do. It’s the smart thing to do. Across WIC Capital’s investment portfolio, sales are up five times, and the fund has a goal of creating 3,000 jobs in the next seven years. And that’s from just eight businesses.

A full quarter of all African women are entrepreneurs. Imagine if their futures didn’t depend solely on a few visionaries like Thiaba Sy. Imagine the progress that would be possible – for their families, communities and countries – if those who hold the keys to capital opened the doors to all.