Closing the financing gap for women-owned businesses through supply chain finance

At the IFC Global Trade Partners Meeting in Lisbon, Trade Treasury Payments (TTP) spoke with Makiko Toyoda, Global Manager for Trade and Supply Chain Finance at the International Finance Corporation (IFC), to explore how supply chain finance can expand access to funding for women-owned businesses.

At the centre of this effort is the IFC’s Women in Trade Network, a global community of senior women leaders from financial institutions engaged in trade finance, that is designed to recognise the role that women have in shaping the economy. The network brought together over 100 participants at this event in Lisbon.

Toyoda said, “Women in leadership can play a critical role… not just shaping companies’ strategies or being involved in decision-making processes, but they can influence how capital flows in global value chains.”

The timing couldn’t be better, given the strain currently being placed on these very value chains. “We would like to make sure that those women-owned businesses have access to information, access to finance, so that they can build resilience and also seek growth.”

Supply chain finance, then, is one tool that can be used to address some of the structural barriers that still stand in the way of progress. Unlike traditional lending, which often relies on collateral or a strong credit history, supply chain finance shifts the focus towards the creditworthiness of larger buyers within the value chain. Often, this will be the large anchor buyer that a smaller suppliers outputs are eventually going towards.

Toyoda said, “Supply chain finance can be a game changer… it shifts how risk is assessed and how liquidity is delivered.”

By using instruments such as payables finance or receivables discounting, smaller suppliers, including women-owned businesses, can access financing on more favourable term, which can help improve cash flow. However, access to finance alone is not sufficient. IFC’s experience suggests that capability building and network effects are just as, if not more important in increasing the participation of women-led firms within the trading chain.

Toyoda pointed to a collaboration supported by the Government of Japan and the Goldman Sachs Foundation, working with McCormick’s supply chain in Vietnam. At the outset, only 9% of suppliers were women. After three years of dedicated efforts, that figure increased to 51%.

“Technical training is important,” Toyoda said, “but we also learned that the network is very important… if you have networking, you have access to information, and you know what you can access in the market.”

For IFC and its partners, the challenge is not only to expand access to supply chain finance, but to embed best practices into the structure of global trade itself.

“We would like to focus on leadership in action,” Toyoda said. “To think about options and solutions that we can present to the market.”