The International Finance Corporation–better known for funding massive economic development projects involving large corporations–is extending credits to small initiatives that benefit women in the developing world.
(WOMENSENEWS)–There’s a water-pump manufacturer in South Africa called Playpumps. It began, like many businesses, with a product, a market and an innovation.
The product is a pump that draws water–available to the public at no charge–in village centers. The market is parched, rural sub-Saharan Africa, where women and children spend an average of three hours a day collecting water.
The innovation is the way the pump is built into a merry-go-round, propelled by kids at play. Each time the kids spin the brightly colored platform it pushes fresh, clean water into a large tank decorated with HIV-prevention messages.
"Women in sub-Saharan Africa spend a ridiculous amount of time collecting water," says Trevor Field, marketing director of Johannesburg-based Roundabout Outdoor, parent company of Playpumps. "On their way to and from, they are open to attack, rape and robbery. A steady, inexpensive source of clean water most definitely has a profound impact on these women." The business is not yet self-sustaining, but that is the goal, Fields says.
Aside from its potential to transform the lives of poor women in sub-Saharan Africa, Playpumps is also notable because it is one of the first recipients of funding support from the Grassroots Business Initiative. This is a new grant-making and advisory group inside the World Bank Group that directly targets organizations that help the poorest of the poor–primarily women and children–in the developing world.
Launched in the spring of 2004, with a pool of $3.5 million and six targeted organizations, the Grassroots Business Initiative is a major departure for the International Finance Corporation, the financial arm of the World Bank that operates the initiative.
With a mission to promote private enterprise in the developing world, the International Finance Corporation–the largest source of loan and equity financing in the world–focuses on bigger projects with a greater profit-making potential and less direct contact with the extremely poor.
The International Finance Corporation, with a committed a total of $17 billion in 2004, typically extends financing packages–combining equity and loans–averaging in the millions for expensive, broad-impact projects, such as expanded power grids or new factories.
The Grassroots Business Initiative, by contrast, extends grants of $200,000 or less and focuses on small efforts directly aimed at improving the lives of the very poor.
"This is very, very unusual for IFC," says Ritu Sharma, executive director of Women’s Edge Coalition, a watchdog group in Washington, D.C., that monitors the effects of international trade policies on poor women around the world. "Normally, we would see these kinds of programs coming from the social development side of the bank and not the International Finance Corporation, which has tended to pay more attention to bottom-line profit potential."
Along with Playpumps, the first group of recipients is a diverse bunch. The Self Employed Women’s Association, a trade union, represents 600,000 illiterate craftswomen in Gujarat, India. Irupana Andean Organic Food is an agricultural collective in Bolivia that markets the organic produce of 1,700 subsistence farmers. Hagar rescues victims of the sex trade from the streets of Phnom Penh, Cambodia, giving them food, shelter, clothing, counseling, training and jobs.
This type of funding is part of a philosophical shift evident within the International Finance Corporation. Since 2000, the International Finance Corporation has paid closer attention to small- and micro-businesses in the developing world. In addition to direct loan and grant financing for these businesses, the International Finance Corporation works at the policy level to encourage new laws that make it easier for small businesses to grow, while funding support institutions–specialized small-and microfinance banks such as Peru’s Mibanco and Bolivia’s Foundation for the Promotion and Development of Microenterprise–and small business consulting companies.
The International Finance Corporation is also focusing more on women’s economic empowerment. It appointed a gender coordinator two years ago and is now evaluating potential projects based in part on gender issues.
Improving Outlook for Women
The new initiative is seen by bank insiders as part of the internal changes taking place. A new understanding has emerged that building up locally-based small businesses and micro-enterprises is critical, giving nations what may be their best hope for permanently growing their economies and decreasing their reliance on foreign aid. There is also a recognition that improving the employment outlook for women–and removing gender-based obstacles facing women entrepreneurs in many poor countries–is essential to poverty alleviation.
"IFC is really making great strides in recognizing that women are a huge untapped reservoir of entrepreneurship," notes Karen Mason, former director of the World Bank’s gender division. Mason says that this latest effort is one more example that the International Finance Corporation is altering its financing approach so that the very poorest people, often women, benefit.
The Grassroots Business Initiative combines funding with advice and business guidance to train managers, develop business plans, craft marketing strategies and improve operational efficiency. The end goal: to wean small ventures off their shaky dependence on donations while reinforcing their ability to strengthen the economy–and civil society–in poor countries around the world.
Initially, there are signs that some of the programs are yielding enormous social benefits.
The 500 villages with umjikelezo–that’s Zulu for merry-go-round–have already seen marked improvements in family health, school attendance and women’s ability to tend to other important tasks. In one village, day care providers report that children who routinely became ill with diarrhea and vomiting from contaminated water are now in far better shape. They say that girls who had been absent frequently from school to collect water today spend their days reading and writing.
And aid experts suggest an even broader impact, changing long-accepted cultural norms.
"The Playpump is helping to equalize the gender imbalance of water collection in rural Africa, as young boys like to play on the roundabout and consequently, unbeknown to themselves, are contributing to ease the burden of water collection, which is traditionally a female task," says Stella Goings, of UNICEF Zambia.
In business since 1997, the company’s annual revenues hover around $250,000, generated by the sale of advertising space on the storage tank. Currently, the company takes in enough to keep the pumps in good condition.
Manufacturing costs, estimated at approximately $7,000 per pump, are subsidized through partnerships with donor organizations and the South African government. But ambitious expansion plans, into 24 other African countries, require additional capital infusion and improved business planning.
"This sounds like an excellent idea on paper," says Sharma, of Women’s Edge. "It is exactly what needs to happen to help nonprofits survive and create more employment. But as with everything in the World Bank, the devil is in the details and it remains to be seen whether they can deliver what they are promising."
Meanwhile, those directly involved with the work on the ground say they are encouraged by the bank’s support.
"I know that some in the nonprofit community have been critical of the World Bank. But frankly, I don’t care," says Helen Lieberman, founder of Ikamva Labantu, another of the initiative’s targeted groups. Ikamva Labantu is a network of community-based self help groups that provide skills training and jobs to poor women in Capetown, South Africa.
"Without the bank’s help, we would not survive," says Lieberman.
Ann Moline is a freelance writer in Alexandria, Va. She writes frequently about business and international economic development for a variety of publications.
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