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Since the COVID-19 pandemic brought economies to a screeching halt in early 2020, microbusinesses around the world have been forced to close their doors and many people’s financial lives have become uncertain. However, one thing is certain — men and women who own businesses are experiencing the pandemic and the subsequent economic fallout differently, and women are bearing the brunt of the crisis. Women are more likely to participate in informal, low-wage work in industries that are vulnerable to disruption during the pandemic and women-owned businesses are less likely to have the reserve funds necessary to help them survive a prolonged economic shock. Entrenched gender inequalities leave women and men with different resources available to them to plan for, manage, and recover from shocks.
At the end of 2020, Accion Global Advisory Solutions conducted a survey of 2,600 microentrepreneurs in Mexico and Chile to help financial service providers understand how their micro and small business clients were faring nine months into the pandemic. The survey results provided significant insight into the challenges women-owned businesses are facing due to the pandemic. Based on the findings from our research, we’ve outlined five ways that financial service providers (FSPs) can support women as they adapt their business and their lives during the pandemic:
1. Help women build the digital skills needed to stay resilient.
Our results found that women are nearly 16 percent more likely to be sole proprietors, while businesses owned by men are more likely to have multiple employees. Though this means women entrepreneurs may have fewer employee expenses, it also means that, even in good times, they are often managing every aspect of their businesses completely on their own. Many of these sole proprietorships who were accustomed to selling and marketing their products in person were unprepared to operate digitally. We’ve found that when micro enterprises have digitized at least part of their business, or reimagined their business altogether, they are better off during the pandemic. Edtech platforms and programs, such as Accion’s Ovante, offer quick and easy-to-follow lessons that equip women entrepreneurs with the digital skills and confidence to move their businesses online, retain their loyal clientele, and potentially expand their operations during lockdown.
2. Incorporate “tech and touch” into products.
We know that building trust between financial institutions and their customers through human connection is essential to client retention and product adoption. As many FSPs have moved their operations online during the COVID-19 crisis, they’ve risked leaving some clients behind — in particular, those who have lower levels of education and are less familiar with digital products and services. In our survey, women entrepreneurs reported lower education levels than their male counterparts, especially for technical school or higher education completion. We found that these lower education levels are correlated with greater distrust in digital financial products.
Human touch can be critical to lowering barriers to entry for these important resilience-building products, and many FSPs have found ways to cultivate personal connections with their customers despite social distancing measures. Financial service providers can utilize call centers or assisted onboarding to reach customers one-on-one to explain the value of digital products, teach them how to use them, and engage customers in a more meaningful manner. Investing in strategies that combine human interaction with technology will ensure that more women entrepreneurs join the wave of digitization. With access to and support in using digital tools, they’re better equipped to navigate the new normal, rethink or restart their businesses, and build their financial health so that they can be resilient to any future crises.
3. Prioritize savings products that meet the needs of women.
Global trends indicate that women are stronger savers than men, with lower loan-to-deposit ratios. At the same time, they’re also less likely to have reserve funds to help their businesses survive economic shocks. Our own findings in Chile and Mexico show that the women entrepreneurs surveyed had on average 10 percent fewer reserve funds available for emergencies than men. This means that although women have a higher propensity to save, they face barriers doing so formally through savings products, making them more vulnerable during crises. To prepare their women clients for future economic downturns, financial service providers need to design savings products that specifically meet the needs of women and incentivize the opening of savings accounts. This incentivization might involve the launch of a savings product — like Shorouq by Bank al Etihad — that is coupled with a rewards program which recognizes the financial goals of women like saving for children’s education or owning a home.
4. Engage women entrepreneurs with practical advice on business survival.
During this crisis, many women are experiencing a disappearance of sales, forcing them to dip into savings to rescue their business, or take on more debt to keep their business afloat. These women entrepreneurs in our survey reported being more focused on their businesses’ survival than business growth and more likely to indicate they are exploring other sources of income or have thought about shuttering their businesses. Male respondents, though also seeing disappearing sales, were more likely to consider expanding their businesses or to rethink their business models in response to the crisis. These findings emphasize that women business owners are struggling to keep their businesses afloat and need guidance to weather this tough time. While pivoting business models and implementing marketing techniques might be key to keeping business doors open, women often lack the time, resources, and support needed to undertake these activities. Financial service providers can play a critical role in helping women entrepreneurs find innovative ways to pivot and strengthen their business during this time.
5. Meet women where they are by recognizing their day-to-day responsibilities and stressors.
49 percent of women reported spending more time tending to children since the onset of the pandemic, while only 7 percent of men reported the same.
Nearly two-thirds of women surveyed reported feeling more tired since the pandemic struck, and more than half reported greater emotional distress. Our survey analysis indicates that women entrepreneurs are spending significantly more time taking care of their children than their male counterparts. Forty-nine percent of women reported spending more time tending to children since the onset of the pandemic, while only seven percent of men reported the same. Women entrepreneurs who are also caretakers need convenient and easy-to-use financial and business management products that allow them to stay home while tending to their businesses. That being said, reports have also shown sharp surges in reported domestic violence around the world as a result of the lockdown. Offering non-financial services — such as hotlines to connect with experts in gender-based violence or telehealth services — has been found to be highly impactful among women.
The vulnerabilities of women during a crisis like COVID-19 are significant and concerning. With this in mind, Accion Global Advisory Solutions is creating products that help women stay safe and financially healthy during this trying time. We created new modules focused on the crisis for Accion’s interactive edtech platform, Ovante, to help microentrepreneurs adapt their businesses without ever leaving home. This type of flexible education is perfect for women entrepreneurs, who are — as we have seen — strapped for time due to an increase in household responsibilities, and less likely to understand or trust financial products and business strategies that are essential for business survival.
Accion continues to work closely with our financial service provider partners to design additional products that meet the everyday needs of women and equip women entrepreneurs with the knowledge and tools they need to survive this pandemic and build resiliency for the future.