Women's Political and Economic Freedoms are Interlinked

I participated in a conference on women's entrepreneurship in Ramallah, Palestine. The onference was attended by Dr. Salam Fayadh, the Palestinian Prime Minister, and some of teh most influential political and economic leaders in Palestine. Below are my remarks.

Women comprise half of the world’s population, perform 66 percent of the world’s work, produce 50 percent of the food, and constitute between 60 and 80 percent of the manufacturing workforce in developing countries. In addition, women business owners make up the majority of entrepreneurs in the informal sector and a large share of the micro-enterprise sector. Yet, despite their extraordinary contributions to socio-economic development, women continue to be marginalized in many countries around the world.

The challenge of building democracy that delivers is one of ensuring fair and open economic, political, and civic participation for women in society. Today, we hear about developments in the Middle East that are lauded for advancing women’s rights – parliamentary quotas for women; an increased number of female university graduates. But my enthusiasm is tempered by the realization that such political and educational advances will be hollow if women are not empowered economically. What use is a university degree if you are unable to find a job, create your own business, or if you feel pressured not to even pursue a professional career? World Bank statistics from 2007 show that in the West Bank and Gaza women with tertiary education account for 82% of unemployed women compared to only 12% for men. Similarly, of what value is a seat in parliament if you do not have credibility behind you because you are not awarded equal economic rights in society?

My organization, CIPE, views women’s empowerment through the prism of building linkages between educational, political, civic, and economic empowerment. The question of how to support women’s entrepreneurship is central to this effort. CIPE has found through its experience that many traditional approaches to promoting entrepreneurship focus too much on building the skills of a few individuals. Whereas on the other hand, institutional reform can help to remove barriers to entrepreneurship, such as problems enforcing contracts; struggling to overcome corruption; complex licensing procedures; difficulty accessing credit; finding reliable employees; and lack of transparency, trust, rule of law. In fact, though these issues affect all would-be entrepreneurs in the Middle East, studies show that they have a disproportionately negative impact on women. The World Bank has found that high capital requirements and drawn out and expensive procedures for starting and closing a business are likely to present a larger barrier to women because women require “greater flexibility to scale down or abandon business aspirations to meet family needs.” In other words, when the costs of doing business and exiting the market are high, women have incentives to remain in the informal sector or not even pursue business. Labor codes that govern permissible hours of work, perceptions of gender roles, and other legal and social concepts also present added challenges for women becoming entrepreneurs.

Despite these obstacles, remarkably women tend not to view themselves as victims but rather seek to understand how they can be drivers of change. And that’s what I want to talk about today, how the private sector, and especially women’s business associations and civil society organizations, can play a vital role in removing barriers to entrepreneurship through public policy advocacy and community engagement. The recipe for building entrepreneurial economies is pretty simple, but the ability to implement necessary reforms is much more complex. The “recipe” involves building market institutions; removing barriers to starting, operating, and growing a business; reforming educational systems; creating a broader awareness and understanding of what entrepreneurship means; and deepening appreciation for entrepreneurs’ contributions to the development of societies. The ingredients of this recipe will not come together by preparing individuals to become entrepreneurs. A key component of success in supporting entrepreneurship has to be association-level work to advocate for the institutional changes that will foster a culture of entrepreneurship. Associations have been a vital part of America’s democratic history, and examples from CIPE partners around the world show the usefulness of the association model in advancing democracy and economic growth.

In terms of fostering entrepreneurship, business associations and chambers of commerce can play a leading role in removing barriers to doing business through policy advocacy. CIPE’s partner the Bangladesh Women Chamber of Commerce and Industry has successfully advocated for a number of local and national level policy changes, as outlined in its Women’s National Business Agenda. In particular, the Chamber has eased access to credit for women entrepreneurs, both through the issuance of Central Bank rules providing women with low-cost loans with no collateral requirements, as well as by monitoring implementation of these new rules by commercial banks. To date, nearly $23 million has been provided to more than 3,000 women entrepreneurs, helping to create around 20,000 new jobs. The Chamber, which has had explosive membership growth since it began working with CIPE, has also developed into a stronger organization through better governance mechanisms and improved budgeting and strategic planning.

The Coalition of Women Business Associations in Romania is an informal coalition launched in January 2004, with CIPE support, by nine Romanian women’s business associations eager to play a larger role in the formulation of government policies related to the private sector. The coalition does not replace the activities of association members; it gets involved in major initiatives and events that require grassroots support such as public hearings, debates, legislative proposals, and amendments. By 2007, the coalition had become an influential, self-sustaining entity with 19 association members representing more than 2,000 businesswomen. It is another example of a framework for driving national-level debate on issues such as entrepreneurship.

The business community is also leading the fight against corruption to empower entrepreneurs. In Russia, business associations are equipping small businesses with tools to resist extortion by public officials. In addition, CIPE studies have shown that a major barrier to entering the market and operating a business is individuals’ confusion over complicated licensing procedures and conflicting laws and regulations. Business associations can work to change laws and regulations to ensure that they are more consistent and fair; this has the added benefit of decreasing instances of corruption because local officials cannot rely on their discretionary powers to selectively implement different laws.

In Kyrgyzstan, members of the business community are engaging in the national educational system to help ensure that university curricula are more geared towards the real business world. Public-private dialogue can also lead to incorporating entrepreneurship and civic education concepts into educational curricula. All of these activities represent practical, concrete examples of how the private sector can advocate and work to foster an entrepreneurial culture.

As one author put it simply, “By being able to exercise their economic freedom, entrepreneurs reinforce political and personal freedoms and are an important force in establishing and maintaining an open democracy.” In non-democracies or democratizing societies, entrepreneurs face heavy barriers. But those who find a way to operate, by virtue of their very existence, are advancing economic, political, and civic freedoms. And once societies transition into democracies, entrepreneurs are the drivers of economic growth, which adds to the stability and well-being of the country and its citizens. Women are stepping into their natural role as entrepreneurs, and are therefore key drivers of change particularly in the Middle East.