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How small merchants can help drive sustainable consumption

How Small Merchants Can Help Drive Sustainable Consumption

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The COVID-19 pandemic dealt a heavy blow to small businesses, but a silver lining emerged amidst the shuttering of storefronts: a clearer understanding of the types of support small businesses need to survive, grow and compete in today’s digital economy

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From the United Nations’&nbsp;<a href="http://www.un.org/sustainabledevelopment/development-agenda/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">2030 Sustainable Development Agenda</a>:&nbsp;Gender equality and women’s economic empowerment are central to realizing this vision, yet there’s much work to be done.As the world marks International Women’s Day on March 8th, we have outlined a number of steps that business and government can take to close the gender gap in financial and economic inclusion.&nbsp;We draw on a recent UN&nbsp;<a href="http://womenseconomicempowerment.org/assets/reports/UNWomen%20Full%20Report.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">report</a>&nbsp;that we co-authored, a special high-level UN panel established by the Secretary-General. The report identifies proven and promising actions that governments, businesses, non-governmental organizations and multilateral development agencies can take to close these gaps.&nbsp;The complete report and supporting policy briefs are available&nbsp;<a href="http://womenseconomicempowerment.org/reports/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">online</a>.Benefits of Financial InclusionFinancial inclusion brings major benefits to individuals and economies. For individuals, it means access to credit for emergencies or needed purchases, a path to savings and an opportunity to expand a business and manage risk. For the larger economy, financial inclusion increases savings, expands and reduces the price of credit for investment and entrepreneurship and helps to allocate more efficiently labor and capital, promoting faster economic growth.Despite progress in recent years, 2 billion people—about 45 percent of all adults— in emerging market economies lack a formal account at a bank, a financial institution, or with a mobile money provider, according to the&nbsp;<a href="https://www.worldbank.org/globalfindex" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">World Bank’s 2015 Global Findex</a>. The unbanked rate is even higher for the poor, those in rural areas and women.

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Source: World Bank, Global Findex:&nbsp;<a href="https://www.worldbank.org/globalfindex" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">https://www.worldbank.org/globalfindex</a>Access is not the only issue. Women are less likely than men to use their accounts for deposits, withdrawals and payments. Governments and the private sector can increase women’s financial inclusion in numerous ways:Eliminate discriminatory laws&nbsp;limiting women’s rights to inheritance, property ownership and choice of work.Simplify procedures for obtaining official personal identification, including the use digital/biometric systems to establish identity for those who lack traditional paper documents. In&nbsp;<a href="http://www.unwomen.org/en/news/stories/2016/3/mastercard-and-un-women-join-to-advance-empowerment-of-women" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Nigeria</a>, UN Women and Mastercard are partnering to provide women with personal identification cards that have electronic payment functionality.Streamline “know-your-customer” (KYC) regulations&nbsp;for opening bank accounts by allowing tiered KYC regulations. Poor customers who make small transactions and maintain low balances should face fewer regulatory barriers.Reduce the costs of savings accounts.&nbsp;When offered free savings accounts,&nbsp;<a href="http://womenseconomicempowerment.org/assets/reports/briefing_papers/Financial%20inclusion_with%20cover.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">more than 80 percent</a>&nbsp;of unbanked women in Kenya and Nepal accepted.Expand agent banking—providing financial services at retail shops and post offices. In partnership with Women’s World Banking, Malawi’s NMB bank offers savings accounts to women through a network of agents. Customers make deposits or withdrawals at local shops using a mobile phone, and NMB employees visit customer homes to help them set up digital accounts.Offer customers digital bank accounts. McKinsey Global Institute&nbsp;<a href="http://www.mckinsey.com/global-themes/employment-and-growth/how-digital-finance-could-boost-growth-in-emerging-economies" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">estimates</a>&nbsp;that it saves providers 80 to 90 percent by offering customers digital bank accounts. The lower costs make it feasible to serve low-income customers even when their account balances and transactions volume are small.Digital finance is still in its infancy but has enormous potential to serve the excluded. Mobile money is&nbsp;<a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2016/04/SOTIR_2015.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">now available</a>&nbsp;in 93 countries. In developing countries, only about 55 percent of adults have a bank or financial services account but nearly 80 percent have a mobile phone.Accept digital payment for routine government services&nbsp;such as utility fees and school fees. Currently, women face enormous costs when they must travel long distances to pay bills. Digital payment options can eliminate these costs.Expand options to determine credit-worthiness. Female entrepreneurs are more likely to lack a credit history than males. In Kenya, a borrower can now apply for a loan&nbsp;<a href="http://womenseconomicempowerment.org/assets/reports/briefing_papers/Financial%20inclusion_with%20cover.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">using a mobile phone</a>. A set of algorithms quickly determines credit-worthiness based in part on past mobile transactions.Promoting gender equality is a win-win for the private sectorThe incentives for businesses to support gender equality are strong. Companies with greater gender equality in their workforce and top management can reap many&nbsp;<a href="https://piie.com/publications/wp/wp16-3.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">benefits</a>. Such companies are better able to attract and retain female talent, motivate their female workers, understand and respond to the needs of female customers and better address complex problems by incorporating more diverse views. Gender-diverse teams&nbsp;<a href="https://web.duke.edu/equity/toolkit/documents/DiversityMatters.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">are correlated with higher financial returns</a>&nbsp;and&nbsp;<a href="http://www.lnds.net/blog/images/2013/09/grattonreportinnovative_potential_nov_2007.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">higher innovation potential and outcomes</a>. And businesses with more women in top leadership and board positions enjoy stronger financial performance.The&nbsp;<a href="http://womenseconomicempowerment.org/assets/reports/UNWomen%20Full%20Report.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">UN High Level Panel report</a>&nbsp;identifies several promising and proven actions that businesses can take to promote gender equality and enhance economic opportunities for women.Identify and address stereotypes and implicit biases in organizations. Doing so can help companies design practices that&nbsp;<a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674089037" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">combat gender biases in hiring, promotion and pay</a>. Many large global companies now have mandatory training for managers to recognize and counter these biases in human resource practices, with new digital platforms being developed to help organizations improve their performance.Monitor progress.&nbsp;Many businesses are setting targets as a way to monitor progress in reducing gender gaps in recruitment, retention and promotion. Many are also linking managerial compensation to progress. Regular pay-equity reviews and innovative pay-equity processes (for example, setting explicit objective criteria for initial pay and promotion) can reduce gender pay gaps.Train and mentor:&nbsp;Training and mentoring programs help female employees develop their skills. Sponsorship programs are particularly important in promoting women and developing a strong pipeline of female talent.Offer family-friendly policies&nbsp;including flexible work options and paid maternity and paternity leave. The flexibility of the workplace shapes women’s choices of occupations and places of work and a lack of flexibility is a significant cause of the gender pay gap.Consider quotas for top leadership positions: More than 110 countries have some type of quota for women in parliament, and 11 countries use quotas to improve the gender balance of government agencies. Nine countries have legislatively mandated quotas for corporate boards.Create incentives in global supply chains.&nbsp;Some companies are partnering with the public sector to protect and empower female workers in their global supply chains:The&nbsp;<a href="http://betterwork.org/about-us/the-programme/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Better Work program</a>&nbsp;brings together global companies, factories in their supply chains, governments and worker organizations to improve factory conditions and safeguard the rights of workers in the garment industry.<a href="http://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/2BBE235C2E9F3F1185257D5B00501B1D?opendocument" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">She Works</a>, a public–private partnership organized by the International Finance Corporation, is working with private companies to improve gender equality and enhance employment opportunities for 300,000 women in company supply chains.<a href="https://weconnectinternational.org/en/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">WeConnect International</a>&nbsp;identifies, certifies and provides training to women-owned enterprises and connects them to qualified local and multinational companies. To join, companies commit to a global supplier diversity program.Raise awareness.&nbsp;Through its annual&nbsp;<a href="http://reports.weforum.org/global-gender-gap-report-2016/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Global Gender Gap Report</a>,&nbsp;the World Economic Forum has been a leader in calling attention to gender gaps in economic and political opportunities around the world. The recent UN report is a call to action to the global community to speed up the progress on closing these gaps. Doing so will help realize the vision of inclusive and sustainable growth.Laura Tyson is a Distinguished Professor of the Graduate School, University of California, Berkeley, and a senior advisor at the Mastercard Center and Jeni Klugman is managing director, Georgetown Institute for Women, Peace and Security and Fellow, Women and Public Policy Program, Harvard Kennedy School.Featured Photo Credit: Getty Images

Inclusive and sustainable development around the world—leaving no one behind—is the overarching vision of the United Nations’ 2030 Sustainable Development Agenda. 

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Actions Government and Business Can Take to Advance Women's Economic Empowerment