Empowering Women: Our Insights On Effective Gender Lens Investing

Empowering Women: Our Insights On Effective Gender Lens Investing

Around the world, women entrepreneurs provide for their families and transform their communities in unique ways. Years of research show that investing in women’s economic empowerment can strengthen local communities and in turn promote economic development globally — a key objective of the Sustainable Development Goals. Yet, according to the 2017 Global Findex Database, more than 1 billion women remain outside of the financial system. And the International Finance Corporation has found that a $287 billion financing gap exists for formal, women-owned small businesses.

We at Kiva have seen firsthand the impact of investing in women – since 2005, we have provided over $1 billion in loans to nearly 3 million women. From an artisan woodcarver working to send her children to school in Ghana, to a single mom making ends meet through her food shop in Paraguay, our loans and greater access to capital enable women to start and grow businesses, become more resilient to financial shocks, and invest in education for themselves and their children. In partnership with our global network of over 150 financial service providers and social enterprises, we have developed a deep understanding of women’s economic needs, enabling us to pursue a new initiative to advance the financial resiliency of women on a global scale.

With catalytic funding from USAID INVEST, our asset management subsidiary, Kiva Capital, has begun developing an impact-first, gender-lens investment vehicle to activate  $100 million in institutional capital to support women globally. This strategy will advance women’s economic empowerment and financial resilience by investing in a globally diverse portfolio of gender-forward companies that pursue best practices in gender equality at their organizations and with their stakeholders. 

Understanding the Gender Lens Investing Landscape

To help inform the evolution of its gender strategy, Kiva recently surveyed the gender lens investing (GLI) landscape. With a focus on financial inclusion in emerging markets, we analyzed sector-wide data and interviewed key industry stakeholders to understand the existing gaps and opportunities. 

With growing funds, resources, and networks, the trend in gender lens investing is promising, but the gaps investors are looking to address are persistent and necessitate dedicated approaches, especially in the face of the pandemic. Our report provides evidence that while microfinance has been a driver of economic opportunities for underserved women globally, a more well-rounded GLI approach is required to generate the level of impact necessary to truly advance financial inclusion for women.

Kiva Gender Lens Investing Landscape Report 2021 

We hope the report can help contribute to the growing GLI landscape and provide useful insights for others working in this space. We believe the findings summarized below will be applicable for those working on gender lens investing strategies with financial service providers, and to a broader extent small and medium-sized enterprises (SMEs) in emerging markets..

Adopt a Holistic GLI Approach

In the broader GLI landscape, the number of approaches for investing with a gender lens has diversified over the years, but many of these investments tend to focus on just one area (e.g. women in leadership, workplace equity, or women as clients) instead of espousing a more comprehensive approach. The adoption of multiple GLI approaches that are applicable to investments can allow strategies to work in concert, reinforcing one another and leading to lasting impact. 

A majority of GLI funds do employ more than one GLI approach within their portfolio. When it comes to the microfinance sector, we found gaps across all key approaches, ultimately limiting the impact that microfinance institutions can have on women’s economic empowerment. This means future funds have a clear opportunity to employ a more comprehensive set of GLI approaches and incentivize other stakeholders to think holistically about their GLI approach.

Collect Better Data

In our discussions with various stakeholder groups, all agreed that data collection and analysis were a challenge. For gender experts and investors, the lack of outcome-level data was noted as a key limitation. Investees, meanwhile, expressed that they often lack the resources necessary to collect outcome-level data. Simply counting the number of women reached is not enough to drive effective GLI. To truly learn how best to serve women through GLI, we need to analyze data at both the output and outcome level. This will enable investors and other stakeholders to understand the long term impacts of an investment and the true impact on women.

Opportunities for improved data collection and analysis include lean data assessments, more gender-disaggregated data, and use of data to inform policies and product design for clients. Where possible, investors should discuss insights drawn from gender-disaggregated data with portfolio companies, and encourage those companies to capture and leverage the data to sharpen their own business strategies. 

Without the intentional and systematic collection of outcome data across investments, we will not be able to truly understand what works (and what doesn’t) in microfinance to advance women’s financial inclusion.

Understand Intersectionality

Intersectionality is often discussed in “developed” markets. However, women in emerging markets, including women from racial or ethnic minority groups, women living with disabilities, women refugees, and a host of others — all face compounded barriers to financial inclusion due to their intersecting identities. Gender is only one aspect of a woman’s social and political identity that leads to financial exclusion, and the GLI space has a long way to go in understanding and implementing an intersectional lens alongside a gender lens.

If we want GLI to truly advance financial inclusion for women, products and services must be designed to address barriers that women face due to other aspects of their identity. This is yet another reason why investors and investees should work to prioritize sound data collection practices and incorporate borrower voice into product design — the results can be immensely powerful for addressing the intersectional challenges of women’s lives.

Provide Capital with Additional Support

Companies often lack the capacity and resources to implement a gender lens across their operations, products, and services. By coupling financing for financial institutions with technical assistance, investors have an opportunity to support the implementation of a gender lens in ways which benefit both the institution and their clients.

At the client level, support for technical assistance to develop capacity building activities will also lead to better outcomes for women. Decades of microfinance efforts have clearly shown  that financial products alone are unlikely to lead to the full financial inclusion of women. The addition of business training and mentorship programs can level the playing field and lead to better financial outcomes for women and their businesses. Our research in Southeast Asia and the Pacific in early 2021, similarly found that one of the most requested services from women entrepreneurs was business training opportunities and support to develop the skills needed to efficiently operate their businesses.

Capital coupled with non-financial resources, including institution-level technical assistance and targeted training opportunities for women, has the potential to improve both investment and impact outcomes.

Our Continuing Role

Kiva is committed to supporting women to pursue their aspirations and exercise decision-making power at home and in their communities. Moving forward, these findings will inform Kiva Capital’s gender lens investing strategy, fund development, and will shape both our own research and data collection priorities as well as how we evaluate impact from an intersectional lens. This also includes the design of a technical assistance facility that will support our partners to design and launch gender-forward products and services. Through technical assistance, we aim to facilitate improved data collection and analysis, the implementation of gender equitable policies and practices, and improved design of products and services that advance women’s economic empowerment. 

Our goal is to continue identifying the needs of women, especially those from marginalized groups or in underserved areas, and incorporate their feedback into the financial solutions we deliver across our portfolio. In sharing our learnings, we hope to build the capacity of impact investors to better support women through capital and understand how and when gender lens investing is most successful. 

We are deeply grateful for USAID’s partnership in this effort. We are committed to sharing these learnings with the wider impact investing community and plan to do so in the coming months by hosting the Gender Equity + Financial Inclusion Forum with support from USAID. Through this Forum, we will bring together investors, gender lens investing experts, financial service providers, and social enterprises committed to advancing gender equity. Together, we will tackle challenges the community is facing in closing gender gaps in women’s economic empowerment and financial resilience.