South Asia Can Reap Incredible Gains by Empowering First-Generation Women Entrepreneurs

Providing access to finance, mentorship, supporting transition to higher value chains, etc. could help in creating an enabling environment for women-led firms.

Only 26% of women in South Asia are economically active, i.e., they are either working or looking for work, as compared to 75% for men.

Imagine the impact on the economy if the ratio for women employment converged to that of men. The International Labour Organisation estimates that reducing the gap in labour force participation rates between men and women by 25% by 2025 could raise the global gross domestic product (GDP) by 3.9%, or $5.8 trillion.

South Asian countries, because of their population and low levels of female participation, can reap incredible gains from levelling their gender gaps.

The gender of managers and employers is one of the important factors that influence women employment.

Data from World Bank Enterprise Surveys (2021), covering the formal sector, shows that women-led enterprises create more steady employment opportunities for women compared to those headed by men. In firms owned by men, the average share of women workers was found to be 25%, compared with 43% in women-owned firms.

Unfortunately, women-owned firms are in a minority, globally. World Bank data shows that the share of firms where a woman was among the principal owners was only 18% for South Asia, in 2021, as compared to 33% for the world, and over 45% for East Asia and the Pacific.

Promoting greater entrepreneurship among women is therefore critical. If successful, it could shape a very different economic and social trajectory for South Asia and its women.

Creating an enabling environment for women-led firms

What can be done to change the status quo, and create an enabling environment for women-led small and medium enterprises? A recent study by TalentNomics India, with Radhicka Kapoor as lead author, looked at the success differentiators for 20 first-generation women entrepreneurs in South Asia.

The study encapsulates the promise as well as the challenge of women entrepreneurship in South Asia: it was not easy to find first-generation women entrepreneurs, especially outside India, but their stories and efforts to overcome business and societal barriers are inspirational and worth learning from.

Drawing from this study, as well as a few others, a holistic effort along the following dimensions could have a significant, if not immediate, impact on creating a larger pool of women-led enterprises.

Collection of data: Gender analysis is the opposite of a framing that is gender blind or gender neutral. What gets measured gets done. Hence, it is vital to collect gender-disaggregated data. More granular data collection will allow policymakers to better assess the degree to which women-led SMEs contribute to the economy, and better understand barriers to gender equity, ultimately leading to more effective policy interventions and reforms.

Equal access to finance: Difficulties in accessing finance are often intensified by gender-related factors which include women’s lack of collateral, weak property rights and discriminatory regulations, laws and customs. The International Finance Corporation estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions – a financing gap of around $285 billion.

While many government and private programmes, for example, the Pradhan Mantri Mudra Yojana (PMMY) in India, facilitate easier access to institutional credit for women-led micro-enterprises, more needs to be done to educate women entrepreneurs about the full range of financial instruments and digital finance technologies through targeted informational campaigns.

On the supply side, reforms are needed in the financial sector to enable them to lend more to women-led SMEs, such as implementing alternative credit scoring options to replace the requirement for collateral, utilising trading history from digital platforms, or compiling a score based on cash flow analysis, household income and behavioural data.

More gender-balanced staffing within financial institutions can also help address the societal bias and scepticism towards women-owned enterprises.

Expansion of mentorship: According to World Bank research, female entrepreneurs who cross over into male-dominated sectors perform better than those who remain in traditionally female-concentrated sectors.

Sector choice is certainly one of the factors that contributes to the gap in men versus women entrepreneur performance.

With support from donor agencies and tie-ups with non-profit organisations like Mann Deshi Foundation and TalentNomics India – that have expertise in conducting mentorship programmes – successive generations of women entrepreneurs can be mentored and supported to cross over into male-dominated sectors.

An effective mentoring programme would incorporate a sustained period of learning, one-on-one mentor connect, and as icing on the cake, connect the mentee with a mentor (man or woman) who is successful in a male-dominated sector.

Role models also play a crucial role in developing the entrepreneurial spirit, as Marian Wright puts it, “You can’t be what you can’t see.”

South Asia can learn from global best practices. The Women’s Entrepreneurship Ambassadors Programme in Sweden engages volunteer role models to participate in public events and speak at schools and universities. The Technovation Girls programme enables girls in over 100 countries to work with female mentors to launch technology start-ups aimed at addressing a problem they have identified in their community.

Supporting women’s transition to higher levels of trade value chains: Research by the World Bank on different value chains in North East India, including spices, bamboo, horticulture and medical tourism, shows that the participation of women is higher in some segments of the value chain, such as cultivation and harvesting in agriculture, and more generally, in sorting, grading, packaging and labelling.

While enabling women’s participation in different value chains, these activities are often less remunerative for workers compared to others, such as R&D, production, distribution, marketing, and so on.

Gaps in education, skills and training undermine women’s ability to engage in and move up to higher-value activities. Addressing these gaps could be a fruitful endeavour for development partners, working in tandem with state governments. Training, including on-the-job training, could usefully focus on areas such as business development, quality control, marketing, distribution, access to finance and the ability to use higher-grade agricultural inputs and technologies.

Such training would not only help enhance women entrepreneurship, but also help women to transition to more remunerative segments of value chains.

Addressing regressive gender norms: Regressive gender norms often become embedded in discriminatory laws and regulations, especially evidenced in unequal property and inheritance rights. In turn, these laws impede women’s ability to start and grow businesses, as fixed assets are the most readily accepted form of collateral for commercial loans.

In South Asia, asset ownership, especially land ownership, is primarily determined by inheritance.

Inheritance rights over parental and spousal property have been equalised between men and women in Bhutan, India, Sri Lanka, and Nepal, while unequal inheritance rights are still prevalent in Afghanistan, Bangladesh, Maldives, and Pakistan. Research shows that the gender gaps in property ownership in South Asia are large by global standards.

Evidence suggests that the use of economic incentives, in the form of transfers, subsidies, and access to financial instruments can also make a difference when it comes to such norms. Large-scale interventions like Pakistan’s Punjab Female Secondary School Stipend (FSSS), a conditional cash transfer programme for adolescent girls to stay in school, have resulted in gains in education, as well as in a mindset on a later age for marriage. Amendments to the Hindu Succession Act, which granted daughters equal rights to inherit ancestral property, is another important example.

Support for women’s entrepreneurship

None of these changes is easy, because the barriers, like most gender issues, stem from biases and attitudes prevalent for thousands of years. But all are amenable to change, even if the results will take longer in some cases.

In devising a plan of action to deliver entrepreneurship support to women, one of the key questions is whether it needs to be delivered through dedicated women-only programmes by specialist agencies, or could it be integrated into mainstream programmes.

Globally, both approaches are in use, with the choice being eventually determined by social attitudes towards women in society and the labour market.

In many developed countries, where women face fewer challenges in accessing education and jobs, support for women’s entrepreneurship is delivered largely through mainstream programmes. However, in South Asia, given the particularly challenging environment for women entrepreneurs, there may be a preference for dedicated women’s support.

Hopefully, when there is a repeat study of first-generation women entrepreneurs in South Asia, say, at the turn of the decade, the ecosystem would have become more supportive, fostering the growth of many more inspiring female entrepreneurs like Nayana Karunaratne of Sri Lanka, Huma Fakhar from Pakistan, Surakchya Adhikari from Nepal, Siffat Sarwar from Bangladesh, Karma Yogini from Bhutan, Zoona Naseem from the Maldives, or Ruchika Bhuwalka from India. (For the complete list, see the TalentNomics India study).

Sanjay Kathuria is a Senior Visiting Fellow at the Centre for Policy Research; Adjunct Professor at Georgetown and Ashoka Universities; and Global Fellow at Wilson Center. He tweets @Sanjay_1818.

Nikita Singla is Associate Director at the New Delhi-based Bureau of Research on Industry and Economic Fundamentals.