35% of all small and medium enterprises (SMEs) are owned by women. Women-owned SMEs produce around 20% of GDP
(Source: World Bank 2012)
8-10 M formal SMEs in emerging markets are owned by women which represents 31-38% of all formal SMEs in those markets
(Source: IFC 2011)
If women played an identical role in labour markets to that of men, as much as USD 28 trillion, or 26 per cent, could be added to the global annual Gross Domestic Product by 2025 (Source: McKinsey 2015)
Sustainable Development Goals
On 25 September 2015, the global community adopted a set of Sustainable Development Goals (SDGs) to end poverty, protect the planet, and ensure prosperity for all as part of a new sustainable development agenda.
The 5th SDG embodies the objective to achieve gender equality and empower women and girls. It is not only a stand-alone goal, but it is also indispensable to achieving other goals (e.g. eliminating poverty and hunger (SDG 1 and 2), ensuring good health and education for all people (SDG 3 and 4)). One of the targets of the 5th SDG involves to undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws. This target is very crucial to overcome the above mentioned market entry barriers that women-owned businesses face.
Procurement can play a vital role to reach sustainable development and gender equality. In this regard, Goal 12 – “Ensure Sustainable Consumption and Production Patterns” is highly applicable, specifically target 12.7 that states “promote public procurement practices that are sustainable, in accordance with national policies and priorities". Sustainable procurement entails social factors that increase the procurement opportunities among women and contributes to their economic empowerment. Such social factors include gender balance, equal policies, distribution of resources, fair working conditions and respect for human rights. Sustainable procurement can notably contribute to community development, economic securities for whole families and eradication of poverty.
The empowerment of women also depends on the right of full and productive employment and decent work for all women (Goal 8). Studies show that up to 90 % of the earnings of women-owned businesses tend to be reinvested in their families and communities, which links inclusive economic growth directly to development (ITC, 2014). When women are educated and can earn and control income, infant mortality declines, child health and nutrition improve, agricultural productivity rises, population growth slows, economies expand and poverty decreases. The UN, governments and the private sector can use procurement to achieve great socioeconomic change for women and girls on a global scale. The positive correlation between gender equality and the socio-economic environment of a country calls for incentives to ensure equal opportunities for female and male entrepreneurs.
Guide to Gender Responsive Procurement
What is a Woman-Owned Business?
Defining and classifying Women-Owned Businesses helps determining which companies are entitled to preferential treatment. Classification of Women-Owned Businesses will also enable the collection of data, which facilitates the measurement of progress and the effects of gender-responsive policies. An important aspect of a solid definition is that it helps reducing the risk of tokenism and fraud, where women are placed in key position without granting them any managerial power only to obtain preferential status as a Woman-Owned Business. A Woman-Owned Business/vendor should at a minimum include;
(a) At least 51 per cent independent ownership by one or more women (or woman sole proprietorship),
(b) Unconditional control by one or more women over both long-term decision-making and the day-to-day management and administration of the business operations, and
(c) Independence from non-women-owned businesses.
What market barriers do Women-Owned Businesses mainly face?
UN Women drafted a guidance paper on Gender-Responsive Procurement in February 2017 entitled “The Power of Procurement: how to source from women-owned businesses”, a guide that on one hand provides corporations with a deeper understanding of the barriers and challenges preventing women-owned businesses from accessing and fully participating in local and global values chains, and on the other hand endeavors to make the practice of gender-responsive procurement a standard and recognized approach to socially and economically sustainable procurement in the UN system.
The guide identified several barriers that prevent women and girls from entering and/or fully participating in the formal economy. The most significant barriers are those related to the access of different forms of capital:
o Financial capital --> Women typically start their businesses with less capital and have less access to financing than men, which limits their ability to start and grow their businesses;
o Social capital --> Women business owners tend to have difficulties establishing robust business networks and connections with individuals and organizations that can generate business;
o Human capital --> the OECD (2012) found two main reasons that helped explain the relatively lower revenue generated by women-owned businesses: the lack of managerial experience and the smaller amount of time women could devote to their businesses mainly due to household work.
- Gender-Responsive Procurement Task Force page
- International Finance Corporation (2011). Strengthening Access to Finance for Women-Owned SMEs in Developing Countries. Washington D.C.
- Organization for Economic Cooperation and Development (2012). Closing the Gender Gap: Act Now. Paris.
- World Bank (2012). World Development Report 2012, Gender Equality and Development. Washington, DC: World Bank.
Women's Empowerment Principles
The Women's Empowerment Principles (WEP's) are a further UN initiative, resulting from a collaboration between UN Women and the United Nations Global Compact, and are adapted from the Calvert Women’s Principles®. The WEP's points best practices for businesses on how to involve and empower women in the community, workplace and market. UN Women invites suppliers to become signatories to the WEP's or to sign the Voluntary Agreement to Promote Gender Equality and Women’s Empowerment to support the elimination of discriminatory practices against women. While voluntary, the agreement clearly signals UN Women’s priorities to suppliers. At present, more than 1447 Chief Executive Officers (CEOs) have signed the statement of support the WEP's.
The principles are the following:
- Establish high-level corporate leadership for gender equality,
- Treat all women and men fairly at work - respect and support human rights and non-discrimination,
- Ensure the health, safety and well-being of all women and men workers,
- Promote education, training and professional development for women,
- Implement enterprise development, supply chain and marketing practices that empower women,
- Promote equality through community initiatives and advocacy, and
- Measure and publicly report on progress to achieve gender equality.
Gender Responsive Procurement
Gender-responsive procurement is a sustainable selection of services, goods or civil works that takes into account the impact on gender equality and women’s empowerment. UN Women strives to ensure that all operations, including procurement processes, support its mandate for the elimination of discrimination against women and girls, the empowerment of women, and the achievement of equality between women and men. UN Women’s focus on gender responsive procurement is thus in line with the strategic aim of the organization to empower women globally. Gender-responsive procurement provides an opportunity for the procuring entity to expand its global markets, diversifies its supply chains while simultaneously growing the economy and improving the lives of women and girls around the globe.
In 2019, the United Nations (UN) spent almost USD 19.9 billion on purchase of services, goods and civil works to fulfil its functions. Together with governments, companies and other non-governmental organization, the procured value amounts to trillion of dollars globally. Yet, less than 1 % of women-owned businesses access the procurement market and are awarded the contracts (Vazquez & Sherman, 2013).
Women entrepreneurs are a growing economic force and represent a significant share of employment generation and economic growth potential. It is estimated that Small and Medium Enterprises (SMEs) with full or partial female ownership represent 31-38 percent (8-10 million) of formal SMEs in emerging markets (IFC, 2011). Public procurement spending accounts for approximately 10-15 % of the Gross Domestic Product (GDP) in developed countries and over 30 % of the GDP in developing countries (ITC, Empowering women through public procurement, 2014). Procurement, supplier diversity and inclusion can thus be used as a powerful tool to economically empower women and to combat poverty by increasing the income of women and ensure sustainable social and economic benefits.
In this regards, governments and international organizations recognize that empowering women and women owned businesses is a catalyst for achieving gender equality and the internationally agreed goals and commitments.
Best Practice Guidelines
How can we overcome these barriers?
Women-owned businesses can be assisted to access the procurement market by establishing and implementing gender-responsive provisions throughout the procurement process. While there is no one-size-fits-all plan for gender-responsive procurement, below is a list of best practises that procuring entities can apply to increase supplier diversity and market access for women-owned businesses (ITC, 2014);
- Classification: Classify women-owned vendors based on women ownership and control;
- Targets: Establishing mandatory and measurable goals or targets, e.g. to award a minimum 20 % of all contracts to women-owned businesses;
- Subcontractors: Introduce subcontracting requirements, e.g. vendors awarded contracts over a certain threshold must submit plans for women-owned businesses to participate in their supply chains and conduct strategies for achieving set targets;
- Price or Margins of preference: The procuring entity can, based on the preferred status of the vendor (e.g. being women-owned), give higher scores to the preferred firms while making no adjustments to the non-preferred firms. For instance, if there are equally compliant bids, contract will be awarded to the women-owned business;
- Reservations: Permit women-owned businesses to prequalify for certain groups or categories of contracts. This practice entails that the procuring entity sets aside certain procurement opportunities, e.g. under a certain value threshold, for competition among women-owned businesses;
- Capacity-building programmes: Provide proactive procurement skill development for women-owned businesses to eliminate the knowledge barrier and enable them to compete successfully in procurement markets. This can take place by providing targeted financial assistance or technical assistance in areas such as finding tender opportunities, submitting competitive bids, understanding contract terms, basic accounting etc.; and
- Progress measurement, monitoring, tracking and evaluation: This is necessary in order to ensure compliance with policies and programmes, to measure progress towards set objectives and to make necessary adjustments and improvements. Result-based management can be used as a suitable tool for this purpose.
What is UN Women doing?
UN Women aims to increase the agency’s total procurement contracts awarded to Women-Owned Businesses and to reach set targets. To reach its targets, UN Women has:
- As Chair of the Gender-Responsive Procurement Task Force, carried out the GRP Baseline Survey, which shall serve as the basis for development of a comprehensive Theory-Of-Change and system-wide Strategy for Gender-Responsive Procurement,
- Implemented mechanisms of preferences as introducing women ownership as a tie-breaker between two or more suppliers that score the same in an evaluation process,
- Updated its Procurement Manual with gender-responsive procurement policies,
- Implemented a mandatory gender profile registration of new vendors in its internal ERP system (ATLAS) that enables classification based on women ownership/control. Such data will also be collected through the solicitation documents, which are currently being updated with gender sections. Classification of women-owned businesses will enable us to track and report progress,
- Amended its “General Conditions of Contract” that requires suppliers to avoid discriminatory practices. This requirement extends to the suppliers’ supply chain both upstream and downstream. UN Women is the first UN Agency that has incorporated gender-responsive procurement provisions in its general terms and conditions of contract,
- Developed a new eProcurement platform, moving the whole procurement process on-line. This, among other things, enables and facilitates the classification of vendors, collection of data and measurement of progress, as well as simplifies the inclusion of more gender-responsive aspects in the procurement process,
- Initiated discussion with UN system agencies to update the “UN Supplier Code of Conduct” and the "UN Procurement Practitioner's Handbook" to contain gender-responsive provisions and provision on gender-based discriminatory employment practices, and will
- Roll-out and implement an online capacity training and certification programme for Women-Owned Businesses and female buyers in procurement professions through our training partners, and
- Partner with women business organizations and networks to find Women-Owned Businesses and initiate communication with the media to spread awareness.
What can be done to increase market access for Women-Owned Businesses?
- Communicate procurement opportunities to women’s business organizations and networks,
- Ensure that one procuring agency can use the result of prequalification procedures and vendor classifications conducted by another agency,
- Streamline and standardize solicitation documentation and qualification procedures with gender responsiveness provisions across the procuring entities,
- Fit the technical, financial and other prequalification and qualification requirements to the size and complexity of the procurement opportunities, where women vendors are not discriminated based on their firm's size,
- Add gender-responsive requirements in solicitation documentation and throughout the evaluation procedures,
- Encourage the use of best value award criteria, and where appropriate give preference to women-owned businesses,
- Provide meaningful feedback to unsuccessful bidders on the strength and weakness of their tenders and areas of improvement, and
- Enforce rules regarding prompt payment of women-owned businesses, including subcontract level.
Colombia, 2015. Photo: UN Women/Ryan Brown.
Jordan, 2015. Photo: UN Women/Christopher Herwig.
Empowering women and girls has a multiplier effect - it helps drive up economic growth and development across the board