2010 Summit of the Global Banking Alliance for Women
Ambassador-at-Large for Global Women's Issues
It is so wonderful to be here with all of you for the 2010 Annual Summit of the Global Banking Alliance for Women (GBA) and especially to be here for your 10th anniversary Summit. Happy anniversary and may there be many, many more.
I want to thank the IFC for all the good it does, for its visionary leadership. I see the difference you make all around the globe. I want to thank Rachel for her generous introduction and all that she does to head up the IFC efforts that so significantly involve women – both in access to finance and in growing women’s economic progress. What IFC does also successfully leverages opportunities for women and for financial institutions in the work that all of you do.
When I look at the roster of GBA’s membership, I see the health of diversity. I see governmental and nongovernmental financial institutions who are engaged. Private sector banks are engaged. Entities that specialize in microfinance are engaged as well. And so are entities whose mandate spans entire continents, fostering growth and development in every dimension of economic enterprise.
Having grown from four founding members to the current twenty-two, GBA has made all of the right moves over the last ten years by recognizing that no single approach or institutional arrangement can adequately address the inequity and shortsightedness that curtails women's access to financial services. And I stand here and say, we need you now more than ever because I think we are at a special moment to grow all that you have stood for.
We must pursue, as you have done, every avenue and investigate every mechanism that offers the promise to, in the words of Secretary Clinton, "to bank the unbanked” and drive economic growth.
Challenges facing women in the world today
The magnitude of the challenges women still face in this 21st century is daunting, often tragic--not just in terms of deprivation and second class citizenship, but in terms of lost opportunities and untapped potential for our world. Nearly half the world lives on $2.50 a day, and women are the majority of the world’s poor. Many of us have been involved in the Millennium Development Goals (MDGs). Just several weeks ago, we gathered at the United Nations at this ten-year on the MDG timetable point to look at the progress that has been made and the road yet to be traveled. And in that process, what came up over and over again was the recognition that MDG 3, which is the MDG for women’s empowerment and gender equality, is so absolutely critical to the realization of all the MDGs.
Economic growth is clearly essential if we are going to alleviate poverty. But how can we achieve so much growth across so many regions and under so many different conditions--environmental, cultural, geographic, and so on? Your expertise and experience can best answer this question. Studies have shown that to grow GDP, there is no better or more effective investment than women-run small and medium-size businesses. And yet, we know that women confront an array of roadblocks--from training to access to markets to discriminatory regulations to finance--barriers that have to be overcome if women’s economic potential is to be unleashed.
Today, almost 70 percent of the adults in developing countries lack access to formal financial services, such as savings or checking accounts. Only 12 percent of sub-Saharan Africans or 24 percent of South Asians have access to formal finance. And even though SMEs are the drivers of job creation in so many ways, commercial banks are still most comfortable financing larger enterprises in the traditional sectors. As a result, only 18 percent of small enterprises in the low-income countries have access to formal financial services.
The missed opportunities that arise out of these practices are immense. Studies have shown that women drive economic growth globally and domestically, and have better growth rates and better loan payback rates.
This significant gender gap in access to finance represents lost opportunities for growth and this is especially true for the “missing middle” group of the small enterprise sector who has the best growth and job creation potential, and are mostly women-run.
Let me give you a macro-example of what the economic empowerment of women could mean, as if you didn’t know: it is calculated that the Asia-Pacific region is shortchanged in excess of $40 billion a year in GDP because of the untapped potential of women. I am particularly mindful of that these days because we just came back in the last week or so from the APEC Women’s Entrepreneurship Summit in Gifu, Japan. This is one of the critical reasons that the 21 economies who participate in APEC understand increasingly the importance of women and the economy.
As World Bank president Robert Zoellick says, and I quote him endlessly all over the world, “Gender Equality Means Smart Economics.” I would go even further and say that women entrepreneurs are the engines of economic growth in so many ways. You are familiar with studies and analyses produced by this institution (the World Bank), by the IFC, by sources as familiar as the World Economic Forum, Goldman Sachs, the Boston Consulting Group and so many more. The data shows that women’s economic participation promotes enterprise development at the micro and SME levels, as well as better business management and returns on the investment.
In explaining why his firm began a program called “10,000 Women” and invested an initial $100 million in the initiative to help women in the developing and emerging markets grow their business skills, the CEO of Goldman Sachs explained: “When you want to invest and create GDP, there is no better or more effective investment--no lower-hanging fruit to pick--than investing in women.”
An article in the Economist noted the following: “Forget China, forget India, forget the Internet, it’s women who drive GDP.”
Yet, nevertheless, it remains true that women everywhere will tell you one of their greatest obstacles to establishing new businesses or expanding existing ones is the issue that so concerns GBA -- inadequate access to finance. This is common in every economy, including in the United States, especially among women entrepreneurs. I remember several years ago traveling with the then-First Lady Hillary Clinton and she was visiting with a group of women who had started a small business and were now at some 100+ employees – it was a tech firm. They told her something I have never forgotten: “Mrs. Clinton,” they said, “the best ideas die in bank parking lots.”
While women own 40 percent of U.S. businesses and contribute $1.2 trillion to the U.S. economy, only 5 percent of all equity capital investments in the U.S. go to businesses owned by women. And only 3 percent of women entrepreneurs get investments from venture capital.
The Path to Change
I am pleased to be able to say that the Obama Administration has made financial inclusion a priority. We believe that to unleash the growth potential of women-owned enterprises, to help them grow from micro to small and medium and beyond, the world's governments must play a critical role in creating a policy environment that fosters inclusive finance.
We are convinced that the global gender gap in access to finance can be closed with appropriate government policies, with openness and competition and providing the private sector with the right incentives.
Last year, for example, the president announced a new Microfinance Growth Fund, which has committed more than $100 million to provide credit to individuals and small businesses, and especially those run by women. There is no doubt that microfinance has played an extraordinary role in lifting up millions and millions of the poorest of the poor, particularly women, who have gotten the loans and paid them back all over the world. I am sure that all of us have our own experiences spending time with the women who have been the beneficiaries and have begun, in ways unimaginable given their circumstances, to grow these tiny businesses that transform their lives, and enable them even to send their children to school, and to do so much more.
I remember being with some Grameen borrowers in Bangladesh. A husband and wife were explaining how they so knew if they got credit and did what they hoped to do with it, that their lives would be better. But there had been some efforts in some circles in their village, particularly coming from a certain mullah, who told them no, they should not have nothing to do with this approach and discouraged them from becoming borrowers. They were strong in their faith, and they told me how they struggled and struggled with trying to make the right decision. In the end, they decided to take the credit. They knew it would improve their family’s life. And then they added, “And when our son grows up, he’ll be a different kind of mullah!”
We are also encouraging partnerships to open up new opportunities in mobile banking, for example. I know that you had my friend Cherie Blair as a speaker here earlier today. She and Secretary Clinton last week kicked off a major initiative on the part of the U.S. Government, her foundation and GSMA--which is an association for mobile companies--an initiative to cut in half the gender gap in poor women’s access to mobile phones within three years.
Blair’s foundation, in a major research study, documented that 300 million women in the poorest parts of our world have no access to mobile phones. We are learning more and more that mobile phones can transform women’s lives -- from health to safety to economic opportunity and certainly, ultimately to mobile banking.
We are also supporting innovations like secured-transaction reform, so that small businesses can use movable assets--the tailor can use his sewing machine, or the farmer her tractor, as collateral for loans--something that is not permitted by a lot of the formal banks throughout the world.
We are supporting consumer-protection efforts, so that we can protect the newly banked from being victims of predatory lending practices.
And since 2009, we have utilized every international opportunity we can to include women in broader trade and economic policy discussions such as those that have been generated for South America--Pathways to Prosperity, the Africa Growth Opportunity Act and its ministerial, APEC, as I mentioned, OECD and so many others. We emphasize that women’s access to finance is so critical because, as women entrepreneurs tell us every place, this remains their greatest challenge for starting and growing their businesses.
Each of these efforts is based on the principles that underlie our development work--local leadership, an emphasis on partnerships and alliances, and a commitment to spurring long-term economic growth--and each is being informed by the lessons we have all learned in pursuing our objectives.
I would like to distill these lessons briefly with respect to women and development into five basic imperatives, each of which is relevant to the GBA because they all will help ensure that the credit GBA members provide is appropriately targeted and has a chance to achieve maximum impact.
Here's what we think we have to do in order to capitalize on women's potential to grow economies:
First, increase women entrepreneurs in decision-making. Women’s presence in the private sector, as important economic actors in their own right, is not matched by their representation in policy and decision-making institutions. That is true at the low levels and at the highest levels. We know that women can contribute to those discussions; they can bring a diversity to the decision-making process, and help enhance the quality of decisions that are made. Over and over again we have seen that policies fail because they do not consider key factors in the economy. For example, women’s labor, which is often what we understand as labor in the “informal” sector, is too often left out of the data that we all need upon which to make our decisions.
Several years ago, I was traveling with Hillary Clinton in Africa and we were in a van with an economics minister. He was going on and on about how the women in that country had no role in the economy of the country. She stopped him and she said, “Sir, as far as the eye can see, women are bent over with children on their backs carrying wood, carrying water, doing the farming that is getting done, and you tell me they have no role in the economy of your country. If they all stopped but for a day, your country would shut down.” So, somehow we have to reconcile women’s work in the informal sector into the broader economy.
Second imperative, ease women’s business entry. Changing policies and legal frameworks is often the first step toward eradicating gender-based discrimination, but we must recognize that amending laws and altering policies within the formal business sector often isn't enough. Transitioning into the formal business sector has to be made easier, more transparent, and more female friendly, if you will. Because all over the world, women face problems regarding business registration, licensing, permits acquisition and so much more and that is another way that many of us are focused on helping them transcend those barriers and we all need to be doing a better job at this.
Third, secure lending for women. Here, of course, we touch on your basic preoccupation, if you will, and raison d'être. Business owners consistently cite lack of access to finance as one of their most limiting constraints, and this constraint, not surprisingly, disproportionately affects women. Most studies find that women are not only more likely than men to be rejected for loans or to be subject to higher interest rates, but they are less likely to apply for loans than men.
We have several excellent examples of what we can be doing and should be doing, let me just touch on a few:
§ One is the IFC’s partnership with Nigeria's Access Bank to provide credits to women entrepreneurs. Since the launch in 2006, this partnership has provided over $18 million to female entrepreneurs and trained over 300 women entrepreneurs on how to grow their businesses successfully. And by every measure, the skeptics have realized this is a program that has been very successful.
§ Another example is the USG launch of the G-20 SME Challenge. It’s a unique financial inclusion effort aimed at giving small entrepreneurs a chance to grow their businesses. Led by the U.S. Department of Treasury-- and I am very pleased Nancy Lee is here--in a partnership with Ashoka’s Changemakers and support from the Rockefeller Foundation, the Challenge is looking for the best models worldwide that catalyze finance for small and medium enterprises. One of the criteria encourages SMEs to look into particular ways to address barriers facing the women-owned enterprises. Up to 15 winners will be invited to the G-20 Summit that will be taking place very soon in Seoul. Nancy has been heading up the G-20’s working group on financial inclusion and we are so pleased that she is engaged on the part of the U.S. Government in the way that she is, and that she is here today to tell you more about all of this.
§ There is also other good news. The U.S. State Department and the Republic of Korea’s Presidential Committee for the G-20 is putting together, a symposium at the Korean National Assembly on November 9 in conjunction with the Korean Ministry of Foreign Affairs and Trade, Ministry of Public Administration and Security, and a women’s newspaper to co-sponsor “G-20 and Women.” It will be just in advance of the G-20 Seoul Summit and will reiterate the need for G-20 leaders to discuss economic and financial matters from the perspective of gender equality to ensure sustainable economic development. The keynote speakers will focus on the expansion of women’s access to finance and the integration of gender equality into development policy.
I think all of these are important steps in the right direction that in the months and weeks and years ahead we can grow and build on.
The fourth imperative for us is to keep women’s empowerment in the forefront. Good policies and adequate access to credit won't be enough if the actions we take and the programs we sponsor neglect nurturing women's professional capacities. That’s something you all know and do well and we need to re-double our collective efforts.
Lastly, we need to promote private sector investment because wherever possible, we need to encourage the direct investment in women-owned and operated businesses. I hope all of you will continue to step up to the plate as you have done over and over because, as you know so well, this is truly a win-win.
It’s a fact that women’s progress is critical to a country’s progress, a region’s progress, our world’s progress. I would not place all the weight of this thesis on financial inclusion itself. Obviously, there are so many other factors. They are very powerful in and of themselves but to the extent that financial institutions of all kinds open their doors to women, all of humanity will truly benefit.
You are in the vanguard of that worldwide change. In the literal sense, your loans, your credit, your financial services, your business, and it is also what happens as a result of what you do--what you make available to women all over the world--and that is everyone's business...it is a good business. It is one of the best businesses anyone can think of.
So I want to thank you very much. I hope GBA will have grown exponentially in membership and in impact by the time you celebrate your 20th anniversary in 2020. I hope I can come back to celebrate with you because I know that you will have achieved even greater success after all that you have done in the last ten years. Thank you all very much.