Page 18 - GS230401

Views

Expanding access to financial services

for female business owners

This encouraged enterprising women to set up micro
businesses to serve their communities and provide a
solution where there was none.

Hence, female entrepreneurship is increasing around
the world. A study by the World Economic Forum from
2021 (see https://bit.ly/3lrue2C) found that almost half of
the startups (49 percent) in the United States are formed
by women, compared to 28 percent in 2019. This trend is
mirrored in the U.K., where research shows that women
are now running almost 40 percent of all U.K. micro
businesses—up from 32 percent before March 2020 (see
https://bit.ly/3yOBTvb).

Barriers to women's access to finance
Yet, despite the rising number of women-owned
businesses, a disproportionate number of disadvantages
By Lori Griboski still exist. Men still outnumber women three to one when
it comes to business ownership, according to the World
Paysafe Economic Forum (see https://bit.ly/3ZZuVPK).
icro and small businesses are the lifeblood One of the primary reasons for that is the inequality in
of most economies worldwide. They pro- access to finance. This means the ability for an individual
vide products and services tailored to locals,
M generate new jobs, and stimulate an inflow to access investors, financial institutions, services and
mentorship that are affordable and suitable to support a
of community resources. They also offer role models to business' stage of development.
society by integrating women into the economic main-
stream. But in many countries, women starting businesses In fact, the World Economic Forum (see https://bit.
still face a wide range of challenges, and these are sig- ly/2KtYy8E) reported that 80 percent of women-owned firms
nificantly different from those experienced by their male with credit needs are either unserved or underserved—an
counterparts. equivalent of a massive $1.7 trillion financing gap.

Cultural norms and societal barriers set the pace at According to a 2019 study, 61 percent of female small
which women become self-employed business owners. business founders opted to self-fund their ventures (see
Defying social expectations, building a support network https://bit.ly/3JypXSX). This means some entrepreneurs
and balancing a business with family life are some use their personal savings to get started, limiting their
challenges they must overcome. On top of that, access to economic power.
financial services and funding from investors remains a
considerable hurdle. Additionally, a recent TechCrunch study of all venture
funding found that female-backed ventures received just
Throughout this article, I'll assess how players in the fintech 10 percent of overall funding, while the remaining 90
industry can help close the gender gap while shedding
light on the disparities that limit entrepreneurial-minded
women from gaining access to the resources needed to
build a legacy of their own. Further compounding this is the reality

Rise of female entrepreneurship that traditional lending models often
require collateral which some women
The pandemic served as a catalyst, changing how women
participate in the economy. Restrictions on travel and lack primarily due to cultural norms
disrupted supply chains meant households had to rely on and legal inequalities.
local goods and services.

18