How supporting entrepreneurs can improve the lives of Central American women

The ability to earn a decent income and live safely within one’s own community is vital not just for one’s own wellbeing, but also for economic development and political stability. That is why initiatives that seek to promote economic growth in Central America – or anywhere, for that matter – must address head-on the needs of women entrepreneurs.

Across Honduras, El Salvador, and Guatemala, women who seek to escape poverty by launching small businesses often find that success brings more suffering – and not just for them, but also for their children. Beyond having to contend with a culture of machismo, weak protection by the state leaves successful women entrepreneurs vulnerable to armed gangs and militias. As the owner of a small cosmetics company put it, “I feel like it’s better that my business doesn’t progress, because if it grows, I’ll suffer extortion.”

Recent research confirms these fears. Women and Girls Empowered (WAGE), a United States-based initiative to reduce legal, economic, and policy barriers to female entrepreneurship in poor countries, recently held 27 focus groups across Honduras and El Salvador. Many of the barriers to women’s economic empowerment that were identified – such as limited access to credit, lack of business and financial education, unequal property rights, and lack of connection to social networks and markets – are globally pervasive.

But women in Central America face added threats from gang violence and organized criminal activity. Rates of femicide – the murder of a woman or girl for gender-related reasons – have reached epidemic levels. In Honduras, there were 5.8 femicides per 100,000 women in 2016. In El Salvador, the rate is an appalling 10.2 per 100,000. Gangs also force children to join and subject girls to sexual abuse.

For entrepreneurs, the threat of physical harm is compounded by gangs’ demands for bribes or “taxes.” To avoid attracting the attention of these groups, women forego storefronts or signage, operating quietly from inside their homes and delivering products directly to clients. They travel to faraway cities – often in the dead of night – to sell their wares, which increases business risk and transportation costs. All of this limits their businesses’ growth potential.

But simply giving up on one’s business is not a good option, either. Small entrepreneurship remains one of the few available paths out of poverty in Central America, especially for women, who face unemployment rates that are 50% higher than those of men, owing partly to cultural norms that impede working outside the home. As one Salvadoran woman told WAGE, “My husband doesn’t like that I work. If I don’t obey him, I run the risk that he will abuse me.”

When your only option for escaping poverty means placing a target on you and your family’s backs, the future looks bleak. Unsurprisingly, many desperate Central American women have fled their homes – often on foot, children in tow – seeking safety and opportunity in the United States. But for every woman who leaves, many more stay behind, either in their hometown or in new towns within their country, where they can only hope that their newfound anonymity will offer some security.

The ability to earn a decent income and live safely within one’s own community is vital not just for one’s own wellbeing, but also for economic development and political stability. That is why initiatives that seek to promote economic growth in Central America – or anywhere, for that matter – must address head-on the needs of women entrepreneurs.

While there are no simple solutions, promising steps can be taken. At the center of any strategy for improving conditions for women entrepreneurs in Central America should be local microfinance institutions.

Women rely on MFIs for much more than start-up business funding. According to WAGE research, they also seek financial education and help with emergency planning, to facilitate a quick departure if needed – all delivered discretely.

MFIs should pay attention to the needs of women entrepreneurs and tailor their services accordingly. For example, they should provide financial products that enable women to save in secret, hidden from the prying eyes of their husbands, their spouses’ associates, or gang members. Loan products that offer lower interest rates or advance specific goals, such as savings for health emergencies, including physical attacks, would also help.

Global consumers also have a role to play in improving the economic prospects of women in Central America. Some 300 international companies operate in Honduras alone, in sectors ranging from textiles to electronics. Buyers of their products, in the US and elsewhere, should be leveraging their wallets to persuade those companies to drive change in the communities where they operate.

Whether pressured by their customers or not, international companies operating in Central America should use their clout to demand that local and national governments root out impunity-enabling corruption and enforce laws that protect women and children. At the same time, they should establish partnerships with MFIs and civil-society organizations to develop and carry out corporate social responsibility initiatives that directly support local communities, especially women.

Foreign governments, beginning with the US, should support progress in the region, including through continued aid delivery. Researchers have shown that, amid severe economic shocks, foreign aid can contribute significantly to conflict prevention. Given the powerful effect this would have on migrant flows, the US should be motivated to strengthen its efforts to help reduce poverty and violence in Central America.

As it stands now, women in the region face an impossible choice between escaping poverty and staying safe; in many cases, they achieve neither. They have the drive to build small businesses, improve their families’ wellbeing, fuel local economic growth, and strengthen regional stability. But they need support. We must give it to them.