Can inclusive investments advance growth within the localized private sector?
Small- and medium-sized enterprises (SMEs) are powerful drivers of economic growth: they account for 90 percent of businesses, more than 50 percent of employment, and create two out of three jobs globally. This presents a significant untapped opportunity to advance gender equality in low- and middle-income countries. When this potential is realized, SMEs deliver social impact and thrive: Grean World, a renewable energy company selling improved cookstoves in Ethiopia, delivered an impressive 7:1 return on investment (ROI) by introducing a women-centered approach to marketing and sales by recruiting and training women as sales agents across remote areas. Okeba, an agro-processor in Uganda, achieved a 1.7:1 ROI after introducing on-site, high-quality childcare for their grain and seed sorters.
Grean World and Okeba are partners under USAID’s Feed the Future Market Systems and Partnerships (MSP) Activity to test two of the four business strategies defined by the Women-Inclusive Return on Investment (WI-ROI) framework: Grean World’s case benefiting women as Consumers and Okeba’s case focusing on Workplace Culture (see graphic). The case studies documented each company’s inclusive business model and calculated the Women-Inclusive Return on Investment (WI-ROI) to show the financial success of investments aimed at empowering women.
Both cases demonstrated that making women-inclusive investments can be a lucrative strategy for SMEs. They also highlighted key benefits of using the WI-ROI framework to guide and scale social impact measurement for the private sector:
- Aligned with business language and incentives. The WI-ROI builds on the ROI as a standard financial performance ratio, allowing investors and funders to meaningfully communicate the financial value of women-inclusive practices and compare results across geographies and contexts. For SMEs, this provides the opportunity to credibly reflect their commitment to social impact beyond individual success stories.
- Used existing business data. Many businesses have the existing financial data required to calculate a WI-ROI. That said, the granularity of the data is important for WI-ROI calculations. Thus, working with these firms to unpack their existing data is critical to supporting successful WI-ROI calculations. This requires time, leadership buy-in, and staff commitment.
- Strengthened data literacy and business systems within SMEs. Worldwide, large and small businesses alike struggle to find time and resources to enhance their data collection and learning capabilities. In both cases, the WI-ROI co-development and calculation process allowed the firms to reflect on their data systems and strengthen data literacy within their teams.
“We need to invest in data… [as it] will help us to make good investment decisions.”
– Okeba key informant
In the case of Grean World, the WI-ROI calculation process prompted the SME to invest in a data management mobile app that could be used by all employees to track sales, expenditure, stock, and sales agent activity. Sileshi Abebe, Grean World Co-Founder, explains this in an interview during a recent webinar.
- Facilitated due diligence on women-inclusive investments in data-poor environments. A careful selection process preceded the company selection. Several companies did not pass the vetting phase due to a lack of confidence in their potential to deliver benefits for women or the overall profitability of the business model (see the Learning Note on vetting and selecting companies). The WI-ROI framework allowed scrutiny of the women-inclusive nature of the investment through the co-development of a Theory of Change—a suitable method aligned with the complex realities in which many SMEs operate.
Yes, gender equality is good for big business. Both cases have shown that investing in women can be profitable for SMEs. The WI-ROI framework offers a valuable tool for impact investors, fund managers, donors, and the private sector to investigate if women-inclusive business models deliver financial returns while benefiting women as workers, consumers, or as part of supply chains.
Sabine Garbarino MarketShare Associates and Yaquta Fatehi William Davidson Institute at the University of Michigan.