In The News

Betting on Women in the Fight Against Poverty

June 18, 2014

Today about six out of 10 of the world’s poorest people are women. That means, of the estimated 1.5 billion people living in extreme poverty worldwide, 60-70 percent are girls and women. However, if girls and women account for a large percentage of the poor in the world, they are also an integral part of the solution to extreme poverty.

A student after school in a suburb of Delhi.

In the last decade, women have made great strides in opening businesses, building credit, and increasing their participation in the economy. However, about six out of 10 of the world’s poorest people are still women. Photo/Conor Ashleigh

According to the World Bank, extreme poverty is defined as the average daily consumption of $1.25 or less, which means living on the edge of subsistence. Despite the fact that 700 million fewer people were living in extreme poverty in 2010 compared to two decades ago, tremendous efforts still need to be made to address the situation of the remaining 1.5 billion extreme poor today. This is especially the case in South Asia, where 43 percent of the developing world’s poor people live. In order to achieve the World Bank’s goal of eliminating extreme poverty by 2030, a more inclusive and broad-based economic growth strategy is required, a strategy in which women need to play a major role.

Women and girls tend to be more vulnerable to extreme poverty compared to men for a variety of reasons, including limited conditions and opportunities for jobs and business development, existing inequalities in education and health, and gender-based discriminations still evident in societies today. Although the global rate of extreme poverty is expected to fall to 15 percent by 2015, poverty is increasing among women and girls in rural areas. Women and girls in developing Asia are particularly affected as they are left with the burden of farm and family work while men go to urban areas in search of employment. Fighting against extreme poverty means recognizing and addressing this gender dimension.

In the last decade, women have made great strides in opening businesses, building credit, and increasing their participation in the economy. In East Asia and Oceania, 64 percent of women are in the work force as of 2012, and in Southeast Asia, women-owned SMEs are growing rapidly, especially in middle-income countries. In Malaysia, the annual rate of growth for women-owned SMEs is almost 10 percent. In Thailand, approximately 40 percent of all businesses are owned or operated by women. Women’s economic empowerment is proving efficient not only in reducing poverty at the individual and family level, but also as a powerful tool to boost economic development at the national and global level.

However, women’s full economic power will not be unleashed unless there are stronger commitments to providing the services and enabling environment they need to take full advantage of their capacity, at each stage of their lives as girls, women, and mothers. This means improved access to education and health, as well as the development of key social safety nets to allow and sustain women’s full engagement in the economy.

It is widely acknowledged that access to education is crucial to women’s empowerment. According to UNDP data, 123 million youth aged 15 to 24 lack basic reading and writing skills and 61 percent of them are young women. The World Bank’s 2013 “State of the Poor” report highlighted a gender gap in education among those living in extreme poverty. Poor women aged 15 to 30, on average, have a year less schooling than poor men of the same age group. Therefore, a priority for national governments to reduce poverty should be focused on narrowing or eliminating this gap. A Goldman Sachs research shows that investments in female education can yield a growth premium in GDP trends and increase per capita income in employment. For example, Japan’s GDP could increase by up to 15 percent if their female employment rate matched their male employment. In some South Asian countries where women and girls face obstacles accessing education and are constrained to unskilled labor, the lack of education is costing countries in terms of lost economic growth. For the BRIC countries and Next-11 countries identified by Goldman Sachs as having the potential to become the world’s largest economies (including Bangladesh, Indonesia, Korea, Pakistan, Philippines, and Vietnam), it is estimated that greater investments in female education can raise GDP growth by roughly 0.2 percent per year.

Women need equal access to economic opportunities. The World Bank reports that women work two-thirds of the world’s working hours globally, but earn only 10 percent of the world’s income. In addition, they own less than 1 percent of the world’s property. By opening up opportunities for women such as access to information and finance, networking and mentoring opportunities, and providing support and training to businesses, women can increase their economic participation, financial independence, and reduce poverty.

Two initiatives that have proven successful in providing women greater access to economic opportunities in a sustainable way are social business ventures and access to micro-finance – both pioneered by Nobel Peace Prize laureate Prof. Muhammad Yunus, this year’s recipient of The Asia Foundation’s prestigious Lotus Leadership Award.

Prof. Yunus defines social businesses as non-loss, non-dividend companies dedicated entirely to achieving a social goal. They attract women in great numbers, with 38 percent of social ventures led by women, compared to twice as many men than women in conventional business. The Guardian Social Enterprise Network suggests that reasons women are attracted to social businesses include gaining a better work-life balance, lower risk opportunities, fewer employees and a more geographically localized customer base. The increasing number of social entrepreneurs across developing countries like the Philippines is a positive step for women’s economic participation. In the island nation, social entrepreneurship is increasingly prominent in both profit and non-profit sectors. Enterprises range from engaging in house building projects such as Gawad Kalinga to selling sustainable lifestyle products like ECHOstore.

However, whether social or not, businesses require capital to start and develop, an area where women still face barriers, despite the impressive wins of the last decade. There is an ongoing revolution taking place in making microcredit accessible for women to establish small businesses and thus earn an income to support their families. In South Asian countries like Pakistan, microcredit loans empower women in villages to earn an income through buying cattle and contribute to the often male-dominated rural household. Having access to microcredit also supports women in Asia looking to expand or start new businesses after attaining technical and practical business skills through training. Eliminating barriers to microcredit in order to facilitate the use of collateral, lessen the requirement of formal credit history, and avoiding excessive paperwork will make it easier for women to empower themselves. A supportive business environment with favorable policies and initiatives to close the gender gap will further enhance trust and increase women’s economic empowerment.

Véronique Salze-Lozac’h is The Asia Foundation’s senior director for Economic Development Programs and Ka Wai Wong is the Foundation’s Australian Youth Ambassador for Development both based in Bangkok. They can be reached at veronique.salze-lozach@asiafoundation.org and ka.wong@asiafoundation.org, respectively. The views and opinions expressed here are those of the individual authors and not necessarily those of The Asia Foundation.

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