November 24, 2015

Female entrepreneurs in Ethiopia benefit from World Bank funding

A project backed by the World Bank is helping women in Ethiopia access credit to help grow their businesses.

The Women’s Entrepreneurship Development Project, funded by the World Bank’s International Development Association (IDA) with support from the British and Canadian governments, has loaned US$38 million to 3,227 female entrepreneurs since the start of 2014.

The World Bank estimates that 70% of small and medium enterprises in developing countries cannot access the funding they need to grow.

Women in particular face challenges starting or expanding a business, since they are less likely to own assets that can be used as collateral, often have less education, and face gender discrimination.

But the Bank’s research shows shows that female-owned businesses have one of the highest return opportunities in emerging markets—and can be a key driver in reducing unemployment, since female entrepreneurs tend to hire women, who are more likely to be unemployed.

The Bank reports that, although 76% of the beneficiaries of the scheme have never had a loan before, the repayment rate is over 99%.

World Bank economist Yoonyoung Cho has written for IZA World of Labor about entrepreneurship for the poor in developing countries. In her article, she writes that: “A comprehensive approach combining skills training with access to finance is more effective in helping small-scale entrepreneurs succeed in the labor market than either service alone. Business training can help small-scale entrepreneurs set up businesses and improve business practices, while customized support and follow-up services can improve overall program effectiveness.”

Read more here.

Related articles:
Entrepreneurship for the poor in developing countries by Yoonyoung Cho
Self-employment and poverty in developing countries by Gary S. Fields
Entrepreneurs and their impact on jobs and economic growth by Alexander S. Kritikos
Female labor force participation in developing countries by Sher Verick
Policies to support women’s paid work by Gianna Claudia Giannelli
Find more IZA World of Labor articles on entrepreneurship and development