Today Goldman Sachs has announced, in partnership with the International Finance Corporation, the creation of the first-ever global finance facility for the exclusive use of small and medium-sized businesses owned by women.
Up to $600 million will be made available initially and it is estimated this amount will enable 100,000 female entrepreneurs to access the capital necessary to grow. Creation of this facility is an historic first step and it is hoped others will join to grow the available pool. The IFC estimates that the global capital gap attributable to gender is $285 billion. So there is a long way to go.
The gesture is itself extremely important. It announces to the financial community that
there is a measurable gender gap in capital access (capital is not gender blind, as is often claimed)
a world leader in finance is taking this capital gap seriously enough to publicly support closing it
the world economy will be better off if women have more capital.
Specifically, GS and IFC say that closing the gap in the BRIC and Next 11 countries would, by 2030, increase per capita income in those countries 12%.
So, once again, we see that excluding women from the formal economy comes with a price previously unrecognized. We have ignored the damage done by women’s economic exclusion for too long. On the upside, with world leaders in both the private and public sectors now consistently calling for closing the economic gender gap, we may all actually reap the benefits of a more inclusive economy. The intention of this new facility is to address both the barriers banks experience in lending money to women and the troubles women have getting loans. Some of this will, I’m sure, mean addressing some of the discriminatory practices that typify banking in the developing world (and, to be fair, everywhere else as well).
I have had the privilege of teaching on the Goldman Sachs 10,000 Women program, which celebrates its five-year anniversary today. The company says the graduates of this program have shown remarkable growth, multiplying their revenues five times and doubling their number of employees. The ripple effect, of course, includes the worker incomes and better lives for their families–efforts such as this one benefit many besides the women themselves.