Remarks at the Indian Vital Voices Conference
Under Secretary for Economic, Energy and Agricultural Affairs
Thank you to Alyse Nelson, President and CEO of Vital Voices, Susan Davis, President of the Board. And to my friends, Sally Shelton-Colby and Zain Verjee. I am honored to be here among so many amazing women leaders, entrepreneurs, and activists from all over South and East Asia.
Some of you have heard the Chinese proverb that “women hold up half the sky.” But in many parts of the world, women hold up a lot more than half. We are here to explore ways to ensure that opportunities for women are fully realized. No country can power its economy without empowering 100% of its population. Depriving 50% of a country’s human talent of its full potential puts any country at a disadvantage in this increasingly competitive world.
Today, I am delighted to have the opportunity to celebrate the contributions that empowered women have made—and will continue to make—to economic growth in my country as well as in each of yours. As you know, the issue of women’s empowerment is of great importance to my boss, Secretary Clinton, who I am proud to point out is our third female Secretary of State in the last 15 years. It is the common thread weaving together her lifelong career in public service. In fact it was her declaration that “women’s rights are human rights” back in 1997 that sparked the Vital Voices movement. Secretary Clinton understood that being a voice for change is not about the values you whisper, but the values you shout. All of you, in your companies and in your communities, are echoing that call for equality, empowerment and access to opportunity for women.
I would like to begin by asking what historians are likely to say about the history of our era when they write about it 100 years from now. In the long sweep of history I would suggest that the two great stories of our era will be:
1) the dramatic changes in the developing world, particularly the large emerging economies and
2) the growing role of women in our societies, our politics and in our economies.
Let me start with the first, but my major focus will be on the second. Asia is the region that is driving today’s global economy. Its share of the global economy in has risen steadily from 7% in 1980 to 21% in 2008. Asia’s stock markets now account for 32% of global market capitalization, ahead of the United States at 30% and Europe at 25%. But the sustainability of this model will depend heavily on fully including the talent of women. As the World Bank’s president Robert Zoellick says, “Gender Equality Equals Economic Growth.” I would go further to say that women entrepreneurs are critical engines of economic growth. And my statement is supported by a number of recent studies that show investing in women is smart economics. Those same conclusions were reached by the World Bank, the International Finance Corporation and a host of reports from the corporate sector.
We also have considerable evidence that investments in women’s training can pay high dividends in productivity and growth. The U.S. provides a good example. Women who had worked in defense plants during WWII demonstrated that they could do the same highly skilled work as men, even in jobs not normally open to women, such as the famous “Rosie the Riveter” example. Many of these women were forced to exit the work force after the war ended, but their example proved to be a huge driver in the post war growth spurt. Indeed, the growing participation of women in the U.S. work force in the 1950s, 60s and 70s represented the major reason for the robust growth our country enjoyed during most of that period.
This brings me to an often missed point: to empower women it is also necessary to ensure that men recognize that helping women achieve their full economic potential also improves the their households’ lives and their economic futures. No family, no business, no country can realize its full potential until women achieve their full potential. Women do two thirds of the worlds’ work, earn 10% of the world’s pay and own only 1% of the means of production.
Clearly, we have a long way to go. Women are contributing enormously to economic growth all over the world. In India, we see women serving in the highest positions of India’s banks and financial institutions. According to a study conducted by EMA Partners, one in five of India’s major banking, insurance and money-management companies is headed by a woman.
Here in India, companies are finding innovative ways to incorporate entrepreneurs in their value chains. Hindustan Unilever, reaches millions of consumers in remote villages by employing thousands of women entrepreneurs in its marketing and distribution efforts. The model is sustainable as women are “built in” to the business model: they provide value to the business. And Unilever provides them with economic opportunity as well as social value to the community. This program has helped to elevate the status of these women in their villages and in some cases doubled their household income.
Of course, programs like these aren’t limited to India. We’ve seen how women visionaries such as Roshaneh Zafar have followed Bangladesh’s Grameen Bank model in Pakistan to transform the lives of thousands of women by providing quality and cost effective microfinance services. This often includes services that permit women to open new businesses, expand their production, and hire additional employees. This model offers women the chance to be economically self-reliant, and that alone raises their social status while benefitting their families and communities.
Another woman, Sylvia Banda from Zambia, recently entered into an agreement with a United States-based firm, Kanzam International, to market Zambian food products to the American market. The agreement between the two companies was made during the AGOA forum in Washington. The agreement will help increase its food exports to the U.S. market from the current 300 to 500 tons.
Despite those economic data, serious barriers stand in the way of women’s full economic participation. This lack of participation has been calculated to cost the Asia Pacific region between USD 42-46 billion a year in GDP growth, according to a report by a UN Commission. To stem these costs in lost GDP, it is smart strategy for governments to assist women in overcoming the existing legal and policy barriers, and for societies to adopt changes in the social norms and customs that bar women’s full economic participation.
All over the world, women still face obstacles when trying to establish new businesses or to expand existing ones. Among the biggest hurdles are training, technology, markets, mentors and networks, as well as discriminatory laws, regulations and business conditions. There are also specific conditions, like the lack of property rights, or the need for women to obtain permission from their husbands or fathers to open bank accounts, start a business, obtain a passport, or enforce a contract.
One of the biggest barriers is access to credit. Even where legal and policy barriers are not especially prominent, lack of access to financing is common in virtually every economy, including in the United States, especially among women entrepreneurs. While women own 40% of U.S. businesses, only 5% of all equity capital investments in the U.S. go to businesses owned by women. And only 3% of women entrepreneurs get investments from venture capital. According to available research, this is due to investors’ false perceptions of women as having little business experience and skills, or women’s inadequate exposure to the financial world. Yet, across the world, women tend to have high repayment rates—often much higher than men. Grameen Bank’s clients boast very high repayment rates. Averaging between 95 and 98%, the repayment rates are far better than that of student loan and credit card debts in the United States.
According to a recent World Bank/IFC report, women’s economic activities are not equally distributed across the productive sectors. And in most developing countries, female-run enterprises tend to be under-capitalized. Many have poorer access to machinery, fertilizer, extension information, and credit than male-run enterprises. Laws, regulations, and customs restrict women’s ability to manage property, conduct business, or even travel without their husbands’ consent.
What those numbers tell us is that to grow our economies, we must unleash the potential of women; and governments must create a policy framework that will help more women realize their untapped potential. It is encouraging to see an increasing number of studies, conducted both by multi-lateral development banks and businesses, showing a strong link between women’s empowerment and economic growth. And those well-established data should produce new policies that would allow us to do things differently.
I hope the following recommendations pertaining to women would offer us some new thinking:
First, increase women entrepreneurs and women traders’ participation in decision-making and encourage public-private dialogues. Women’s presence in the private sector, as important economic actors in their own rights, is not matched by their representation in policy and decision-making institutions. But we know that women can contribute greatly to those discussions, bringing diversity to the decision-making process, and help enhance the quality of the decisions made. We have seen over and over again that policies often fail because they do not consider key factors in the economy, including women’s labor, which often remains “informal” and left out of national data.
Second, ease women’s business entry and operations. Policies and legal frameworks are often the first step to eradicate gender-based discrimination. When transitioning from informal to formal business operations, women face enormous challenges, including barriers to business registration, licensing, and permits acquisition. And we have not done a great job collecting critical data that records women separately in those economic activities. This data would help inform more comprehensive policies and solutions to allow more women grow businesses and transition from informal to formal economic activities.
Third, secure lending for women. Lack of access to finance is consistently cited by business owners as one of their most limiting constraints. And it disproportionately affects women. Most studies find that women are not only more likely than men to be rejected for loans or be subject to higher interest rates, but women are less likely to apply for loans than men. This is still happening in the United States. The IFC’s new initiative that guarantees commercial loans to women entrepreneurs has proven to be successful and should be replicated throughout the world—an scaled up. The G20 also recently launched a Challenge to identify financing innovations for SMEs, including those that can address the needs of women entrepreneurs.
Fourth, private sector investment. Increasing trade and economic growth is not only a government business. It takes the whole society, including the private sector, to be part of the policy-making. Some companies are beginning to recognize the power of women and the growth they can bring to their communities and economies. We need more companies to recognize and to join us in public-private partnerships. Diversity—by gender, ethnicity, race and culture—is and should be seen as an enormous strength for companies. It puts their management and business structures more in line with the real world. While research and data collection are the first steps for us to understand where the gender-based barriers are, we need actionable solutions. One of them is to build networks and capacity in women entrepreneurs.
I am proud to say that the U.S. Department of State in the past few years have been supporting and working with emerging women entrepreneurs. We not only bring together the brightest and most entrepreneurial minds to share best practices and learn from each business strategies, we also help expand those emerging women leaders’ horizon through mentoring and training programs.
I am especially pleased to learn that the U.S. government’s support has also catalyzed other organizations’ growing support for women entrepreneurs. Programs such Goldman Sachs’ 10,000 women, ExxonMobil’s women’s economic empowerment program, and OECD’s women entrepreneurship program in the Middle East region are all excellent programs.
To sum up if we are going to continue the progress we have begun, we will have to more effectively engage governments and the private sector to increase the number of women entrepreneurs, and management positions, ease women’s entry into business, ensure access to capital for women and across the board create more economic opportunities for women.
So I will concludes as I began, by saying that I am honored to be among such an accomplished group of women. When historians look back at this period they will see that you and your colleagues have made history. I believe deeply that as women play stronger and stronger roles as entrepreneurs, business leaders, political leaders, and drivers of social change, you will change the world.