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Empowering women, empowering the national economy

Governments everywhere have ministries dedicated to women’s affairs. I know of only one with a Ministry for Women Empowerment: Indonesia. Charged with the “realization of gender equality and justice” together with children’s well-being, the ministry frames gender equality as a matter of justice. It is also an issue of fundamental economic importance.
 

Arancha González (The Jakarta Post)
Geneva
Thu, August 4, 2016

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Empowering women, empowering the national economy Preserving culture – A woman, who is a member of the Ina Sabu hand-made woven fabric workshop in Oepura sub-district, Kupang, East Nusa Tenggara, makes a traditional fabric with a local pattern called Sabu on March.2. She can complete a woven textile within one week and sells it at Rp 300,000 (US$22.94) per piece. (thejakartapost.com/Djemi Amnifu)

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overnments everywhere have ministries dedicated to women’s affairs. I know of only one with a Ministry for Women Empowerment: Indonesia. Charged with the “realization of gender equality and justice” together with children’s well-being, the ministry frames gender equality as a matter of justice. It is also an issue of fundamental economic importance.

Women are the most underutilized “resource” in the world economy. The social and legal discrimination that relegates hundreds of women to subordinate or marginal economic roles has a huge aggregate cost. 

The McKinsey Global Institute estimates that raising women’s wages and labor force participation to make them equal to those of men would boost global output by over 25 percent. It would be like adding a new US and China to the world economy.

It is no accident that the Global Goals on Sustainable Development adopted by the UN aim to eliminate extreme poverty by 2030 and to achieve gender equality in education and work. 

They must happen together, or neither will. 

Nowhere is this clearer than in the poorest households and communities. When women are paid for their work, and have control over how the money gets spent, they invest much more of their income than men do in their families’ education and health. 

Positive social and economic effects are amplified from one generation to the next.

For businesses and countries alike, greater gender equality tends to go with better economic performance. Having more women on corporate boards and in leadership positions is associated with higher profitability. 

Countries that provide greater economic opportunities for women generally rank higher on measures of national competitiveness. 

This makes sense: no team can expect to win if it neglects the talents of half of its players.

Indonesia’s focus on empowering women is smart economic policy. Indonesian women already play leading roles in politics and the economy. 

The recent Cabinet shuffle saw Sri Mulyani Indrawati return as finance minister, a role occupied by men in most other leading economies. 

Women can be found at the top of the Indonesian business world in everything from oil and gas to cutting-edge tech companies. 

According to the World Economic Forum’s Global Gender Gap report, women in Indonesia outnumber men at university; 43 percent of firms are owned at least in part by women.

And yet, only 17 percent of members of parliament are women. Less than a third of firms have women in senior management. 

Business surveys conducted by the International Trade Center show that only 17 percent of Indonesian firms that export are owned or managed by women. 

Since firms involved in trade tend to be more productive and pay higher wages, this suggests Indonesian women are significantly underrepresented in the most dynamic segments of the economy. 

An additional complicating fact is that the small and medium-sized enterprises (SMEs) that generate the bulk of jobs in Indonesia, including for women, are both far less productive and less globally integrated than bigger companies. 

This makes for lower incomes across much of the labor force. And for lower contribution to domestic growth.

Tackling the obstacles facing women entrepreneurs and workers, especially in the SME sector, would be a useful complement to President Joko “Jokowi” Widodo’s ongoing moves to consolidate reforms and growth. 

But this is not just a job for the government. The private sector must do its part too.

As I visit Indonesia this week I will be sharing the International Trade Center’s SheTrades initiative, which seeks to connect one million women entrepreneurs to international market opportunities by 2020. 

The initiative’s Call to Action spells out how governments, the private sector, and civil society can remedy obstacles holding back women-owned businesses. 

We need to gather gender disaggregated data to inform good policies, including trade policies. Multinationals can sign up and pledge to source more from women-owned suppliers. 

Governments can commit to reforming discriminatory laws and procuring more goods and services from enterprises run by women. 

Financial institutions can pledge to ensure all-important access to credit for women entrepreneurs, so that they can formalize and grow from micro to small and from small to medium-sized and beyond (this would be good for the banks, too, of course!).

Momentum behind the initiative is building. Last month, the Nigerian government committed to enabling 200,000 women entrepreneurs to connect to global markets. Barclays Bank of Kenya set up a US$50 million fund and pledged to ensure access to financial services and business skills training for 10,000 women entrepreneurs.

For a young engineer with a big idea in Bandung, SheTrades could mean equal access to venture capital for her start-up. For women coffee growers in Sumatra, 

SheTrades could mean getting quality certifications that open doors to lucrative niche markets. SheTrades could mean more detailed understanding of the challenges facing budding women entrepreneurs across the country.

In Indonesia, SheTrades can only be what policymakers and businesses make of it. But one thing is clear: An economy with more successful, internationally-integrated, women-owned SMEs would not just be good for women’s empowerment. It would be good for all Indonesians.

 

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The writer is the executive director of the International Trade Centre, a joint agency of the United Nations and the World Trade Organization.

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