Post-Event Resources: Promoting Gender Equity Through Finance
On February 24, 2022, the USAID Private Sector Engagement (PSE) Hub held "Promoting Gender Equity Through Finance," a webinar in the Mobilizing Finance for Development (MF4D) series. Check out the event page to read the panelist biographies.
Key Event Highlights
Gender Equality and Women's Empowerment:
- Women are making significant strides in their access to global wealth. Worldwide, women make or influence between 75-80 percent of purchasing decisions, and earned in 2020, an estimated $24 trillion in income.
- The World Economic Forum’s 2021 Global Gender Gap Report estimates that it will take nearly 270 years to close the gender economic opportunity gap. In addition, the IFC estimates a $300 billion gap in financing for formal, women-owned small businesses globally.
- USAID INVEST is working to influence systemic conditions and encourage gender-smart financial transactions at scale.
- INVEST partnered with the Toronto Centre to develop a toolkit that will help financial supervisors consider and integrate gender equity into their supervisory practices and improve enabling conditions for women's financial inclusion.
- INVEST has supported seven blended finance funds that aim to raise $382 million to make gender-smart investments to close the gender financing gap.
Panelist Project Overview
Gender Investment Framework & Toolkit:
- The World Council of Credit Unions (WOCCU) provides women with training on digital marketing to market their products on apps like WhatsApp and Facebook.
- Women entrepreneurs face challenges to access credit and are often constrained by social norms. To address this, WOCCU partnered with Le Partenariat pour la Mobilisation de l'Épargne et le Crédit au Sénégal (PAMECAS), a credit union in Senegal, to create a toolkit and framework to better understand and meet the financial needs of women.
Ilu Women's Empowerment Fund:
- The Ilu Women’s Empowerment Fund, a $35 million fund invested in 25 primarily mid-sized companies across Latin America and the Caribbean, supports portfolio companies and initiatives such as designing financial products for women, developing diversity and inclusion policies, strengthening information systems to collect gender-disaggregated data, and developing women’s career networks.
- The Ilu Women’s Empowerment Fund assists women entrepreneurs with challenges such as restrictive social norms, insufficient financial products, complex credit application processes, and a lack of access to networks and skill-building opportunities.
Women's Livelihood Bond (WLB) Series:
- The Women’s Livelihood Bond addresses the lack of access to affordable credit in Southeast Asia by partnering with the Singapore-based Impact Investment Exchange. This partnership mobilizes $100 million in new sources of private capital to bolster sustainable livelihoods for over two million women in the Association of Southeast Asian Nations (ASEAN), and the greater Indo-Pacific region.
- The Women’s Livelihood Bond pulls together a basket of borrowers to issue a collective bond for women-focused enterprises or supporting women’s livelihoods.
Working with the Private Sector
Q: What was it like working with private sector financial executives? How did your goals align?
A: William Trigg: Private sector financiers work on a level which is much faster and less bureaucratic. Coming from the government, you have to be careful to ensure that our equities as development professionals are taken into account every step of the way.
Addressing Change in the Marketplace
Q: What are the barriers to mainstreaming gender equity finance solutions? How can these barriers be addressed?
A: Sophie Romana: People and institutions don’t know where to start; launching a gender lens investment or gender mainstreaming process can seem daunting. To address these barriers: 1) more and better information is key; 2) work with organizations that can have a systemic footprint (i.e., government, federations, larger organizations); and 3) make the business case for women clear. Demonstrate that it makes good business sense to invest in women by going beyond the moral imperative of equity or social justice to show that gender investing makes sense for the bottom line.
A: Rachel Murphy: Companies need ongoing accompaniment as they dig deeper into gender disparities within their company or region. Companies need to build this in-house expertise, while having continued availability of experts and resources. While there’s no one-size-fits-all approach, there are frameworks and best practices that can be replicated and adapted to each company. Finally, there are limited financial product offerings that have a gender lens approach, so it’s important to provide a low-risk entry point to this space.
A: William Trigg: In Southeast Asia, the main barriers are barriers to entry. To change mindsets: 1) give bankers the information to understand that new markets are in micro, small, and medium-sized businesses, which are majority women run in Southeast Asia, and; 2) demonstrate that success breeds success.
Q: How do we influence changing social and gender norms that contribute to the challenges women experience in accessing financing?
A: Sophie Romana: When we did the market assessment in Senegal, we found there was a perception that women are not good entrepreneurs. However, the data PAMECAS has on their clients shows that women repay on time, and ahead of time. So we need to switch perceptions, and incremental changes can help do this. For PAMECAS, we lowered the bank’s collateral requirement and increased the ceiling on the first loan, which incentivized women seeking finance. If we keep building on incremental change, that’s how we’re going to be able to change gender norms.
A: Rachel Murphy: There’s also a need for training at the company and individual level around gender awareness. And in addition to commitments and training, we need to systematize that [awareness] through policies and procedures. We need to message beyond “why you need to be a part of this movement” to say, “this movement is already happening and you are at risk of being left behind, which will affect your bottom line.”
Q: How are you measuring systemic change, impact, and the social return on investment?
A: Rachel Murphy: We need to monitor not only the implementation of the initiatives, and the direct kind of outputs and impacts of those, but also connect those to overall business performance. For the Ilu Fund, we use an annual gender scorecard to track specific indicators. The next frontier of this movement is generating more data.
A: Sophie Romana: At the level of a microfinance institution or credit union, the only systemic impact we can look at is the adoption, change of policies, and continuation of gender lens investing.
The Women's Livelihood Bond (WLB) Structure
Q: Can you speak more about USAID’s role in the WLB structure? How did they provide a value add to the structure, at the risk of making an already complicated structure more complex?
A: Will Trigg: We are more or less a subsidy or an insurance on the bond. How is that value added?: 1) our money buys a piece of insurance that guarantees the bond will be repaid, and; 2) the U.S. government and other big investors, provides investors with a sense of security.
Q: Can you talk a bit more about the lower cost for credit unions to serve women?
A: Sophie Romana: PAMECAS’s data on the percent of loan interest rate allocated to cover the risk presented by those loans demonstrates that women represent 0.8 percent of risk, compared to 2.4 percent for men. In general, women have a lower risk because they are taking smaller loans as they have a much lower credit ceiling. We need to realign credit processes and credit products to make better products for women.
Q: From the view of the Ilu Women’s Empowerment Fund, was there a calculated cost per person to directly impact 1,800 women? Was this a cost-effective investment?
A: Rachel Murphy: USAID INVEST provided $1.3 million to implement the Ilu Women’s Empowerment Fund initiatives. That’s about $700 per person, discounting the fact that individuals outside of those 1,800 women are impacted by the companies [receiving investment from the fund] and initiatives they are implementing. We’ll be doing further analysis later on. As fund managers, this question of cost is interesting because it helps lower the risk of the loan, and makes these companies more attractive.
Tools and Resources
Q: How can interested organizations navigate open source gender lens investing tools in the market? How does the Ilu Toolbox compare to other tools?
A: Rachel Murphy: The Ilu Toolbox is a one-stop-shop for SMEs in an emerging market context that want to start the gender-smart journey, but don’t know where to begin. It starts with a quick assessment to get a snapshot of your strengths and gaps, and then directs you to a certain gender lens [approach] and its tools. There’s a lot of tools on the market, and our hope is to provide a centralized source of information.
Q: What are some resources to support women fund managers?
A: 1. ILU Toolbox
2. WOCCU Gender Lens Investing Framework and Toolkit (GIFT): coming soon! Please follow their website for updates.
3. RENEW SME Gender Growth Acceleration (SG2X) Playbook: coming soon! Please follow their website for updates.
Key Event Highlights
- Mobilizing Equitable Finance by Addressing Systemic Gender Bias
Mobilizing Finance for Development (MF4D) Webinar Series Resources
- Mobilizing Finance for Development Marketlinks Course Landing Page
- Mobilizing Finance for Development – A Comprehensive Introduction
- Vignettes Handbook – Mobilizing Finance for Development
- Finance Wiki