Can inclusive investments boost local private sector growth?
Small businesses are powerful engines of economic growth. They account for 90% of businesses and more than 50% of employment globally, creating two-thirds of jobs. This represents a huge untapped opportunity to advance gender equality in low- and middle-income countries. When this potential is realized, small businesses can have a social impact and thrive. Grean World, a renewable energy company that sells improved cookstoves in Ethiopia, achieved an impressive 7:1 return on investment (ROI) by implementing a women-centric marketing and sales approach, recruiting and training women as salespeople in remote areas. Okeba, an agro-processing company in Uganda, achieved an ROI of 1.7:1 after implementing quality, on-site childcare for grain and seed sorters.
Green World and Okeba are partners in the USAID's “Feed the Future” Market Systems and Partnerships (MSP) initiative, testing two of the four business strategies defined in the Women's Inclusion Return on Investment (WI-ROI) framework that, in Green World's case, benefit women. consumer And in the case of Okeba Workplace Culture (See figure.) The case studies documented each company’s inclusive business model and calculated a women-inclusive return on investment (WI-ROI) to demonstrate the economic success of investments aimed at women’s empowerment.
Both cases demonstrated that making investments that are inclusive of women can be a lucrative strategy for small and medium-sized enterprises. It also highlighted the key benefits of using the WI-ROI framework to guide and scale up private sector social impact measurement.
- Align with business language and incentivesWI-ROI structures ROI as a standard financial performance ratio, enabling investors and funders to meaningfully communicate the financial value of women-inclusive efforts and compare results across regions and contexts. For SMEs, this is an opportunity to credibly reflect their social impact efforts beyond individual success stories.
- Use your existing business dataMany companies have existing financial data necessary to calculate WI-ROI. That said, data granularity is important in calculating WI-ROI. Therefore, working with these companies to analyze their existing data is essential to a successful WI-ROI calculation. This requires time, leadership buy-in, and staff commitment.
- Strengthening data literacy and business systems in small and medium-sized enterprisesAcross the world, large and small businesses alike are struggling to find the time and resources to strengthen their data collection and learning capabilities. In both cases, the WI-ROI collaborative development and computation process enabled the companies to reflect on their data systems and strengthen data literacy within their teams.
“We need to invest in data…” [as it] It helps you make the right investment decisions.”
– Key informant from Okeba
In Grean World's case, the WI-ROI calculation process prompted the SME to invest in a data management mobile app that allows all employees to track sales, expenses, inventory and dealer activity, Sileshi Abebe, co-founder of Grean World, explained this in a recent webinar interview.
- Facilitated due diligence on women-inclusive investments in data-poor environments. The selection of companies was preceded by a careful selection process. Some companies did not pass the screening stage due to lack of confidence in their potential to benefit women or the overall profitability of their business model (see learning notes on screening and selecting companies). The WI-ROI framework allowed us to scrutinize the women-inclusiveness of our investments through the joint development of a theory of change, an appropriate approach to the complex realities faced by many SMEs.
Yes, gender equality is a good thing for big business. Both cases show that investing in women can pay dividends for small businesses. The WI-ROI Framework provides a valuable tool for impact investors, fund managers, donors and the private sector to explore whether women-inclusive business models deliver economic returns while benefiting women as workers, consumers or part of the supply chain.
Sabine Garbarino of MarketShare Associates and Yaquta Fatehi of the William Davidson Institute at the University of Michigan.
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