What happens when a country reimagines its business environment to boost women’s economic empowerment?
A momentous shift is occurring in one of the smallest countries in the world: Tuvalu, a Pacific archipelago halfway between Australia and Hawaii that is home to just a little over 11,000 people.
Since gaining independence in 1978, the public sector has been Tuvalu’s main economic driver, serving as its leading employer and primary services provider.
The government has long prioritised tourism promotion and climate change adaption, as low-lying Tuvalu is highly vulnerable to rising seas.
Over the past three national strategic plans, it has also sought to stimulate the growth of the private sector, which is dominated by micro enterprises – 80% earn less than US$ 5,000 a month – and women entrepreneurs, who own around two thirds (65%) of all businesses. Yet these measures have not significantly increased the private sector’s contribution to the economy.
Diagnosing the business environment through a gender lens
Seeking a new approach, Tuvalu’s Department of Business & Investment requested technical assistance from the ICR Facility to conduct a gender-sensitive diagnostic analysis of the country’s business environment and identify constraints to growth. The ICR Facility conducted research and produced a report with validated findings and recommendations to support inclusive development.
The diagnostic involved desk research, focus group discussions with women leaders and stakeholders from the public, private and civil society sectors as well as consultations with development partners and academics.
The results offered valuable insights, says Irene Danquah, who oversaw the project for the ICR Facility. For example, Tuvalu’s high proportion of women business owners did not, in and of itself, equate to women’s economic empowerment as most were engaged in necessity entrepreneurship – that is, starting informal micro-businesses simply to put food on the table.
According to Augea Alemenia, a business development officer at the Department of Business & Investment who worked on the diagnostic and subsequent reforms, “Having the findings from the ICR Facility was really helpful. This was the first time we could see all the issues and challenges facing women business owners in a single document.”
The diagnostic findings were presented at a stakeholder validation workshop in September 2023, and the feedback helped shape recommendations for Tuvalu’s first ever gender sensitive investment strategy.
Turning insights into action
The recommendations aimed to create a more conducive business environment for women and youth entrepreneurs that would foster opportunity entrepreneurship and create “structures to empower women to build and scale sustainable businesses if they chose to,” says Danquah. They also aimed to attract more foreign and domestic investment which would advance women’s economic empowerment, given the proportion of businesses owned by women.
However, the success of the proposed reforms depended largely on the government’s willingness to act, and Alemenia recalls that his then department Secretary made them his office’s top priority. These reforms include:
- Accelerated business registration
The Attorney General’s office has streamlined the business registration process, which benefits women particularly. Sole trader registrations, commonly used by women entrepreneurs, that previously took one or two months must now be processed within two business days. Moreover, all business registration fees have been waived.
In addition, the Department of Business & Investment now offers training to women on business ideation, registration and licensing and encourages participants to register their enterprises.
These changes have lowered barriers to entry, promoted business formalisation and increased registrations by women.
- An inclusive National Investment Policy
The diagnostic directly informed the drafting of Tuvalu’s first National Investment Policy. This policy reserves sectors such as handicrafts and fish vending for women, ensuring a protected economic space for female entrepreneurs and helping to preserve Tuvalu’s traditional arts and crafts sector, which is dominated by women.
- Access to capital
The diagnostic showed that access to funding was a major challenge for women seeking to start or grow businesses. In response, the Department of Business & Investment has worked with the Development Bank of Tuvalu to launch a new grant facility, funded by Taiwan. The scheme provides funding exclusively to women who have participated in the entrepreneurship training course offered by the Department of Business & Investment and presented a vetted business plan.
- Integration into national planning and budgeting
The diagnostic recommendations have been formally integrated into the Department of Business & Investment’s Annual Work Plan, ensuring they are recognised, funded and implemented in the upcoming financial year.
- Women’s voices in national dialogue
The diagnostic underscored the need to shift gender norms relating to entrepreneurship by showcasing successful women entrepreneurs in Tuvalu. To that end, the Department of Business & Investment organised a national conference on inclusive business that featured leading women entrepreneurs, promoted peer learning and encouraged entrepreneurship.
Open to all women, the conference allowed those in leadership roles to hear from women who rarely have a voice in national dialogue. “It was like an open door – a chance to see challenges beyond those included in the report,” says Alemenia.
- Tax policy reform
The Ministry of Finance adopted a progressive tax policy that exempts businesses with fewer than five employees, many of which are women-led, from paying taxes. Originally set for one year, the tax holiday has been extended indefinitely for small women-owned businesses.
It was influenced by strong female representation in policy discussions, including leadership from the female Director of Customs and Tax, and has been promoted via public events funded by Australia and Taiwan.
A foundation for economic resilience and inclusive growth
The cumulative effect of these inclusive reforms is expected to be felt across Tuvalu’s economy, unlocking untapped entrepreneurial potential and driving more equitable growth.
By expanding opportunities for women, who already constitute a majority of business owners, the country is likely to see increased business formalisation, higher productivity, and stronger value chains.
These changes are anticipated to boost domestic consumption, create employment and diversify income sources, particularly in rural and underserved communities. And by supporting women to build successful businesses, these reforms may also yield broader social dividends, as women are more likely than men to spend on family health, nutrition and education.
Over time, this inclusive economic momentum could strengthen Tuvalu’s fiscal resilience, reduce dependency on external aid and foster a more vibrant, self-sustaining private sector that reflects the full diversity of its population.
Collaboration, commitment and gender-sensitive design
The results of the intervention are an example of best practice for the ICR Facility and could be replicated in other countries.
Key factors include the ICR Facility’s expertise and capacity as well as the Department of Business & Investment’s efforts to lead the intervention and build stakeholder support, despite the diagnostic being conducted almost entirely remotely. For Danquah, “This work showed that with the right local partner, digital collaboration is not only possible – it can be highly effective.”
Another key factor was establishing a shared understanding of the importance of women’s economic empowerment early on and agreeing that the diagnostic should be gender sensitive. Ensuring stakeholder buy-in and gender balance in all intervention phases were likewise crucial.
The results exceeded Danquah’s expectations, especially after the focal point at the Department of Business & Investment, Ms. Petesa Finikaso, was transferred to another unit and the department itself was moved to a new ministry following a change in government. “I was shocked – not because I doubted their commitment, but because in bigger countries, things can fall through the cracks,” Danquah says. “But they kept pushing.”
It’s proof that with a motivated local partner and international support change can happen quickly even in a small, remote country. “We need to talk about it,” says Danquah. “We sometimes forget about the Tuvalus of the world, but they’re doing amazing things.”
Find out more:
- The End of Assignment Report of the gender-sensitive diagnostic analysis of Tuvalu’s business environment provides a helpful overview of what it entailed.
- The ICR Facility has published a gender diagnostic checklist in the Investment Climate Reform Toolbox. This can be used as guidance provided it is adapted to the political economy of any country that is being assessed.
- The ICR Facility has developed a course on Business Environment Reform to Support Women’s Economic Empowerment. The course is offered online to specific categories of organisations (e.g. women’s business organisations, chambers of commerce, government offices working on business environment issues).
- The case study from Tuvalu is also described in the publication How to make the Business Environment work for Women’s Economic Empowerment?
The publication of this ICR Story were led by British Council (author: Adam Pillsbury). This was produced with the financial support of the European Union (EU), the Organisation of African, Caribbean and Pacific States (OACPS) under the 11th European Development Fund (EDF), the German Federal Ministry for Economic Cooperation and Development (BMZ) and the British Council.
The ICR Facility is implemented GIZ, the British Council, Expertise France, and SNV. The contents of the publication are the sole responsibility of the British Council and do not necessarily reflect the views of the EU, OACPS, BMZ or the other implementing partners.
