Diversifying Global Supply Chains
ISOBEL COLEMAN: Good afternoon. Good afternoon, everyone. Thank you for joining us here today. I'm Isobel Coleman. I'm a senior fellow here at the Council on Foreign Relations and director of the Civil Society Markets and Democracy Initiative, and also the Women and Foreign Policy Program. And this meeting today is part of our Women and Development Series that we have run for many years. In fact, I've lost track of it now, five or six years, with the generous support of Exxon Mobil and their Women and Economic Opportunity Initiative.
And so thank you to Exxon Mobil. We have Cynthia joining us here from Exxon today. And as many of you are no doubt aware if any of you read any of the work I have done over the years, I have been very focused on the role of women in economic development and the role that women can play in promoting economic growth and poverty reduction, and breaking cycles of poverty in countries around the world.
And so much of my work has -- my earlier work was making the case for that, why we should invest in women's economic empowerment, but I feel like mission accomplished. We kind of all get it now, but the real challenge is figuring out how to do it. And it's not -- it's not so easy. And one of the great levers of change is in diversifying global supply chains, which is the focus of our meeting today. There have been a number of studies shown that putting more money in the hands of women entrepreneurs, in the hands of women business owners has enormous positive spillover effects for their family, for their community, and for their country as a whole in a macroeconomic sense.
There's been lots of very interesting work done. Booz Allen did a study looking at women as an emerging market, bigger than India or China. You've had Goldman Sachs doing a lot of econometric work looking at how increasing women's workforce participation has led to economic growth in the United States, in Europe, and how reducing barriers to women's workforce participation could significantly increase GDP growth in countries around the world. So we know that. We have a lot of data. We understand it. Now, the question is how do you do it? How do you actually dig down and do it?
And we have a great set of speakers here today. You have the bios in the program, so I'm not going to do any lengthy bios, but let me just quickly introduce each one. Anabella Freeman is here from Wal-Mart. She runs a program for Wal-Mart based in Guatemala that covers all of Central America called A Hand to Grow. And it's a program that Wal-Mart has developed to work specifically with suppliers who are not yet part of the Wal-Mart supply chain and are trying to become that and as they become suppliers, you know, they need help and assistance along the way. So she's got some very on-the-ground, real life experiences of working. And we will no doubt understand better at the end of this session some of the challenges, because it is quite difficult.
Elizabeth Vazquez I met a number of years ago, and she has -- she's the founder of a really interesting organization called WEConnect that companies now around the world want to work more with women-owned business, but how do you know which ones they are? And so WEConnect works with the women-owned business and the companies to vet, in effect, and help identify and certify what is truly a woman-owned business, because we all know that there's a lot of ways to cook the books.
So -- and then last but not least is Astrid Pregel, who has been a longtime thinker and adviser on women's economic issues and works with the Canadian government. She's joining us here from Canada today to talk about this issue from a policy perspective.
So as you can see, I think we got a lot of different angles covered and I'd like to start, if we can, with you, Anabella, could you tell us a little bit more about this program? Why -- why did Wal-Mart start it? And what are you understanding and learning already from the work that you're doing?
ANABELLA RUIZ DE FREEMAN: OK, thank you. Well, first, very glad to be here.
In 2005, we started the program is when the companies -- we had two local companies and Wal-Mart bought them. So before we started going into the market as a Wal-Mart brand, we wanted also to find out what we could do to work better with a big portion of our suppliers that are SMEs. We decided then we -- we did a study with over 150 of them to find out what were our strengths in our relationship and where were the opportunities. And based on that, we decided to make this program. The name is A Hand to Grow or Una Mano Para Crecer, and what it means is that we want to really be that hand to the small business to help them grow. And it's not philanthropy. It's not assistance either. It is real business. It's business for them. It's business for us and, therefore, we grow together.
The program, as you said, guides people that would like to become suppliers of Wal-Mart. We guide them on the requirements, what they need to fulfill. They need to be formal enterprises that are -- that they can pay taxes and give a bill for every buy that we make to them. And I stop on that a little bit because that is also one of the biggest challenges in our region. There is a lot of informal market and there is a lot of informal women entrepreneurs that just decided to cook out of their kitchen and then making the step of becoming formal and having an accountant and paying bills and paying taxes -- it becomes too much of a problem sometimes.
And pretty much is everybody has to comply with the sanitary regulation and legal regulation and with that in mind, if the buyer finds that there's a need for the product, then we put it on the shelf.
And once the supplier -- once the entrepreneur becomes our supplier, then we accompany them for three years. The first three years of business relationship with us we give training. That lasted 12 hours this year on the basic processes on what is to become a Wal-Mart supplier, how to get the number, the vendor number, and then how to catalogue your items, and then start selling with us. And during those three years, we give them support of -- I become the liaison if needed -- of whatever issues they may be having. If they have any problems or they have doubts, then I can guide them who they need to talk to, or what is the exact procedure or why is not happening is because of this and that. So that's pretty much in general terms what the program is.
COLEMAN: And do women that you've worked with in Central America face particular obstacles? I mean, what you've described are obstacles that both men and women small business owners would face, but are there -- do you find that women have particular challenges in meeting some of the reporting and accounting requirements that you mentioned? Is that a bigger hurdle?
FREEMAN: Well, I should say that in preparing also for sharing today with you, I passed a survey to all our suppliers. We currently have over 600 suppliers adhered to the program. And that was especially the number one question I asked them. And the responses gender -- there was no difference because of my gender of the difficulties or things that I had to accomplish. However, we do need to know that these are enterprises that were already able to become suppliers, so they knew that they had to overcome those steps.
I do also think that there're some issues about becoming formal that is very unattractive. You have to get an accountant. You have to start paying taxes. You have to pay Social Security as you start growing. And most of them, women, they started as an emergency job. Either I was out of a job, I couldn't find a job, or I wanted to be -- to spend time with the family, but also be productive. So I started in the kitchen and everybody loved the salsa that I made and everybody said, oh, why don't you put a tag and you start selling. And a lot of them, that's how they start. And when you start requiring them sanitary registration, then it becomes, uh, that takes six months and is -- you know, the logistics. However, once they do it, we've seen that they're very successful.
COLEMAN: And part of the reason that you're going to this effort to work and -- identify and work specifically with women among the supplier group is last year, Wal-Mart made a pretty high-profile commitment to sourcing $20 billion of products from women-owned businesses in the U.S. and also doubling that -- I think doubling the amount that you source from women-owned businesses overseas. And you know, that's a -- that's a big commitment and to meet that, you have to have women-owned businesses in your supply chain. So you need to find and encourage those women.
FREEMAN: That's right. We have, out of the 600, there're 200 women-owned businesses with us, so it's about 34 percent, and more and more the -- because we open the year with an informational meeting, where we explain what the requirements are for anybody that would like to be a supplier and -- and we see that more and more we have women coming towards us, and of course, we also pass the word that we are looking for women, so --
COLEMAN: It brings them out.
FREEMAN: It does.
COLEMAN: Now, Elizabeth, could you tell us a little bit more about WEConnect, because I'm sure that, you know, Wal-Mart and many other major suppliers now who you work with, you know, they really depend on the work you're doing because they have a goal, be it for a variety of reasons -- corporate social responsibility or good -- just community citizenship or -- or actually from an economic perspective, you know, really wanting to diversify their supply chain, but then they say, well, OK, so how do we do it? And they come to you.
ELIZABETH VAZQUEZ: Thank you, Isobel, for your wonderful leadership and for the Council for hosting this and my colleagues for sharing the experience. This is a very new journey, I think for all of us. In some ways, we are making this up as we go, to be honest. It's work that it's not that easy. You got really big buyers wanting to source from very small businesses and very small businesses wanting to sell to large organizations. And they're not used to doing business together.
So the reason WEConnect was created wasn't because there was an NGO when we went out and found great corporations. There were corporations in the United States that source inclusively. They buy from women and businesses and other diverse businesses that aren't well represented in their value chains. And when they looked at their global value chains, because more and more, you know, with 95 percent of the consumer base outside of the United States, they really had to think about, well, if women are making over 70 percent of the consumer decisions, where are the women in our supply chains, in our value chains? And they're literally missing. They are -- they represent maybe 1 percent of the $700 billion in annual purchasing power that our corporate numbers represent.
So they created WEConnect International literally as a nonprofit, three years ago to ensure that there's an organization that can effectively partner with organizations that are already doing fantastic work in this space of finding women-owned business and developing their capacity to be competitive, access to finance, and many other areas that are critical for their success. The missing piece has historically been the women need to sell their stuff.
And so we were sort of missing the demand side. So we develop the capacity, we invest in them, they have money, but then they don't really understand generally speaking what the $78-trillion economy is actually sourcing. And so if we can find the women and develop their capacity to understand what the world is actually buying or would be willing to buy and encourage them to work together to scale, then we really have a chance at helping these businesses grow and prosper to compete for contracts with larger organizations. But to date, they hadn't even -- many of them haven't really been thinking very big, and so there is a gap, and it's generally -- we don't expect to see a lot of very small businesses being able to seell to very large organizations.
So it's really our job to find the women in the SME spface and educate them about their own purchasing power and their ability to source more inclusively from the really small businesses and really literally show them the ropes, teach them by demonstration and by offering them business opportunities what does it take to compete for these larger contracts.
And so we look at the entire value chain in a more holistic way and we really focus heavily on the demand side.
COLEMAN: Give us an example of where you've been successful.
VAZQUEZ: So we launched officially three years ago. So we started in the U.K. And frankly, we thought that would be easy, right? Advanced market, lots of well-organized women organizations. It's been really challenging because they tend not to want to self-identify as women. They think, oh, I can make this on my own. You know, we're equals. But statistically, they're not showing up. They're really not growing in a significant way and creating the jobs that they have the potential to create and putting out there the innovations they have the potential to put out.
But then, our next pilot was in Canada, and we are fortunate, thanks to Astrid Pregel being a founding member of WEConnect in Canada, to get a grant. And that made a huge difference in our ability to quickly put together an infrastructure, work with the government and all the regional partner organizations that were already -- these women's business centers were already working with the women business owners, but they didn't have connections to the market. And so we were able to leverage that existing infrastructure and have resource to be able to invest and quickly build a database of certified businesses, verifying that they're women-owned businesses, and creating opportunities for them to meet actual buyers.
And then, we were able to go into, based on that experience, last year, into India, into China, into -- this year into Peru, and as a result of the work with the State Department, AID, and many of our partners, the Peru thing has turned into now we're working in with Exxon Mobil and with the State Department in Mexico, talking with some -- there's some great work that's being done by Wal-Mart there. We're also in Chile. We're in Colombia. We're in Costa Rica. We launched in Costa Rica on Friday, so that's pretty exciting. We did an event in Brazil.
And in markets where you think there may not be a lot of interest in this -- I mean, we had the heads of Boeing and the heads of GE and UPS and major, major corporations, but more importantly, bringing their prime suppliers that were the Brazilian corporations to hear about what this is and see what this is and encourage them not from a CSR perspective, but from a business. We need more diversity. We need more choice. We need better pricing. We need innovation. We need -- we need choice. And right now, you're not presenting us with any women business owners, and so we need to work with you on making sure that we have the best products and the best services, so that we can be the most competitive, most profitable businesses in the world. And by the way, we're also going to do great work because when we spend money on women, we all know that women spend money on their families and their communities.
COLEMAN: And is the -- is the experience and the learning you got from the UK and Canada applicable in India? Is it transferable?
VAZQUEZ: It is. There's definitely -- issues of localization, language, culture, but at the end of the day, women who are entrepreneurs want to sell their stuff. They're not looking for charity. They're not looking for grants. Some of them don't want to grow, and that's fine. But the ones that do want to grow, they really need access -- a little more access to specific types of knowledge and specific types of networks. And when you give them that kind of access, then you just stand back and watch and it's amazing to see what happens when they get contracts and then they go back and they give contracts to other women business owners.
So we've seen it happen over and over and it's across all markets. I think the women who are attracted to this opportunity have faced very similar challenges. Certainly when we did work in India with like the self-employed women's association, which was truly, truly at the base of the pyramid -- there were huge challenges. They were illiterate. They didn't have any formal experience in working with corporations. So there was a lot of work to be done with Accenture and the World Bank to develop that capacity to go from collecting recycled paper to turning it into office products. But they did it, and now they're selling to Accenture and to Wal-Mart and to the -- CEO of Staples is personally involved. And they have hope. And so it can be done at all levels, but these women really need a chance.
COLEMAN: Astrid, we just heard from Elizabeth that getting a grant from the Canadian government was really instrumental in helping launch WEConnect in Canada. How does the Canadian government think about this whole initiative in supplier diversity and really bringing less represented or underrepresented groups into global supply chains? I mean, how -- where does it fall in the policy priorities?
ASTRID PREGEL: OK, so let me tell a little story. So in my generation in the foreign service, there weren't really a lot of women around. So if you were a feminist, you were definitely in the closet or you were out.
So being a closet feminist, I had the great fortune of -- my first husband was a development specialist. We spent all our career in -- you know, first 25 years in my life in developing countries. And he was always out in the field. Now, I did the commercial work. I was the tough person making the deals and making money and doing all that. He was out in the field, doing all that gooey stuff, that's how I thought it was -- so I thought it was. But you know what happened? He would take me out and I would go into the agricultural areas. I would go into the small businesses, into the micro -- in the slums, and people were -- you know, and after a while, I sort of got the sense of -- isn't that interesting, wherever women are part of the decision-making process in designing this project, stuff works?
OK, so that was the first thing I had. And then it didn't take me too long to figure out also, isn't that interesting that where these places are thriving because of women's roles, you know, their kids are taller, like they were physically taller. I mean, you know, this wasn't scientific research. This was just by observation. So I had all this swirling in my head. And then in 2004, I was consul general in the United -- you know -- in Atlanta, still in the closet, but having done a lot of work in what I call the economic space. And this is going to relate directly to Isobel. But let me tell Isobel's story first and then I'll get into the economic space.
In 2004, Foreign Policy came out. There was this woman called Isobel Coleman, who wrote this article and it said exactly what I had observed. You know, I had seen it black and white. I had done research. There wasn't a lot out there. I mean, Isobel is one of the great pioneers. So she -- today's the first ever I met her. So this is really a very --
COLEMAN: I did not set this up --
PREGEL: No, not -- (laughter). You know, this is one of those moments, you know, when the stars really align. It's really a circle for me today.
So all right. So -- you know, Isobel said it. You know, it had to be right. And this launched me to do even more things. But I was discovered was that, you know, I couldn't talk about women's issues in the closet. It was very hard to approach any of my colleagues, even my female colleagues on any of these issues because generally the language around women's issues tended to go to violence, maternal health. You know there's lots of exceedingly wonderful people working on those kinds of issues. But in the mainstream economically driven foreign service, I couldn't say anything about this.
But when I learned that a third of the industry in Canada was owned by women, I had it. I had the space where I could legitimately talk to left-brain policymakers. I was able to get in front of the prime minister of Canada and say, you want to grow the economy, sir? We're missing this whole group that's not connected. And so here's how the government -- this is how it started in about 1996, that the realization began to be more apparent that, you know, we weren't going to reach out to women in the Canadian economy because of equality issues, although that's always my agenda, but I never said that anywhere.
What I was really doing for economists, whether they was in the prime minister's office or in the Ministry of Finance or in our Department of Industry, on in the Foreign Ministry was to say, look, we're trying to grow the economy. Here's the greatest underutilized resource. You know, in Canada, 65 percent of university graduates are women -- 65. If we don't figure -- I'm not saying that's a good thing, either. We clearly need to be working on those issues also, but if we don't figure out in Canada how to take those women and put them in the places where they're going to make the biggest difference in terms of economic growth and jobs creation, we're not going to continue to grow in the way that we have been up until now. We're going to miss real opportunities.
So that's -- it's a pure left-brain economic argument that it really underpins the entire policy framework in Canada around what we were doing. So now, it's really obvious to the United States, you have 50 years of history of taking a look at how do we bring underutilized economic groups into the economic mainstream? So really you lead. The United States really is the leader. So you have -- we think -- the Women's Business Enterprise National Council that really works all of what Elizabeth is doing -- Elizabeth does it for -- you know, with them internationally to really certify and do all of that. But those concepts were unheard of in Canada up until a few years ago.
And so what we managed to do is make that very left-brain argument and say, look, our corporations are not where American corporations are. We need time. We cannot go to Microsoft in Canada -- we can now, but we couldn't three years ago -- and say, supplier diversity. They go supplier who? Like they really didn't know what it was. So we need grace. We need that period. And so they do. They came up with $1 million. But it was based on this economic argument. Never once did we whisper anything about justice. There's nothing -- we don't believe in that. It's just that's not the space. So that's what you meant. It was really that economic argument.
And of course, you know, Canada is probably in the best place on earth geographically to really fit into this supplier diversity framework. It's very easy to say to Canadian women, 47 -- it's like here -- 47 percent of Canadian companies have women's ownership in them. You know, and 90 percent of Canadians live within 100 miles of the American border.
So to say to them, you know what, there's a real opportunity to supply to Microsoft in the United States but also in Canada, you know, that reality is much closer for them. And I think that's, you know, why we've had, you know, just so much success in Canada.
COLEMAN: And how does that trickle down into like CIDA's thinking and how they work --
PREGEL: All right, so -- all right so now you're into the --
COLEMAN: -- in emerging markets.
PREGEL: -- international development world. All right. So park. Now, you know, I worked in CIDA all my career also, lovely people. We have a very progressive president of CIDA, at the moment, very interested in women's issues.
You know, you could talk about CIDA or you could talk about the World Bank. You could talk about Swedish CIDA. You know, once you get into that development world, you get enormous experience and expertise in the area of women. I mean, these people can articulate the arguments around women in a way that, you know, the department people in my Ministry of Finance could never do it. But their experience generally is in the areas of rights, violence, justice -- you know -- they're really deep, deep into these areas. Very few economists in those areas. OK, now move over to the groups within these institutions that are economists. There tend to be very few of them at this moment. And things are very -- are changing very rapidly.
You know, I got into this before I turned gray. You know, they -- things are moving and shifting, but for the most part the economists I find are still thinking that economics is gender neutral. I mean, trade policy -- how many of you work on trade policy -- is another one that drives me to destruction. I mean, I'm not sure Isobel tracks all this, too, that you know -- the research shows us that one change in trade policy could have a totally different impact on women in one country than it does in the other country.
So it could be positive for women in Egypt, whereas in Morocco it was actually having a negative impact. So the whole area of the thought process of, oh, what is the impact of the economic policy that I'm bringing forward, is it going to have a differential impact in society, is not there.
You know, Canada is doing something that I think is very interesting and leading edge in that we have a gender-based analysis process that's required in all government institutions. All -- no policy can come forward, no law can come forward without having gone through a fairly rigid gender-based analysis. So it's -- you know, it's not perfection, but it's much, much better, say, than even five or eight years ago.
But what we're coming to now is we're doing gender based plus analysis. So what we're doing is we're taking not only now this might impact women and how this might impact men, but how does this impact indigenous, disabled, others. You know, and actually, when you think about it, it makes much more sense because if you're trying to create a policy that's going to have the broadest and most positive impact on your entire community, if you haven't done that kind of analysis, the odds are pretty good that the policies governments have been developing for a very long time are not going to be in the optimum benefit to the optimum number of people.
So I see that as sort of the way -- the way forward to this broader sense. But of course, no matter how you slice and dice it, women are going to be a very big chunk of what our analysis it is if you do it.
COLEMAN: Anabella, I just want to circle back to you, one last question before we go to the audience. And when we --the goal of bringing more women-owned businesses into the global supply chain is a laudable goal, but it is a challenge. I mean, it is a challenge for many of the reasons that you mentioned, but many of these businesses that women run are informal businesses. You know, women -- we know -- still have, despite 65 percent of college graduates in Canada being female and of course, all OECD countries today, in many developing economies, women still lag men in terms of education. There're cultural barriers. There're all sorts of things. You know, family responsibilities that hold women back.
So -- yet Wal-Mart has this goal to bring more women-owned businesses in and I know from conversations with various people at Wal-Mart over the years that you have -- you've made a big effort to do this. And it's expensive. It's expensive to seek women-owned businesses and to -- you know, at CGI earlier this year, I heard the example from Leslie Dach that he -- he was talking about how to certify --because Wal-Mart has to certify these businesses and make sure that they're meeting environmental standards and workplace standards and sanitation, some of the things you mentioned, that it's costing Wal-Mart, you know, 3x to do the certification than the amount of goods that they're actually buying from some of these small businesses.
And so how do you think about that investment that you're making? Because it can't be charity at the end of the day. It's got to be -- you know -- defensible on a business basis. So how do you think about it from an internal Wal-Mart accounting perspective?
FREEMAN: I would like to point it out in a few perspectives. The first one is, in general, small businesses, of course, at the end of the day, the buyers are measured by their numbers, OK? So and most of small businesses, they do not raise the bar of the sales too much. So as -- just regardless if it's women-owned or men-owned, just a small business has that challenge by itself. The good thing about going with small businesses is that they are quicker to react to the market. They usually know the market -- the local market better, because they know the taste, they know the likes, they know how the consumers like it, and that adds value to our shelves.
So it's a mix and also we believe that the stronger you have a local industry, the better you become as a society. And what we want also is to be able to generate more employment, and this is the way. And particularly, when we decided to create the program, we did it specifically thinking of manufacturers. Our program is only targeting -- because we know that there're small businesses of all kinds. They import goods from China or Panama and they sell it -- and they resell it in the region. However, we are focused on the manufacturing, because of that.
And I think you also pointed out another challenge and I think that's where we've seen the most is that women -- we tend to give priorities or to prioritize things in a different way than men -- not good, not bad, just different, you know. And sometimes knowing that probably right now I have a good job working for somebody, and deciding on going and becoming an entrepreneur, and I know that you went through that before, is a big challenge just by itself. Say OK, now, now I have to start thinking about I have to pay the -- everybody -- my employees, everybody gets a bonus for Christmas, except the owner, you know? So now is no, yeah, it's pay time. No, it's pay time. You know.
So -- (laughter) -- and those are the challenges. And then, you cannot just say I'm a business owner and if I have always time to go, I'm going to go. You know, you're thinking about business 24/7. You go on trips and you go visit, see the shelves, and see what kind of gels are there and see if my packaging is better or worse, you know, those kind of things.
So I think becoming an entrepreneur is -- is a challenge by itself and then -- and then deciding to go and knock on the doors of different people, so that they can buy your product and exhibit it. And one thing that we try to do with our program, was I told our suppliers, is that we are just an extension of their business. If they have a boutique out of their house or if they're selling out of their kitchen, well, now, they have 600 other kitchens where they sell and then we run it for them, you know, but is the discipline also to take of our customers so that our customers are pleased and therefore the business is ensured for a long time.
So I would say that those are a few of the challenges and another one is innovation. You don't know how many times we receive one more coffee product, you know. And I tell my -- the entrepreneurs when they come and I say, it's not that we don't want coffee, is that we have 10 or more brands already and if you tell me as a housewife this is an exporting coffee and blah, blah, blah, it sounds blah, blah, blah to me. You know? I need to see what difference it makes from what I already have on the shelf.
So -- and I might -- I would like to share a story with you. It was two years ago. There was one coffeemaker that came and said I have the best exporting coffee and so, so. And we told them, we don't need more -- more of that. So if he had something different, maybe it would be interesting. Well, he left and suddenly -- it wasn't a she, but it was a he, but anyway. And he went out two years and then he came back and he said, you know what, now, this is my coffee with vanilla and with cinnamon and with other flavors, and now we're selling.
So sometimes is also do not produce what you're good at, but also produce what the consumers need. And that's a big paradigm, then, we need to work with.
COLEMAN: Let me go to your questions now from the audience. We have some microphones, if you would just stand and introduce yourself, if you -- any of you have a question -- we can start.
QUESTIONER: Hi, Eileen Kaufman, Social Accountability International. You started to talk about, but I wish you would a little bit more, one of the key problems, which is the mismatch between the typical volume of a purchase from a large company and the typical volume of output from a small starting company. And I know -- I know one -- there's one company who's been reporting back to the Global Compact Supply Chain Committee on their work with women's food production company in Mexico. And they walked just through a lot of these issues. But how you are -- as biggest company obviously have -- your experience has to be really useful.
FREEMAN: Well, what we do is we offer three or four stores to begin with and we go little by little. Of course, there're some products that we need them in more stores that we cannot target a specific population or a target, so therefore we do have to work with them to help them out and the ideal is that in the process of being with small -- with very few stores, then they get either training. They get a better production process in general because most of the time the lack of production also is because the process is not all the way set or set well, and we help them on those earlier years, and if possible, we let them go to the other -- to the rest of the chain.
QUESTIONER: Different -- (off mic.)
FREEMAN: No, right now is the same sourcing requirement is our buyers are the ones -- the buyers that buy from Procter & Gamble are the same buyers that buy from SMEs. And they know that they have to manage their category, their full shelf, and have a mix of both. It is complex on our side, you know. It becomes complex and that would be one of the tradeoffs of working too much with small companies that have not yet the volume to produce for more. But -- but we manage to do it.
QUESTIONER: Sundaa Bridgett-Jones with the Rockefeller Foundation. Astrid had talked about, you know, appealing to the left brain. There are many of us who want to know more about the metrics of this. And so if you can offer just a couple of comments about how you are tracking the businesses moving forward in terms of their sales or their employees, but also if you can talk a little bit about the enabling environment in some global south countries, where this is more -- it's happening more than perhaps in other countries. I don't know if that's the case in India or elsewhere, but what countries is helping to support enabling environment for women-owned businesses?
VAZQUEZ: So we're not -- and the countries we mentioned are the ones that are the most engaged so far, with the exception of South Africa. They have the black empowerment rules and regulations in place to encourage local content from black South Africans, but within that, they also have a focus on women-owned businesses and other types of underutilized businesses. And they're really doing some cutting edge work. They really have the policies in place and the legal requirements and regulations in place for local content requirements to report on it and actually show impact and track and measure that over time.
I think the statistics, as a lot of you -- I know CGI and other organizations are trying to get a grasp, a better grasp of the data. It's horrible. We just -- we don't have governments asking when women are involved in trade or products or services are moving across borders, how much of that is being done by women-owned businesses. So there's just a huge lack of information. Same thing with, well, how do we know that women represent 1 percent of the suppliers to governments globally or to the corporations? Well, part of it is that we actually don't know -- no one asks the question are you a woman-owned business. And women haven't historically benefited from self-identifying as a woman-owned business. So that's a challenge, too.
So we have to do a huge amount of educating. We have to work in every market with the government, with the policy makers to help them understand why creating a more enabling environment is so critical for job creation and for economic opportunity and for -- for trade. And then, we also, of course, have to work with the local, corporations on the demand side. We have to work with the NGOs and the multilaterals on what they can do to increase the work they're already doing, but to have more of a market focused goals.
And then of course, the women and business owners themselves getting comfortable with wanting to be a part of a network where they have to self-identify, and then understanding why -- what's in it for them, why would they want to do that, and then connecting the women-owned businesses across markets to share with each other best practices and to scale.
So it's interesting. When we were launching in Australia, usually, the first questions you get is, OK, so which corporations can you introduce me to now? But instead, they were asking me who could I source from -- I need buttons. Do you know anyone in China who has buttons? Or do you have anyone in India that could help with textiles? Or who do you know in Europe that could get me into the European market?
So they really are starting to think a lot more strategically, and it only took one meeting for them to make that leap. So I think a lot of it is asking just very simply questions at the right time of the right people, and I think that's why forums like this are so critical because so many of you -- all of you were included because of your influence and the important work you're doing in your space, and how that can link into creating a more inclusive environment so that all of us have, you know, more choice in the marketplace and more opportunity available.
PREGEL: Could I just --
COLEMAN: Yeah, yeah --
PREGEL: -- say something to that too. You know, clearly, in terms of women's entrepreneurship, it's a multilayered issues that we face. I mean, at the macro level, at the government policy level, there's an enormous amount that needs to be done. I mean, there're only 20 countries on earth where the enabling business environment essentially treats men and women equally. So figure anyone who's not already falling into those 20, there are barriers that are, you know, making the playing field extremely unlevel for the women.
And then of course, you get to more (global ?) kinds of issues, and I don't think I would like to say about that, as I think this issue of networks -- and we've seen it happen. I don't know if you saw the program "Solar Mamas," at the beginning of the month, the Barefoot College in India. It was -- OK, all right. So you know I'm going to go here on this. All right, so why are they training only grandmothers, only women, you know, to become these solar engineers and spreading them all over the world? It's because the women are anchored into their communities. They don't want to go to the city and start selling their services. They don't care if they get a diploma. You know, the women essentially have a lot of interest in mentoring and bringing other women around. And I think this is -- you know, it's a generalization, but I think it does hold true in many, many different contexts. If you could see these women, the women that -- can I tell the Wal-Mart, the sandpaper story? We've got a woman in Canada -- do you know where Prince Edward Island is? You know, 400 miles -- OK. They got great mussels and that's probably what you know the most about Prince Edward Island.
But you know, in summer, Prince Edward Island, there's a woman who makes sandpaper. And for three years, she worked with the buyers in Canada for Wal-Mart to get her product into -- and she -- you know, it's a long story to tell you about all the details, but she did it. What she has done in her community in terms of hiring people, but importantly, to go back to this networking, the power of these networks, she is now bringing along two or three other women in Prince Edward Island, you know, and it grows like that way -- that way.
And that's my experience. Anyway, no matter where I was, if I was sitting, you know, under a mango tree in the wastelands of Gujarat, if we were talking to women dollars to donuts that those women were trying to work immediately with the others. So it's a critical, critical issue. You can get into the policy stuff. You can get into the macro -- the micro stuff, but that piece in the middle of all the networks and the clustering -- clustering these women to bid together or to work together is just immensely powerful, powerful.
QUESTIONER: Are the women that you work with that own companies -- are their companies getting adequate financing?
VAZQUEZ: That's a good question. It's always a challenge. It's a -- it's historically and may always be a challenge for adequate financing. I know for -- probably for all the organizations here, we never have enough resource to do what it is we want and what we need. So I mean, that's true no matter what.
What I would say is there're some really exciting things happening with like the Global Banking Alliance for Women, where you have some of the major banks from around the world, RBS and Westpac and many of the national banks in Africa having programs specifically for women-owned businesses, because -- again, not for charity, but they actually want to grow their client base. And they haven't effectively been reaching out to women-owned businesses in part because they close themselves off by saying -- requiring -- having rigorous asset requirements or you know, you have to prove you have some type of land or -- and so now they're looking at other ways to get validation, verification of their creditworthiness and their ability to pay and their history of repayment in other ways. And that is really exciting because these banks that normally don't share best practices on anything with each other are sharing in this particular space methods for attracting and retaining and helping to grow their women business owner client base and then we're working with them because that is -- these are bankable women-owned businesses that have probably the highest potential to get these larger contract opportunities, which then in turn makes them better customers, so then the banks are happy.
So it's interesting when you connect very strategically the access to -- and then you link that to Women's World Banking and -- (inaudible) -- and these other great organizations that are like a pipeline, a funnel where it doesn't end after you do microfinance. That's just the beginning.
So we really have to continuously think about the pipeline and how we constantly connect access to markets with access to finance, with education and training and with all the other things that have to happen at the same time.
PREGEL: Yeah, I thought I could just add one thing to that. It's the -- you know, the finance piece is getting a lot of attention. Where I think the attention hopefully will start to focus even more is access to markets piece. Because you know, if you've got a woman who's got a contract in her pocket, you know, even if she's never been to that bank before, you know, the odds are the bank is going to pay much more attention.
So traditionally, I think the aid agencies also have been -- are increasingly focusing on finance. I think the next frontier is really the access to markets piece and this is a very specific exciting way you know that that can start to shift.
FREEMAN: I would like to share with you from the Central American perspective, we don't have that much access to it. And of course, if we had a contract like what Astrid was saying, our suppliers got a contract, then it would be easier. And that's what they would love for us to give to them. However, general -- us and I know that a lot of the other supermarkets, we do not give contracts. We do not sign a contract saying that we're going to buy from you jellies for the next three years. So sometimes, even though that's their wish, we cannot -- we cannot do that. And the burden that men and women also have is that they're asking for collaterals that they do not have or they cannot put at risk their home, even -- either because they're still paying for it or because it would be too risky to leave -- if something was to happen to them or something, you know.
So I think there is a lot that still needs to be done for that -- then maybe -- maybe could be something like reviewing the sales of the last three years, if they have been good, or something, you know. It needs to be more creating minds so that we can put some solution for that, because most of the time, the lack of growth is related to the lack of financing.
VAZQUEZ: And although it may not be contract specific, we are starting to work with the International Finance Corporation on at least leveraging purchase orders. So if they have a purchase order, there's just so much -- it's so much easier for them to be able to get into one of the member banks.
QUESTIONER: Thank you. I'm Elmira Bayrasli with the World Policy Institute. This question of scale that you brought up, supplying -- having women as suppliers, I mean, I definitely am a big supporter of that and I think there is a lack -- I think there is a lack of -- from at least my experience looking at entrepreneurship, women are in the informal sector and they are afraid to be formal. But then there becomes a question -- at a certain point, it becomes a question of scale and it becomes a question of competitiveness and how do you make these female owned businesses competitive, but then on a broader landscape, how do you actually -- how does that fit in and make those economies that you're working in competitive?
FREEMAN: I think a lot has to do with the networking also, because sometimes they're not competitive enough because they go to the first supplier of prime goods to get the goods to start the final item. So -- or sometimes they do not negotiate well with their own supplier. So if you help them -- teach them also to go back into their process and look at the process and see where they can be more cost effective, then they can become more competitive.
And I would say that it's more of a point of training and trying to get them into looking at their numbers at all times. We've seen that the suppliers that have their numbers on the top of their tongue, they do much better in general than the others that do not. And they become more competitive. And they're not out of the market, either as faster or they just are there to stay.
VAZQUEZ: One of the most effective strategies we've seen in action is when we host the meet the member events. So these are local events that we host all over the world all the time, where our -- one of our corporate members is willing to sit down with actual buyers, and we invite the women business owners in to come in and have a conversation. It's not that they're going to do a quick pitch. That may happen later on, but at least in the beginning, they hear from actual buyers. This is what we buy. This is when we buy, how we buy, where we buy. This is what we expect of vendors. You may or may not need an ISO certification, but you certainly have to have a bank account if you want us to pay you.
So there's just -- it's an opportunity for them to hear about what it takes to be more competitive and then to ask questions. And then what we find interestingly is within the room, the women who were attracted to go into that particular event have self-identified in having a common interest in selling to Marriott and all of a sudden they realized that they can do this together and that they actually have a lot in common themselves.
And so I think there're lots of very simple inexpensive ways now that we actually have demand, willing to share this knowledge and share their time and willing to open their doors to more suppliers that they wouldn't necessarily normally consider.
QUESTIONER: But -- it's how do you get them from being suppliers to actually being -- to be even next Wal-Mart. I mean the goal should here be how do you get -- how do you get the next Wal-Mart in Mexico or in Guatemala.
VAZQUEZ: Right. So -- but in the beginning, because most women-owned businesses are small, you have to at least begin to get them to think bigger. And you have to help them understand what does it take to grow? What do I have to do to position myself to be competitive? And then, it's that first contract. It's really important that they get that first contract that teaches them how to do that kind of contracting.
And they may not and probably will not be a first tier supplier. So that's the other thing. They -- a lot times, you know, how is this -- I'm going to sell directly to Wal-Mart. Well, no, you're not. Statistically, you're not. But if you can learn to be attentive to your supplier because you now understand how Wal-Mart sources and you understand that Wal-Mart has a bunch of primes and they have primes and they have primes and they have primes.
And Wal-Mart's willing to introduce you to a fifth tier supplier, then you actually have a shot at it, at doing this, and it's a realistic -- and it's the way these markets actually work. And it's the way these organizations actually source. But there's a lot of work that has to be done on the front end to just get them all in the room talking about the challenges and the opportunities and doing it in spite of the challenges. Is that --
QUESTIONER: Hi, I'm Craig Charney from Charney Research. We do market research in developing countries. And I'd like to follow up on the contracting question because this is something we stumbled across in our work in Mozambique a few years ago on alternative dispute resolution. We found that entrepreneurs, particularly informal entrepreneurs were absolutely intrigued by mediation or arbitration, particularly given the -- all the problems of the Mozambique in courts, but in the informal sector almost nobody had a written agreement and the business was done on a handshake basis.
And one -- now, there frankly it was initially both male and female business people. But I'm wondering is it particularly an issue for women, due to issues related to literacy, power, less capital, less -- (inaudible) -- procedures, what have you, and also what succeeds in overcoming this problem. It's easy to say give them a contract, but if they don't have a lawyer, it's hard for them to deal with it. So I'm curious -- we can talk about both problems, but also what solutions have been.
VAZQUEZ: At least in our experience -- did you want to start -- in our experience has been getting a better grasp -- this is -- it's not -- it's not rocket science. In some ways, it is literally getting the right people in the room and letting them talk with each other and meet and letting entrepreneurs do what they do to find business opportunities. So at a high level it's demystifying it and saying it's about people relationships. So I trust you that you're going to give me what you say and that you're going -- and then I'm going to pay you.
So we try to help them understand it at the basic level, but that's -- at the end, that's what it's about in doing business. But the devil's in the details and if they don't understand what they're signing on to and they agree to a bunch of things that they can't possibly deliver on, then -- then they're in trouble, and then -- and the buyer then also has a problem because then they're going to not have a lot of credibility in sourcing from similar types of companies in the future.
So this goes back to understanding all the needs and engaging across the board, not each individual NGO or corporation or government, their services or things that can help them with legal issues or financial issues or accounting issues, but at least identifying what are some of the best resources. I think the other issue is actually like fair trade distributors, like full circle exchange. You know, you're not necessarily going to be able to get into one of these larger contract opportunities, but if you can find a fair trade distributor, they'll actually help you figure out a lot of these issues and how to package and market and good contracting and access to finance. So it's making sure that we're working with the entire network of support.
So when we do a certification, we do an assessment and we find out what are the areas that they're maybe not quite prepared for yet to grow that business, and then, we're in a better position to share with our local partners what the needs are, what the gaps are, whether it's legal or they don't know how to build a website, or they don't have a bank account. We can start to, for the first time, quantify and address where these big gaps are. And so it's -- it's going to take time. This is -- again, it's very early days and you're talking about some complex systems. And a lot of it's very local, right? You can't just send them to a DLA Piper, but you know who's a local attorney.
Well, that takes a vetting process and so the local network has to be developed and a local network has to then start identifying who are the good attorneys in the area, who are the good accountants in the area. And so it's a process. But that's why it takes this village. That's why it takes so many of us working together to address the complexities.
PREGEL: And if I could just sort of broaden the definition -- you know the kind of ecosystem that, you know, have to surround these people. I mean, clearly there's, you know, a huge role for some of these governments. If you take the World Bank's Doing Business Series, you can see that over a number of years, certain countries really have improved the ability of entrepreneurs to actually function, and whether they're men or women. I mean, in the case of Mozambique, I don't know it off the top of my head, but I bet it takes more than a phone call to get a firm registered.
So what you face with women, you face higher hurdles because of the corruption that's required, because of the time commitment, you know, 386 days, you know, for some of these countries is the average time it takes to get a company incorporated. So you've got issues in these enabling environments for everyone, everyone who's trying to do work as a small business, to go from the informal to the formal. However, if you're a woman, you've got all these extra ones.
So some of the things that seem to be working, you know, are at the macro level moving the whole country forward in terms of that enabling environment. And then specifically for women, it's trying to clean up that corruption ASAP because women really are much more vulnerable. And it's not always money that people are looking for. It's pretty hideous some of the kinds of things they can find themselves in.
The other piece that's really critical is that, surprise, women tend to have the majority's role to support families and children. So to the extent that you can have access to energy and water -- I mean, we don't think about that so much in our context, but in the context of Mozambique, you know, the workload every day for women and girls to access water and energy sources is huge and takes away from their ability. So sometimes it's those very structural kinds of issues, you know, in the greater, broader policy environment that are critical and that are really the barriers. Once you've cleaned some of that up, then really this whole idea of clustering -- I mean, I get really excited about clustering. It really -- you know, it's really one way to bring things forward. It's mutual support stuff. It's clear.
QUESTIONER: Thanks, Elizabeth Cafferty, Women's Refugee Commission. So I have a slightly different question. We know that there's research that shows that in development in post-conflict environments, when women suddenly have an independent source of income that they have -- or an increased source of income, they're suddenly at risk for gender-based violence, and that could be domestic violence or it could be because of the activities that they have to undertake in order to pursue their livelihood. These are risky activities, nothing you and I might think of, but if you need to get on a bus that's very crowded, where normally a respectable woman would not be traveling alone, you can be targeted.
So I'm just wondering if this has manifested itself in your work at all and I know asking about violence against women is really tricky because it's very underreported, but I wondered if you had heard or seen anything or there're any strategies that you knew of that women seem to be almost subconsciously employing to get around this.
FREEMAN: Well, with our suppliers, they do not share those stories with us. However, there are studies in Central America that, of course, and especially from indigenous communities, because when -- Guatemala has about 60 percent of the population is indigenous. So -- and the culture is totally different from the Mestizos that are -- so the increase -- the domestic -- the domestic violence has increased when women go out to -- not only because they bring money, but also I think it has to do with they feel that you can do something for yourself that -- that you're not at the expense of waiting for the male of the house to give you whatever money or to support for you. But you start reevaluating that you have value of your own, regardless of, you know, of what they can give to you. So it is a risk. As I said, our suppliers do not share that with us.
I don't think also -- probably in a different type of service -- because our suppliers are really small industries, you know? So I would think that that is more for service or that you are working somewhere else on salary, but I don't know your experiences or yours.
VAZQUEZ: It hasn't been a particular focus. I mean, we've certainly worked with organizations like Vital Voices and seeing where we can work with the women business owners who are also leaders in their communities working on specifically violence against women. But I find personally, just based on my own experience as a young person in my family, that it wasn't until the women in the family had money that they had the choice to stay in a violent situation or get the hell out that they were really empowered.
And so I think we have to really think hard about women's abilities to make decisions for themselves, to give them the choice whether or not to make more money or to stay in a violent situation that may get worse, may get better, but I think we have to allow women to make that decision for themselves and not assume that -- but I agree with your point that we have to be aware that there are unintended consequences and that we need to, you know, proceed carefully and let women know that there may be, in certain communities, implications for them getting involved in projects.
And I saw some of that firsthand when we were doing some work with the World Bank in eastern Turkey with women who had, you know, all of them over six children and, you know, a lot of violence, but what we found in talking with the women that were able to come together because the men knew that the women were just talking with women and there weren't other men involved, so is their safe space, that it was a place for them to get away, to learn a skill, to spend time with each other, and that they were bringing in so much more income than the men that the men wanted them to go out of the house and go make income and bring it back to the family to feed these kids.
So I think there's plenty of evidence to also show that when women have money, they have a lot more choice.
COLEMAN: I'm sorry. I think we only have time for one more question and you've had your hand up. So I'm sorry for the ones I didn't get to today. Behind you, Ashley.
QUESTIONER: Hi, Philippe Burke, Apache Capital. Quick question about the cases where private gain and public gain are not necessarily aligned and, very quickly, a lot of people, I'm sure, have heard the statistics that if you lend to small businesses that are led by women in either in disadvantaged and in developing countries, the credit risk seems to be a little higher among women than it is among men. They perhaps spend less money on, you know, alcohol and guns and that sort of thing. We all know the story. So this is a case where the private decision to lend more to women is perfectly aligned with the public good where, you know, kids get taller, as you were mentioning, perhaps with the lower crime rate, that sort of thing. No need to touch that one.
But in other cases, for example, you have to decide which coffee manufacture to add to your shelf. Now, the fact that if you had hired a woman to do that, there might have been a benefit in that village or in that town really has very little impact on the bottom line at Wal-Mart, I would think. I would think a second order, maybe third order condition. And yet, the governor of that province will find that its budget requirement for, you know, police work, for education is diminished in the long run by making that decision. So is there a way that we could somehow get those two to talk? Is it possible for them to say we have a huge benefit from them if we can hire fewer policemen on the beat, how can I convince Wal-Mart to hire more women?
FREEMAN: That's why we have this program, OK? And this program is a mix of social responsibility with the business side. And they do come to us and they tell us, you know, this coffee will -- and we actually had -- had a case like that that a coffee was produced by a community of women. So therefore we give priority to that coffee over other coffees that are a similar (state ?). I mean, that -- and also, we are migrating into a more modern way of buying. The traditional way of buying is you look at price, volume, quality, competitiveness, and you get it in, you know. And little by little, because we have too many buyers and it's taking us a long time to migrate into that, but we are also looking at certification at women-owned, at sustainability, so little by little -- I wish it was faster, but we can't -- and as I said, that's why the program will help suppliers or will help those types of suppliers sell themselves with the buyers.
QUESTIONER: Is anybody rewarding you for that? You know, does your board care? Do shareholders raise your stock price? Does the government give you money for that?
QUESTIONER: It's going to be a public good, right?
FREEMAN: Well, we -- our relations with the government are easier, you know, the neighbors start recognizing that we are a good neighbor to be in the community by helping out these enterprises, local enterprises. They tell their families or their friends, and they will hope that people will be buying from Wal-Mart their products, because as long as they sell more to Wal-Mart, they will have a longer relationship and they can expand more. So we don't get money directly, but we get money by making more sales.
COLEMAN: It's 2:00. We have to wrap up. I'm sorry for those questions I didn't get to today. There're many more levels of detail that I'd love to dive into with each of our speakers. We've only scratched the surface, but watch this space carefully because you will read and hear more about efforts to bring women-owned businesses into global supply chains. And as you know from this conversation, you know, as Elizabeth kept repeating, we're really at the very beginning of a long journey, but I think there's enormous potential here. And thank you to our speakers for joining us here today. Thank you. (Applause.)
(C) COPYRIGHT 2012, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.
UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.
FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.
FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL INFO@FEDNEWS.COM.
THIS IS A RUSH TRANSCRIPT.
Leveraging New Technology for Women's Economic Empowerment: Understanding and Expanding Distribution Networks
Experts give examples of bringing technologies to developing countries and how distribution of these products works.
Alyse Nelson, Co-Founder and CEO of Vital Voices, discusses the organization's work to empower women around the world with Isobel Coleman, Director of CFR's Civil Society, Markets, and Democracy Initiative.