On May 24, 2012, the World Bank approved the Women’s Entrepreneurship Development Project (WEDP) to provide business opportunities for Ethiopian women. This simple project has provided over 3,000 women with business loans and an additional 5,000 women with business training.
The project’s objective is to “increase earnings and employment of micro and small enterprises (MSEs) owned or partly owned by participating female entrepreneurs in targeted cities.” The $53 million project will close at the end of 2017.
WEDP aims to minimize the financing gap in Ethiopia. In developing countries, 70 percent of small and medium businesses owned by women cannot obtain the financing needed for them to grow. The project tackles this issue by providing loans to female business owners.
The loans are offered through the Development Bank of Ethiopia and microfinance institutions. WEDP receives additional financing from the international development agencies of the United Kingdom and Canada.
More than assisting with access to microfinance, the program also provides women with skill development, technology and product development. By the end of 2017, the project aims to provide loans to 17,500 Ethiopian women entrepreneurs as well as to improve access to and increase capacity of existing microfinance institutions.
The investment in women entrepreneurs yields high return opportunities in emerging markets. Historically, women in developing countries played minute roles in entrepreneurship. Expanding their participation through microfinance drastically improves economic output. Because women entrepreneurs tend to hire other women, they are also key drivers of unemployment reduction.
WEDP has had far-reaching impacts, benefiting well over 3,000 women through a line of credit backed by the World Bank’s fund for the poorest countries with a repayment rate of 99.4 percent. The average loan size for the project is $11,000, nearly double the amount that women entrepreneurs were able to receive prior to the project’s implementation.
Recognizing the impacts of women entrepreneurship in Ethiopia and the importance of microfinance, the World Bank adopted the Small and Medium Enterprises (SMEs) Finance Project to complement the WEDP. With a similar objective, the SME Finance Project also provides loans to entrepreneurs.
Financing constraints of Ethiopian SMEs are one of the key obstacles to job creation, growth and new business opportunities for Ethiopian women, according to a recent World Bank study.
Further, small enterprises are more financially constrained than micro or medium/large enterprises. The development of microfinancing projects to target small enterprises will further build upon the success of WEDP, promoting economic prosperity throughout Ethiopia.
– Anna O’Toole