Javier Ayala

Javier Ayala serves as SNV’s Corporate Lead of Inclusive Business.

As a global pioneer in the Inclusive Business field, SNV has focused its efforts on advancing this approach, an entrepreneurial initiative, recognizing the private sector's strategic role in development, while not losing sight of the ultimate goal of business, namely generating profit, which creates the pillars for sustainability and scalability.

Javier is the Multi-Country Program Manager of the Innovations Against Poverty (IAP) Fund, which is a specialized fund designed to identify and invest in innovative Inclusive Business models in four sectors -agriculture, energy, WASH and ICT- that deliver both commercial benefits for the company and social impact for the low income population in Cambodia, Uganda, Zambia and Ethiopia including job creation, income improvements and access to affordable goods and services.

He has over 10 years of experience in Inclusive Business, Impact Investing, Market access, financial brokering and socioeconomic research having worked in a large variety of inclusive business initiatives, from agribusiness to mobile banking initiatives in Africa, Latin America and Asia.

Javier is an economist, and holds a Master degree in Development Economics and International Cooperation, from the University of Rome, and is a certified Innovation and Entrepreneurship Professional from the Stanford University.

Seventeen Years in The Making: From street vendor to leading one of Cambodia’s most successful food production companies

Stories from women included and benefited from IAP's inclusive business initiatives: 2/5

Based on the current pace of development, it is estimated that it will take another 170 years to achieve gender parity within companies and business at large. This is particularly unsettling seeing as full gender parity in labour markets could contribute with an additional $28 trillion (+26%) to the global annual GDP by 2025 – roughly the combined size of the economies of the United States and China today. While this development is long overdue to a certain degree in most countries, it becomes particularly important in emerging markets to accelerate economic and social development.

One part of the labour market that could contribute to this development is female business owners. Women-owned small and medium enterprises (SMEs) significantly contributes to the economies in which they operate. Based on a study in 140 countries, it’s estimated that there are approximately 8-10 million female-owned businesses globally*, which represents almost 38% of all SMEs collectively. Despite the representation however, female entrepreneurs face a myriad of challenges when it comes to scaling their businesses, ranging from financial to non-financial challenges.

Women have everything from unconscious bias to starting a family and pseudo-science holding them back in their careers, and while organizational and government initiatives to help improve employment and educational opportunities for women are growing in popularity, progress is slow. In addition to this, women entrepreneurs have expressed that they lack the essential business skills in terms of handling taxes, undertaking rules and regulations, and don’t benefit from the same extensive networks as men. In that way, women are disadvantaged from the start, having fewer professional connections, role models and mentorship opportunities which can adversely affect their business in the long run.

Additional challenges are those of financial character, such as a lack of collateral, financial infrastructure and high cost of funding. Although the share of total global equity financing to all-women businesses have increased, these companies received just $1.9 billion out of the $85 billion total invested by venture capitalists in 2017. That’s equal to 2.2% of the pot. Despite recorded increase in average deal size, the number of all-female owned companies receiving investments in this space remains staggering low (368) in comparison to all-male teams (5,588).

Despite these odds, some women make it. And when they make it, they really make it. Research has found that firms that outpace their peers on the number of women in top management see a financial performance benefit of up to 15% over the industry median. Employees of companies with female CEOs also benefit. They experience fewer layoffs, and a different study revealed that women are more likely to lead by example and handle crisis calmly — traits any employee can appreciate.

The numbers make it clear: women are and will continue to be successful entrepreneurs and leaders in business. And in doing so, they will contribute to the economic development globally. However, to fully realize this potential, one needs to appreciate the challenges that these women face in doing so. To shed light on the topic, meet some of the women represented by Innovations Against Poverty Challenge Fund (IAP).

Starting out

Access to finance at the initial phase of the business was a major issue for Mom. She remembers how she was stared up and down by the bank clerks and was refused a loan. As a last resort, Mom sold her house to gain access to the financing required to start her business and procure the necessary food processing machinery.

“My family strongly advised me to re-consider starting this business as I announced that I would be selling the house. They recognized that it was a high risk since I didn’t even know what the machinery would look like, how it operates and whether it works for the intended purpose. If it didn’t work out, the entire investment would go down the drain, which would severely affect my family’s and children’s future.” – Mom Keo

Mom describes how men and women face the same challenges in the startup in terms of funding, time available and technology. The difference is that women have to work harder to prove that the business concept works and need approval from all family members.

“Until recently, in order to convince banks to approve loans, I had to be extremely well-prepared and bring an extensive bundle of supporting documents and proof that the business was viable and able to repay the loan. This would have been different if I was a man since the banks are more inclined to trust men and feel more comfortable lending to them. Today I’m proud to see that the government has shown commitment to support and promote women in business and access to finance. Many banks such as Canadia Bank, Acleda Bank and some microfinance institutions (MFIs) reported that the majority of their clients are indeed women. This is a big change from how it was back then.” – Mom Keo.

Culture as a barrier

While there is progress institutionally to promote women entrepreneurs, cultural barriers however, still remain. Every decision needs convincing of her husband and parents and cultural biases prevents Mom from e.g. meeting with clients and prospective buyers over dinner by herself. In addition, Cambodian women are still expected to take responsibility over all household chores and the wellbeing of the immediate and extended family when marrying. Despite her position, Mom mentions how she has to walk the tightrope in order to balance the cultural expectations in her business while performing financially. Today aged 45 and mother of three, Mom has many male employees that are older than herself. As such, she always has to be careful to manage her behavior, respecting them by listening attentively and be soft-spoken, presenting solutions appropriately while always keeping calm.

“Any display of bad temper is counterproductive. You really learn how to swallow agitation and irritation”, Mom laughs.

Apart from walking the tightrope successfully, Mom lists the following factors that are important for all entrepreneurs, especially women:

  1. Understand what you have a talent for and what you like doing
  2. Ignore negative comments regarding you or what you should be doing instead of starting the business. It’s your opportunity, embrace it.
  3. Understand the nature of the business that you would like to go into and then study its business operations in-depth
  4. Embrace learning: if a solution doesn’t work, move on to improved solutions
  5. Seeking collaboration opportunities from other development projects for capacity building and compliance. Be open-minded and build networks. Listen and learn from the advice provided by all stakeholders.

For the latter, Mom remembers how she in the beginning had no network to turn to, especially being a woman. In order to gain information about the machinery she acquired she had to reach wide and high to collect insights to make wise decisions and setting up operations. The recognition of the importance of networks, may be the reason to why Mom today serves as President of Cambodia Women Entrepreneurs Association (CWEA) that started in 2011, where she represents 500 other women-owned businesses.

Women in business

For her, having women taking greater part of business is not just a matter of greater economic empowerment for the individual women but also broader, sustainable development on country level. If women are more included in the labour market and are enabled to run their own businesses, it strongly contributes to the welfare of the family as well as the community, eventually enabling national economic and social development.

Inclusion of women also makes good business sense. According to her experience managing the business she has observed that women in management are often more efficient than men. In her opinion, women are more responsible and capable in managing workload – both in terms of carefully taking care of details while seeing the overall, holistic goal of the business. She also points to the fact that women are more capable of adapting well to cost reductions, improving staff conditions that reduces turnover rate, accommodates different communication styles and thus reach target audience and continuously seek better solutions compared to men. Mom describes how most women on all levels of the business work and delivers results from their heart; not only for the paycheck.

With a strong history of family businesses, in Cambodia it’s common that businesses are either co-founded and/or co-managed by couples. Mom describes how the woman’s level of influence in this co-venture impacts the performance of the business. Businesses without the woman’s influence only achieve limited growth in comparison to businesses with female leadership influence. In addition to the skills already mentioned, women have the ability to see the long-term vision of the company and ensures that it runs accordingly. As such, the woman’s influence has a great importance in business, says Mom.                                                                                       

Despite the hurdles, Mom is today proud of her business and thrives on the recognition from government, other actors in the private sector, development organizations – both local and international.  In her role today, she serves as a role model for other women in business and aspiring entrepreneurs. With multiple awards under her belt, including the prize from Ministry of Women Affairs for recognition of her work on gender inclusion in business, she’s now approached by multiple investors that seek partnerships.

That said, Mom also reflects over the fact that there are few women that manages to scale their businesses.

“According to research, 65% of women entrepreneurs own small and medium enterprises, while very few own large enterprises. I think that some women business have failed because they just stayed at home or in the market. They were less knowledgeable on business than their male counterparts. So when they face obstacles they become frightened and retreat. I’ve also noticed that many women entrepreneurs do not have business plan and lack financial management skills.” – Mom Keo.

Sustainable business practice

For Mom, it was the commitment to bring quality products that have been produced with high safety standards to the market that kept her going when hurdles persisted. In addition, with the previous vendor experience, Mom had learnt how to observe market trends over time. For example, she observed that Cambodian consumers previously have had strong preference for products from Thailand, which was later changed for Vietnamese and Chinese products. As such, she understood that the market would eventually turn in her favor. Today local products have the highest preference amongst consumers and they are more willing to pay for it.

However, for every decision a careful risk analysis is performed. Mom points out that it’s inevitable that a certain number of risks will need to be taken in order to grow the businesses but for every decision, a sound cost-benefit analysis needs to be carried out. The recent expansion of the business into sustainable dried fruits and vegetables from Cambodian smallholder farmers embeds incurred a high risk. Firstly the supply chain for this type of product is not fully developed, in either Cambodia or globally. Secondly, the new product would require new technology: technology that demands different operations, expertise and compliance with new quality standards. Thirdly, the company was going to secure its supply from a completely different source: smallholder farmers producing fruit and vegetables. In comparison to other commodities, there is only a limited number of farmers producing the desired crops at a reasonable scale and due to the seasonality aspects of these commodities it would be difficult to build a sustainable and consistent supply chain. Furthermore, it will take time to build trust with them and to train them to understand the required standards including technical specification of each crop that the farmers previously haven’t had to take into account.

Although the innovation means a number of social and economic benefits for the farmers, Mom initially assessed this risk as too high to take. This was until the support by IAP was offered.

“So far, there are a lot of projects approaching LyLy for collaboration and LyLy has partnered with them in manufacture nutrition foods, complying standards, applying green environmental standards, provide knowledge and training on food safety… but none of them have offered to share the risk in starting up a new production line and offered support in building up a supply chain like IAP does”. – Mom Keo.

With the support from IAP, LyLy will be able to explore this inclusive business opportunity, which has the potential to create new jobs and secure market channels for farmers. In addition, Mom will be able to meet the market preferences for locally sourced and produced products.