How Do We Make Finance Work for Women? Start by Listening to Them

There’s been a lot of energy around “gender lens” investing in recent years, and for good reason.

This week marked the biennial Making Finance Work for Women summit, hosted by Women’s World Banking and partners. The summit brings together global investors, policymakers, researchers, and others focused on promoting women’s financial inclusion. CGD partners with Women’s World Banking through She Counts, an initiative dedicated to increasing women’s ability to save more securely, invest in their businesses, and exercise control over their finances. The Making Finance Work for Women summit, and the important conversations it sparked, followed a smaller gathering on a related topic co-hosted by CGD last week—Gender Lens Investing in Practice: A Conversation Between Investors and Investees.

As reflected in each of these events, the evidence tells us that women continue to face disproportionate barriers in accessing finance and other support as entrepreneurs, entering and advancing in the workforce as wage workers, and even accessing products and services that fit their needs as consumers. At the same time, we have a tremendous social and financial opportunity to grasp, because identifying effective ways to support women as entrepreneurs, workers, and consumers can increase gender equality, improve financial returns, and promote a more inclusive form of economic growth—one that benefits women, and, in turn, their families and communities.

With this evidence in mind, development finance institutions (DFIs) and other investors have sought to integrate a gender lens into their investment strategies through efforts such as Banking on Women, the 2X Challenge, and the Women Entrepreneurs Finance Initiative. Many of these initiatives are in their earliest stages, so there’s still a lot to learn about how gender lens investing works in practice, how it differs from “business as usual” financial investment, and the impact it’s having.

Those are the questions we explored at last Friday’s event, which began with lightning talks by three women entrepreneurs in the fields of agribusiness, childcare, and financial technology. Rosario Bazan, CEO and founder of DanPer; Priya Krishnan, CEO and founder of KLAY; and Viola Llewellyn, president and co-founder of Ovamba Solutions discussed the challenges they’ve faced in starting and growing their businesses, their efforts to promote gender equality in their workforces, and how they’re supporting women as consumers. 

First, Rosario Bazan spoke about pushback she faced from her own business partners, who feared that investors would discriminate against a woman as CEO of DanPer—an agricultural business in Peru. She also discussed her efforts to promote gender equality in her workforce by prioritizing fair compensation, health services, and educational benefits for employees.  

Priya Krishnan then discussed how KLAY, a childcare business in India, is serving women and their families as consumers by enabling women to rejoin the workforce confident that their children will receive quality care. She highlighted how hiring a predominately female staff has allowed women from socially conservative families to enter the workforce when they otherwise would have faced resistance within their households.  

Finally, Viola Llewellyn discussed channeling her experiences with adversity into her ability to raise capital for and grow her financial technology business, Ovamba Solutions, and how she and her male co-founder complement one another’s strengths to make their business more successful.

Following these initial talks, CGD senior policy fellow Nancy Lee chaired a discussion between Rosario, Priya, and Viola and three DFI representatives: Suzanne Gaboury, chief investment officer at FinDev Canada; Kathryn Kaufman, managing director for Global Women’s Initiatives at OPIC; and Graham Wrigley, chair of the board of the CDC Group. Here are some key takeaways from their discussion:

It’s early days for gender lens investing. When asked how OPIC has made gender equality a core part of its business model, Kathryn Kaufman responded with refreshing candor, saying “I would say that it’s not a core part of our business strategy. We are trying so hard to make it a core part of our business strategy.” Here’s how OPIC is doing that: 

Graham Wrigley, speaking as a representative of another long-standing DFI, echoed this sentiment, saying that gender wasn’t core to CDC’s initial investment strategy, but in recent years the momentum around gender has grown. Suzanne Gaboury discussed the experience of OPIC and CDC’s counterpart, FinDev Canada, which started out with gender equality as a core priority (in addition to job creation and climate change action), but with its founding in 2017, is also still in the early stages of identifying and supporting investees.

We see promising steps in the right direction. Rosario Bazan pointed to her observation of more investors (often driven by the preferences of consumers) prioritizing sustainability, fair work practices, and gender equality, citing the examples of FinDev, the Inter-American Development Bank, and even the Swiss market. We see additional examples in 2X Challenge, which brings together all G7 DFIs as well as those from the Netherlands, Sweden, Finland, Denmark, Switzerland, and the European Investment Bank. 2X Challenge sets criteria for what constitutes a gender lens investment related to the ownership/management of a business or intermediary fund, gender breakdown of a workforce, and the gender-responsiveness of the products or services firms are providing. This sets a clear and transparent standard for DFIs (and one that ideally can become even more ambitious over time). Individual DFIs have undertaken their own related efforts, such as CDC Plus, which focuses on providing technical assistance to investees to increase their development impact, and OPIC’s effort to become EDGE certified to demonstrate their commitment to gender equality, and ask that their partners do the same.

There’s more work left to do. Investees shared their perspectives on where progress is still needed, pointing to the importance of providing mentorship and skill support in addition to financial capital to overcome the additional constraints women entrepreneurs face, as well as encouraging intermediary funds (many of which are entirely men-dominated) to hire more women. That said, they noted that even increasing the number of women-led funds is not sufficient to drive support for women as investees, given that women as investors may still hesitate to invest in women-led companies, fearing failure if they step outside “traditional” (male-dominated) investments.

Addressing these challenges will require more of these honest conversations, through which investors like OPIC, CDC, and FinDev are able to listen to and learn from their investees, as they seek to ensure their investments narrow gender gaps in the global economy.