The Bank said, despite the achievement made by women entrepreneurs, 70 percent of women-owned SMEs in developing countries are either shut out by financial institutions or are unable to receive financial services on adequate terms to meet their needs.
The bank said this result into nearly US$300 billion annual credit deficit to formal women-owned SMEs.
The Bank cited the lack of networks, knowledge, and links to high value markets as factors that further constrain female entrepreneurship.
“Moreover, unfavorable business and regulatory environments are among the barriers that still impede women entrepreneurs from accessing finance. And the fact that many emerging markets financial institutions have yet to develop a sustainable strategy to address this significant market gap represents a missed opportunity and constrains private sector development”, the bank noted on Monday in a statement.
In an effort to address this situation, the bank has developed the Women Entrepreneurs Finance Initiative (We-Fi), the first World Bank-led facility to advance women’s entrepreneurship at this scale.
According to the bank, the facility will work to enable more than US$1 billion of financing to improve access to capital, provide technical assistance, and invest in other projects and programs that support women and women-led SMEs in World Bank client countries.
The goal of the facility is to leverage donor grant funding – currently over US$325 million – to unlock more than US$1 billion in IFI and commercial financing by working with financial intermediaries, funds, and other market actors.
At the same time, the facility aims to support complementary public sector interventions that strengthen the enabling environment and enhance market opportunities for women-owned businesses.
The initiative received donor support from Australia, Canada, China, Denmark, Germany, Japan, Netherlands, Norway, Saudi Arabia, South Korea, United Arab Emirates, United Kingdom, and the United States, enabling the Bank Group to take the facility from concept to Board endorsement within the year of the German G20 Presidency.