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This report examines the state of female entrepreneurship in Indonesia, outlines major binding constraints and gender gaps, and highlights the untapped potential that could be realized if key barriers were lifted. The report draws on quantitative analysis of household- and firm-level surveys, the collection and review of qualitative work with male and female entrepreneurs across the country, a review of global evidence on gender and entrepreneurship, and analysis of relevant policies, laws, and regulations in Indonesia. The report also offers a novel analysis of the potential economic dividends from closing gender gaps in business performance in Indonesia.

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Is there a mindset gap holding women back in business? Can entrepreneurship training instil a set of attitudes, behaviors, and strategies that are thought to underpin success in business such as motivation, perseverance, and self-confidence? This study conducted two randomized controlled trials to evaluate the effect of mindset-oriented business trainings on the performance of women-owned micro and small enterprises in Ethiopia. The trainings were underpinned by psychology with a mission to foster self-esteem and entrepreneurial spirit. Despite a similar approach, however, the quality of delivery seemed to matter as impacts of the trainings on business performance were mixed. A key channel for an impact on profits is if the training can actually effectuate the mindset change, with only one training transferring higher levels of entrepreneurial self-efficacy, personal initiative, and entrepreneurial locus of control to the women, relative to a control group. The study finds suggestive evidence that psychological skills and mindset are better inspired by a trainer who previously owned a business themselves and therefore may have a better understanding of the entrepreneurs' specific challenges. The study concludes that psychological skills are important for women's business success, and these skills can indeed be transferred using training, assuming a shared identity match between trainer and student. Service delivery appears to be critical for inculcating these important skills.

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In October 2012, the Government of Ethiopia launched the Women Entrepreneurship Development Project (WEDP), with the aim of increasing the earnings and employment of growth-oriented micro and small enterprises (MSEs) owned or partly-owned by women entrepreneurs in Ethiopia. In doing so, it created the first ever women-entrepreneur focused line of credit in Africa, and one of few such operations in the world. In addition to the USD 45.9 million in financing, WEDP also offered a variety of innovative training opportunities, designed to not only enhance the business skills of its clients, but their entrepreneurial mindset and practices as well. WEDP has been widely recognized for its achievements in empowering women entrepreneurs and for raising their profile throughout Ethiopia's financial system. The project model has demonstrated how an incentives-based strategy, coupled with hands-on management and a robust monitoring and evaluation system, can converge to successfully address a persistent constraint.

In this document, we articulate some of the main conceptual and practical elements underpinning WEDP's model. Following this lessons piece, we present a collection of research and knowledge documents produced by the project thus far. We hope these lessons and experiences can inform practitioners with insights on working with the MSE sector, with a focus on applying a strong gender lens to reach a promising but underserved market segment: women entrepreneurs.

Excerpts from publication.

The research and knowledge documents contained in the appendices are: Better loans or better borrowers?: impact of meso-credit on female-owned enterprises in Ethiopia / Salman Alibhai, Niklas Buehren and Sreelakshmi Papineni; Disruptive finance: using psychometrics to overcome collateral constraints in Ethiopia / Salman Alibhai, Niklas Buehren, Rachel Coleman, Markus Goldstein and Francesco Strobbe; Full esteem ahead?: mindset-oriented business training in Ethiopia / Salman Alibhai, Niklas Buehren, Michael Frese, Markus Goldstein, Sreelakshmi Papineni and Kathrin Wolf; and Taking management: digital lessons from the development of an innovative management information system for small businesses in Ethiopia / Salman Alibhai, Francesco Strobbe, and Espen Villanger. Show less