Cracking the Women Entrepreneurs Finance Code

In October 2023, the World Savings and Retail Banking Institute (WSBI) became one of the first global signatories of the Women Entrepreneurs Finance Code (WE Finance Code), an initiative housed in the World Bank to bridge the financing gap for women-led MSMEs. This marked the beginning of our journey to collect and report indicators from our network of over 100 financial institutions annually.

The key challenges faced in this process, how they were addressed, and lessons for future initiatives in gender-disaggregated data collection provide valuable insights for the women’s economic empowerment community. Several key conclusions from the WE Finance Code confirm some global trends while offering fresh insights that challenge conventional assumptions about financing women-led MSMEs.

A promising start with room to grow

We integrated the WE Finance Code indicators into our annual SDG data survey sent to our member institutions. Despite the novelty of the initiative, nearly one-third of our members provided data, which is a significant achievement. But, as expected, the journey wasn’t without hurdles.

Challenge 1: Demonstrating the value of reporting 

Some members questioned the value of reporting these new indicators, perceiving it as redundant or burdensome.

We tackled this by providing personalized reports to each reporting financial institution with visually engaging charts comparing each institution's performance to WSBI regional benchmarks and national standards, such as the 2X Criteria. Automating this process, for example, where financial institutions receive instant visual feedback upon data submission, could enhance engagement and demonstrate tangible benefits.

Challenge 2: Clarity in reporting guidelines

One major obstacle was the lack of detailed definitions for each indicator and the lack of information given regarding confidentiality. For instance, the categorization of "women" versus "non-women" can create inconsistencies. Many members grouped customers without gender data under "non-women," skewing results. We also piloted an external data collection platform to enhance the efficiency of data collection and analysis. However, the response rate was significantly low, largely due to members' concerns about sharing data with external service providers.

A comprehensive guidance manual is essential in this situation. Definitions must align globally while accommodating local contexts. Introducing a third category, such as "non-gender," or refining terms like "male" instead of "non-women" could improve data accuracy.

Challenge 3: Limited data collection capacity

Several institutions only tracked some of the sex-disaggregated MSME indicators, others not at all. For instance, sex-disaggregated MSME loan approvals are usually collected but not the loan application volume and value, limiting insights into the broader financing journey of women entrepreneurs.

Encouraging members to adapt core banking systems to capture new data points, such as application stages, will enrich analytics. This investment could uncover hidden barriers and pave the way for targeted interventions. FinEquity has recently updated its Gender Data and Analysis Knowledge Guide with curated resources on this topic. 

First conclusions from the WE Finance Code

Our first-year findings confirm some global trends, but they also reveal fresh insights, challenging assumptions about serving women-led MSMEs, such as:

• Banks still have a role to play: Both banks and microfinance institutions contribute actively to closing the financing gap for women-led MSMEs across Africa, Latin America, the Middle East, and Asia. Contrary to popular belief that only microfinance institutions are well-positioned to serve women-led MSMEs effectively, our data underscores the ongoing relevance of banks in this space.
• Serving the missing middle: While WSBI members are serving women-led micro-enterprises well, women-led SMEs face a larger financing gap, highlighting the challenge of supporting women as they transition from micro-enterprises to small and medium-sized businesses.
• Gender financing gap persists: Although a significant percentage of women-led MSMEs are served by WSBI members, the volume of funds channeled to these businesses—through loans and deposits—remains much lower than for their male counterparts.

Next steps and broader implications

Our next goals include increasing member participation and supporting institutions in expanding measures to empower women entrepreneurs further. These findings offer opportunities to advance financial inclusion strategies by addressing the persistent gaps in serving women-led SMEs and improving funding equality. Gender Lens Investing is a tool that can help bridge the financing gap for women-led MSMEs.

To learn more about our key conclusions and first-year results, explore our SDG report. 

By sharing these lessons, I hope to spark peer-to-peer dialogue and inspire others to adopt and improve gender-inclusive reporting frameworks.