Women’s Economic Empowerment: Some Tips for Informed Investments

The call to economically empower women in developing and emerging economies at long last has significant financial backing. The World Bank’s coordinated Women Entrepreneurs Finance Initiative, OPIC’s 2X Challenge, USAID’s coordinated Women’s Global Development and Prosperity Initiative, and the just announced G7 contributions to the Affirmative Finance Action for Women in Africa (AFAWA) initiative have committed significant funds to the agenda. These funds and initiatives have been built to catalyze additional public and private sector investment in hopes of moving from ambitious rhetoric to equally ambitious financing.

But it’s equally important to draw upon rigorous evidence telling us what works, and what doesn’t, for different populations of women and girls. Not all interventions are created equal. Solid grounding on an ever-growing evidence base should help guarantee that women’s economic well-being is maximized, and any inadvertent harm or wasted resources are minimized.

The right approach cannot be gender-neutral

Back in 2016 we offered overall recommendations for how development actors should approach economic empowerment interventions. Interestingly, recent research from CGD colleagues suggests that a gender lens or a gender-specific approach may not always be needed in education interventions. But when it comes to labor force participation and economic advancement, where gender inequalities are notably wider and more persistent, women are less likely to benefit when interventions fail to consider their gender-specific needs and constraints.

Two broad sets of common gender-specific constraints are (1) those linked to women’s subordinate position in the family and limitations on their independent decision making, and (2) those stemming from women’s traditional household and child care responsibilities that impose time and mobility obstacles. Interventions that address these constraints (we call them “smart”), some comparatively simple to implement, can make significant headway in bringing about more gender equal outcomes—in some cases yielding more positive economic outcomes for women than for men. 

Women may outperform men when intervention designs address women’s specific constraints

Women have a lower starting point—in terms of income, access to finance, or markets, for example being lower—and this may be a reason for the difference in women’s performance, among other reasons. Whatever the cause, “smart” interventions hold the promise to help reduce persistent gender gaps in the economy. Our recently-published paper, Gender Matters in Economic Empowerment Interventions: A Research Review, where we systematically reviewed studies detailing the impact of economic empowerment interventions on men and women, showcases some of these “smart” interventions and offers specific guidance for implementers and investors.

“Smart” tips to help overcome biases include design features that:

1. Increase women’s economic independence and risk-taking through smart design of financial instruments

• Access to individual, private, and secure savings accounts increases women’s economic self-reliance, responds to women’s preference for savings, and particularly helps those who are less empowered.
• Access to joint or family savings or credit accounts do not have the same effect and should be avoided if the focus is on empowering individual women.
• Soft commitments, including saving for a specific purpose or with a time commitment, help encourage economic self-reliance.
• Access to suite of financial instruments (savings, credit, and insurance), repeated micro-lending, variation in loan terms (offering longer terms), and peer support through savings and credit groups all may help increase women’s confidence in business decisions and risk-taking.
• Individual mobile savings provide privacy and reduce transaction costs.

2. Help overcome women’s time and mobility constraints through quality training programs

• High-quality training that improves business practices or marketable skills should include stipends and other incentives that address women’s time burdens and childcare demands.
• This type of training may also include practice trials to reinforce what has been learned.
• Training that includes soft skills, including social support and confidence building, is more effective, especially for women with lower self-efficacy, and should be a core element of high-quality training programs.
• Training with peers or group-based training can provide social support and boost self-confidence.

3. De-bias working environments that traditionally have benefitted men over women

• The traditional, widely held view that women are not economic actors can embed the provision of financial services, business training, and agricultural extension and help perpetuate an unequal playing field between men and women. De-biasing service provision, by providing incentives for bank agents to reach women clients or training providers to treat trainees equally, regardless of gender, can work to improve women’s outcomes.

Very poor women need more and for some women “smart design” alone will not work

Bundling is necessary for very poor women. Microfinance or savings alone won’t cut it if a woman has no income to save, and microfinance can risk placing women into a cycle of debt without additional support to grow a business or transition to wage work. Bundled interventions—combining training, access to capital and in-kind assets, and savings platforms—address the multiple constraints very poor women face.

When social norms are too restrictive, and women are prevented from doing any paid work, these “smart” interventions will not work. In this case, more long-term systemic investment in human capital and social change is needed.