WOMEN ENTREPRENEURSHIP

DEVELOPMENT PROJECTRationale - Implementation - Lessons Learned

Radisson Blu Hotel – Addis Ababa,

Ethiopia

May 11, 2016

OUTLINE

1. Setting the stage:Strategic Context in 2012

Gender rationale

Why WEDP?

2. The WEDP modelDesign and Structure

Line of Credit and Technical Assistance

Business Development Skills

Impact Evaluation

3. ConclusionsIndependent evaluation

Key successful features

Lessons learned

Setting the stage

Why WEDP?

STRATEGIC CONTEXT (…IN 2012)

1. MSEs will have to play a major role during the transformation of the

Ethiopian economy.

• the Ethiopian economic growth will not continue unless a structural transformation

takes place where workers move from subsistence agriculture to higher productivity

activities.

2. Unleashing the potential of women in the economic sector would

increase GDP growth substantially.

• reducing gender inequalities in education and the labor market could increase the

annual GDP growth in the country by around 1.9 percentage points (World Bank

2008)

3. The Government has a strong interest in supporting the MSE sector,

particularly for increasing women’s income.

• the development of small scale income generating activities for women is a specific

aim of the new 5-year plan of the Government – the Growth and Transformation Plan

2011-2015 (GTP).

GENDER RATIONALE (…IN 2012)

1. Supporting female entrepreneurs may be one of the most viable approaches for realizing the economic potential of the current generations of women

• The constraints women entrepreneurs are facing are lack of access to finance, land, training, education, and effective business networks (Triodos Facet 2011).

2. Microfinance in Ethiopia has a low coverage for women and do not provide suitable financing for women entrepreneurs.

• Together with the underdevelopment of the financial sector, this suggests a large potential for micro finance services.

3. Moreover, in terms of employment in urban areas, the private sector consists mainly of MSEs.

• According to the 2011 Urban Employment Unemployment Survey, over 50 percent of the employed women in urban areas operate or work for MSEs, which is their main vehicle for income generation.

WHY WEDP?

• Opportunity for the World Bank to design an investment

operation to support women entrepreneurs

• Entry points: gender related intervention + job creation agenda

• 2012-2016: from a social development intervention to a financial and private

sector development intervention

• Most growth-oriented women entrepreneurs fall into a ‘missing

middle’ trap, in which they are served neither by commercial banks

nor by microfinance institutions.

• High minimum loan sizes and excessive collateral requirements restrict women’s

access to loans from commercial banks.

• Microfinance Institutions (MFIs) primarily cater to micro-firms with group lending

schemes that provide very small loans.

5

Background

Design and Structure

PROJECT DESIGN

Project’s Objective : To increase the earnings and

employment of MSEs owned or partly owned by the

participating female entrepreneurs in the targeted cities.

Components World Bank DFATD Canada DFID UKTOTAL

(USD Millions)

Component 1:

Access to Microfinance

42.40 3.50 3.00 48.90

Component 2:

Entrepreneurial Skills

6.10 1.67 / 7.77

Component 3:

Project Management & Impact Evaluation

1.50 4.0 / 3.50

TOTAL 50.00 9.17 3.00 62.17

STRUCTURE – JOINT IMPLEMENTATION

4 regions

6 cities

9 city coordinators

2 PIUs

12 MFIs

45 OSSs

11 TVETs

ORGANIZATIONAL STRUCTURE

9

WIC Members:

- FeMSEDA

- DBE

- TVET Agency

- DAI/DFID

- Transtec

- CIDA

- World Bank

WEDP CLIENTS’ PROFILE

Indicator avg

Age 33.7 years

Business experience 4.2 years

Annual earnings $5600

Education Secondary

Business Type Sole Proprietorship

Years business existed 3.5

Number Employees 4.2 employees

Desired Services Loan + Training

Sector Trade

Sub-Sector Retail Trade

Component 1: Microfinance

MISSING MIDDLE FOR WOMEN-OWNED MSEs

TECHNICAL ASSISTANCE TO MFIs

TA

provider

TECHNICAL ASSISTANCE ACHIEVEMENTS I

MFIs USING ALTERNATE COLLATERAL

CASH FLOW LENDING SPREADING BEYOND WEDP

VOLUNTARY SAVINGS EXPANSION

1

2

3

MFI ACHIEVEMENTS (MARCH 2016)

3,812

CLIENTS

$41 MILLION DISBURSED

PAR30

< 1%

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

ACSI AdCSI Harbu SFPI

Cumulative Disbursed MFIs own Funds for WEDP loans

MFI USE OF OWN FUNDS FOR WEDP LENDING

CHANGING INDIVIDUAL LOAN SIZES

MINIMUM AND MAXIMUM DISBURSEMENTS

-00

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

ACSI ADECSI DECSI Harbu OCSSCO OMO SFPI Wasasa

Min Loan Size Disbursed Max Loan Size Disbursed

LOAN DISBURSEMENTS BY SECTOR

Agriculture2%

Construction

3%

Manufacturing

14%

Service35%

Trade47%

COLLATERAL COVERAGE

200%

125%

ALTERNATIVE COLLATERAL

Home54%

Other46%

Component 2:

Entrepreneurship Training

MENU OF TRAINING PROVIDERS AND TYPES

Training Providers

TVET Colleges (gov’t)

Business Skills Training

TVET Colleges (gov’t)

Personal Initiative Training

Digital Opportunity Trust (NGO)

Action oriented business skills training

Entrepreneurship Development Center (Private)

Entrepreneurship mindset change training

Typical contents

• Self analysis• Business skills and entrepreneurship

development• Gender issues and challenges in business• Behavioral skills in entrepreneurship• Strategic business planning• Business and market opportunities• Preparation of business plan• Sales and marketing• Procuring inputs• Production, workplace and staff mgmt.• Bookkeeping

“The aim of this component is to develop growth-oriented women entrepreneurs’

skills and facilitate their access to more productive technologies that can raise

their incomes”

TRAINING SATISFACTION

85%‘very satisfied’ with training

7,006 Entrepreneurs trained @ April 2016

300 to 500 entrepreneurs trained/month

GROWTH OF ENTERPRISES

35.70%

20.10%

12.20%

0%

10%

20%

30%

40%

Received WEDP Loan Received WEDP Training Control

Percentage Change in Yearly Profits in Year One of WEDP

18.23%

8.28%

0.86%

0%

5%

10%

15%

20%

Received WEDP Loan Received WEDP Training Control

Percentage Change in Number of Employees in Year One

EVALUATION

IMPACT EVALUATION

WEDP Impact

Evaluation

Component

1. Measuring Project

Results

2. Testing Innovations

with Impact

Evaluations

3. Policy Research

Studies

Measuring Project Results

• Baseline survey of 2,400 WEDP clients completed

• End-line panel survey of same respondents in 2017

Testing Innovations

• Psychometric testing to replace asset collateral - pilot with Amhara Credit and Savings Institute

• Comparing impacts of various approaches to entrepreneurship training (psychology-focused, technology-focused, traditional)

Policy Research Studies

• Policy study on women in male-dominated sectors (‘cross-overs’)

• Policy Study on access to finance challenges for women entrepreneurs

IMPACT EVALUATION

LESSONS LEARNED

INDEPENDENT REVIEW - I

• Given the success of WEDP’s activities to date and the

team’s pro-active efforts to resolve problems, the

project seems extremely likely to be completed with

positive results, having helped increase the earnings

and employment of women-owned MSEs in Ethiopia.

• WEDP is also giving PFIs experience in a new business

line: lending to individual women entrepreneurs, with

TA support to update appraisal tools and loan

products.”

(Independent Review of WEDP, July 2015).

INDEPENDENT REVIEW - II

- WEDP’s Access to Microfinance component provides excellent

experience to show financial institutions that women entrepreneurs

can be good borrowers and that with good cash flow analysis and

lending procedures, collateral requirements can be relaxed

- On the training side, the use of the TVETs—existing, government-

funded, training entities—as the main training provider has been a

good step in helping ensure that the WEDP-specific

entrepreneurship and business skills training courses could be

available after the end of the project.

(Independent Review of WEDP, July 2015).

1. It’s local• It’s a Government’s project implemented at the local level by local

institutions

2. It’s about knowledge• It brings international best practices in MSME finance and tailors them to

the local culture and context.

3. It’s innovative• It’s one of the very few women-only lines of credit in Africa and it brings an

innovative approach to SME finance

4. It’s technological• It applies technology in a smart way: e.g. psychometric testing

5. It’s replicable• The model can be easily adapted to other countries and contexts

KEY FEATURES OF THE WEDP MODEL

LESSONS LEARNED

1. Identifying and serving an untapped market segment• Growth-oriented Women entrepreneurs proved to be a profitable and

underserved market segment.

2. Adopting an holistic approach • Addressing growth-oriented women entrepreneurs’ needs from both a

supply and a demand side.

3. Using liquidity provision to channel knowledge• The success key is the provision of technical assistance to MFIs.

4. Real time measurement and hands-on implementation• The successful implementation requires close monitoring, an inclusive

approach to project’s management and access to regular results’

measurement.

THANK YOU !

Francesco Strobbe

Finance & Markets Global Practice - Africa RegionThe World Bank Group1818 H Street, N.W., Washington, DC 20433, USA Email: fstrobbe@worldbank.org