Sec. 2. Findings
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Congress finds the following: Because women make up the majority of the world’s poor and gender inequalities prevail in incomes, wages, access to finance, ownership of assets, and control over the allocation of resources, women’s entrepreneurship and economic empowerment is important to achieve inclusive economic growth at all levels of society. Research shows that when women exert greater influence over household finances, economic outcomes for families improve, and childhood survival rates, food security, and educational attainment increase.
Women also tend to place a greater emphasis on household savings which improves families’ financial resiliency. A 2016 report by the McKinsey Global Institute estimated that achieving global gender parity in economic activity could add as much as $28 trillion to annual global gross domestic product
(GDP)by 2025. Lack of access to financial services that address gender-specific constraints impedes women’s economic inclusion. More than one billion women around the world are currently left out of the formal financial system, which in turn causes many women to rely on informal means of saving and borrowing that are riskier and less reliable. Among other consequences, this hampers the success of women entrepreneurs, including those seeking to run or grow small and medium-sized enterprises (SMEs). The International Finance Corporation has estimated that 70 percent of women-owned SMEs in the formal sector are unserved or underserved in terms of access to credit, amounting to a $285 billion credit gap. Women’s economic empowerment is inextricably linked to a myriad of other women’s human rights that are essential to their ability to thrive as economic actors across the lifecycle. This includes, but is not limited to, living lives free of violence and exploitation, achieving the highest possible standard of health and well-being, enjoying full legal and human rights such as access to registration, identification, and citizenship documents, benefitting from formal and informal education, and equal protection of and access to land and property rights, access to fundamental labor rights, policies to address disproportionate care burdens, and business and management skills and leadership opportunities. Discriminatory legal and regulatory systems and banking practices are hurdles to women’s access to capital and assets, including land, machinery, production facilities, technology, and human resources. Often, these barriers are connected to a woman’s marital status, which can determine whether she is able to inherit land or own property in her name. These constraints contribute to women frequently running smaller businesses, with fewer employees and lower asset values. Savings groups primarily comprised of women are recognized as a vital entry point, especially for poor and very poor women, to formal financial services and there is a high demand for such groups to protect and grow their savings with formal financial institutions. Evidence shows that, once linked to a bank, the average savings per member increases between 40 to 100 percent and the average profit per member doubles. Key to these outcomes is investing in financial literacy, business leadership training, and mentorship. United States support for microenterprise and microfinance development programs, which seek to reduce poverty in low-income countries by giving small loans to small-scale entrepreneurs without collateral, have been a useful mechanism to help families weather economic shocks, but many microcredit borrowers largely remain in poverty. The vast majority of microcredit borrowers are women who would like to move up the economic ladder but are held back by binding constraints that create a missing middle –large numbers of microenterprises, a handful of large firms or conglomerates, and very few SMEs in between, which are critical to driving economic growth in developing countries. According to the World Bank, SMEs create 4 out of 5 new positions in emerging markets but about half of formal SMEs don’t have access to formal credit. The financing gap is even larger when micro and informal enterprises are taken into account. Overall, approximately 70 percent of all micro, small and medium-sized enterprises (MSMEs) in emerging markets lack access to credit.