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Thursday, October 29, 2009

The BoP Community Has To Do Much More for Women

By Manuel Bueno

Delacroix "Liberty Leading the People", 1830

It still baffles me that there are not more BoP businesses making use of women's skills to enhance their economic and social bottom lines. For example, looking at the details of the many fellowship opportunities or upcoming conferences (a list of which was recently provided by Francisco Noguera), the role of women is barely touched upon, if at all. Yet the earning power of women globally is expected to reach $18 trillion by 2014 - a $5 trillion rise for current income. That is more than twice the estimated 2014 GDP of China and India combined. This is a huge lost opportunity, which I already mentioned in one of my posts some time ago and which is creating important business opportunities.

To start with, women are productive economic agents that can contribute valuable assets to the commercial efforts in any company. As members of local communities they have valuable information about target customers such as their financial constraints or unmet needs. Therefore, they may be important in helping shape the final product, pricing or retailing decisions and/or targeting a more specific segment of the local community. Additionally, women can leverage liaisons between the local communities and private companies, hence spearheading commercial efforts by raising awareness about the benefits of the product or directly offering the product to the customer. As a result, women can often be included in significant ways in commercial and distribution networks.

Moreover, women are also important as consumers and heads of households. Women are often left in care of the family and are thus responsible for the welfare of their children. They normally purchase goods which are required in the household and they usually buy goods for other family members to use. According to our publication "The Next 4 Billion" women spend 51% of the household income in goods such as in food, housing improvements and health services. Therefore, they represent a very important "entry gate" for many routinely-used products. Furthermore, since they are often in charge of child care, women play a very significant role in improving the future opportunities of their offspring by improving household health and decreasing children mortality and morbidity rates. 

However, according to the Millennium Campaign 70% of the 1.3 billion people living in poverty are women. Women in general suffer from worse socio-economic conditions that their male counterparts throughout their lives. This significantly impairs their ability to improve their plight or that of their children and increases their vulnerability to global and economic social crises.

There are three main pillars to improve the state of affairs for women. Firstly, education is the key and the main barrier to achieving gender equality. Women lag men in the education they receive in spite of their higher returns from schooling than men (Psacharopoulos and Patrinos, 2002). Two-thirds of the children denied primary education are girls. Girls are also much less likely to complete primary school than boys. Because boys have a higher chance of continuing their schooling, the gap between girl and boys in secondary education increases until reaching adulthood. As a result, 75% of the world's 876 million illiterate adults are women (World Development Indicators).

The second main pillar is access to good health care including sexual and reproductive health services because they improve women's ability to build their human capital and take advantage of economic opportunities. For instance, adolescent fertility rates in the BoP are extremely high. While in countries such as Spain or Finland the number of births per 1.000 women aged between 15 to 19 is only 9, adolescent fertility rates in countries like Guatemala and the Dominican Republic are above 107 (World Development Indicators). Such high fertility rates carry a higher risk of birth complications and mortality, precipitate early departure from school and a higher probability of living in poverty, and are associated with poorer development outcomes for children (Morrison, Shwetlena Sabarwal, Sjoblom, 2008). Finally, contraceptive use is an important additional indicator of female empowerment, because it captures a woman's ability to space pregnancies and obtain the desired family size, while preventing HIV/AIDS transmission.

The third pillar, and one in which every BoP business can help, is access to skill training opportunities. A chronic shortage in these opportunities often relegates women to less-well paid jobs, less secure forms of work and fewer chances to be promoted. Women do about two thirds of the world's work (Women's International Network), produce half of the world's food, and yet earn only 10% of the world's income and own less than 1% of the world's property (Womankind Worldwide). Further, this lack of education and job training creates barriers for women to find a formal job or to grow their own businesses, which are usually dominated by food vending, informal processing and catering, handicrafts and tailoring. In fact, education increases the likelihood that women will formally join the labor force, with vocational and tertiary education having the greatest impact on women's inclination to work (Psacharopoulos and Tzannatos, 1992).

It should be noted that the benefits from socially and economically empowering women in developing countries have a higher impact than improving the living conditions of the general population regardless of their gender. This bigger "bang for the buck" has been empirically proven to have repercussions not only for the women affected, but also for their children, hence generating strong positive externalities. In this line, it is estimated the female income has 20 times the impact on the survival of the children than male income (Goldman Sachs, 2008).

With regards to the first pillar returns from improving female education are potentially very big, but difficult to quantify exactly because they spread onto many different areas. In general women's education has more impact than men's education on children survival and schooling and household productivity (Filmer, 2000). A 100-country study showed that increasing the share of women with a secondary education by 1% boosts annual income per capita growth by 0.3 percentage points (Dollar and Gatti, 1999). Furthermore, an extra year of girls' education can reduce infant mortality by 5% to 10% (King and Hill, 2003) and raise female income between 10% and 20% (Goldman Sachs, 2008.). Fertility rates are also reduced thanks to education, with four more years of education resulting in one child less (Klasen, 1999.).

Returns from improving female sexual and reproductive health care are also potentially high, since there is a strong causal link between lower fertility rates and the overall poverty level (Eastwood and Lipton, 1998). Moreover, reducing the household size lowers the chances of malnutrition in the remaining children while increasing the time they spend at school.

Gaining access to formal employment has a positive economic impact, since it improves female income, and socially, because it improves the status of women in the household and in the neighborhood (Horton, 1980). By empowering women, employment can significantly reduce poverty because female economic activity is instrumental in increasing consumption and savings. Furthermore, it is widely recognized that increasing female participation in the labor force can positively impact women's freedom and attainment in other areas, such as education and health, and have a positive impact on education and health outcomes for their children (Kanbur and Haddad, 1994).

Even if women are not offered a chance to collaborate in the distribution or commercialization of the product, they may also be benefited from new products that meet their needs. By educating women on how a product may help them improve their living standards, for example in terms of reproductive health, personal hygiene or household management, it may also have a significant impact. Thus, products that specifically aim to solve women's needs and that adapt to their financial and social constraints may also in the longer-run empower them.

For instance, basic micro-savings schemes have been found to lead to an increase in female decision-making power within the household (Ashraf, Karlan and Yin, 2008). Key factors contributing to empowerment are business training in learning how to manage their savings, learning how to balance family and work responsibilities, gaining experience in decision-making and leadership, and taking ownership and controlling their finances (Cheston and Kuhn, Draft, 2002.).

Engaging the private sector in providing market based solutions to entrenched poverty and gender challenges is a challenge in itself.  Nevertheless, there is ample evidence of private solutions to specific problems where women play a central role either in the business model design and execution or as target customers.  This experience is very poorly documented and understood.

It is our responsibility, the responsibility of BoP investors, businesses and employers, to push this agenda further and start making a difference in gender-based inequality. It is high time that women stopped being an afterthought in BoP business strategies. The BoP movement currently enjoys much more legitimacy and respect than it did when it started. We now have to move to more refined and sophisticated approaches both in terms of developing suitable business models and in terms of how we try to tackle social ills. In this line, empowering women is a no-brainer in the generation of economic and social profits for the businesses involved, and should be at the top of the list of any BoP organization.

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