Gender Finance

Summary

In 2014, IFC partnered with Goldman Sachs 10,000 Women to launch a first-of-its kind facility, designed to unlock finance for women-owned small and medium enterprises (WSMEs) in developing and emerging markets, and close the significant financing gap they face.

The Women Entrepreneurs Opportunity Facility’s (WEOF) mission was not only to expand and deepen financing for women entrepreneurs, but to empower them through access to expertise, while demonstrating the commercial viability of investing in women by attracting external investors. To achieve this, an ambitious goal was announced to reach and support 100,000 women entrepreneurs, enabling the investment of $600 million into WSMEs through financial institutions. A decade on, the results are clear, with more than 2.5 times that number of women entrepreneurs reached and over five times the target capital invested.

In addition to serving thousands of women-owned businesses, WEOF has fostered strong performance among its partner banks, which continue to report healthy growth and superior asset quality in their WSME portfolios.

As WEOF’s ten-year mission comes to a close, this report surveys the impact, innovations, and lessons learned — looking ahead at what more can be done to unlock opportunity for women entrepreneurs globally.

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• Women represent a distinct and profitable customer segment that is often underserved by traditional financial products and services.
• Financial institutions must identify, acknowledge, and address gender biases rooted in cultural norms, stereotypes, and institutional processes.
• A structured approach, including understanding gender dynamics, building organizational capacity, and designing inclusive products, helps integrate a gender perspective into their operations.
• This report presents ten guidelines that financial institutions can follow to adopt a more intentional strategy towards the financial inclusion of women.

This report offers strategic and actionable guidance to policymakers in strengthening their access to finance policies for small and medium enterprises (SMEs). This report emphasizes the need to improve the enabling environment for SME debt and equity financing. It outlines a roadmap of eight key actions to guide policymakers in achieving this. While such reforms are necessary, they are often insufficient to fully address SME financing constraints. Targeted financial programs thus remain essential to bridge the financing gaps effectively. This report outlines seven actions to improve the design and implementation of these interventions to maximize their impact and the effective use of public funding. This report also underscores the importance of a tailored approach to address the distinct challenges faced by specific SME segments, particularly those of women-owned (and led) SMEs, SMEs in agriculture, SMEs in fragile and conflict-affected states, and those seeking financing for climate change adaptation and mitigation.

Fintech and digital financial services have been considered a game-changer for women's financial inclusion and economic empowerment. Until now, there has been limited research that quantifies the degree to which fintech firms are actively addressing women's financial inclusion and the specific strategies that are showing success.

To fill this gap, IFC conducted a survey of 114 fintech firms in emerging markets around the globe. The report, Her Fintech Edge: Market Insights for Inclusive Growth, provides insights from fintech firms about their own perceptions and practices to deliver services to women's customer segments.

"What is clear from this study is that strong behavioral gender differences, as well as barriers, call for fintech firms to offer differentiated solutions for women, said Emmanuel Nyirinkindi, Vice President of Cross-Cutting Solutions, IFC. "In doing so, fintech firms can unlock the full potential of the women's market – a valuable customer segment that exhibits greater loyalty, lower default rates, and strong revenue generation." 

The survey findings show that women still make up a minority of fintech portfolios, with 63% of the lending-focused fintech firms reporting that women-owned small and medium sized enterprises (SMEs) make up less than a quarter of their portfolio.

Nevertheless, the report highlights that there is a strong business case for fintech firms to serve women customers. The majority of fintech firms consider women to be more loyal, less risky, and more or equally valuable customers than men. The survey found that 69% of lending focused fintech firms believe women's loyalty is greater than or equal to that of men.

The presence of leaders who have internalized the social or commercial value of serving women is the strongest internal driver for firms intentionally targeting women. The survey found that 58% of firms attribute their strategic focus on women to leaders' belief in the importance of women's financial inclusion.

To target women intentionally, the report explains that fintech firms need knowledge, research, financial support, and technical assistance to fully capture the women's market.

The Forum established the Women’s Entrepreneurship Finance CoP (WEF CoP) Practice for groups of practitioners from member institutions to meet and share experiences, seek solutions to challenges that they face in financing women-SMEs. Since launching in 2022, the WEF CoP has evolved into a powerful example of how to empower women entrepreneurs through financial awareness, tailored financial services and promoting financial inclusion for women-led SMEs.

The primary goal of WEF CoP is to translate shared experiences and insights into practical knowledge applicable to better serve women-owned and women-led SMEs (W-SMEs). As a member driven community, it draws on the collective knowledge and experience of industry leaders and practitioners across regions, together with experts from IFC. The platform has facilitated knowledge sharing and connections amongst over 500 industry practitioners, providing practical solutions that members implement in their operations.

The community fosters open discussions, sharing insights, and exchanging ideas on various practical topics relevant to women entrepreneurs, including product design and delivery, business development, risk management, alternative data utilization, legal and regulatory matters, and more. Additionally, it provides a space to discuss the unique challenges faced by women entrepreneurs, fostering the exploration of mitigation techniques and solutions. Through this dialogue, members collectively contribute their unique cross regional experiences and insights, enriching the knowledge pool that benefits both women-owned SMEs and financial service providers.

On International Women’s Day/ Month 2024 we are pleased to showcase the remarkable work and impact of our member community in their respective markets and regions. Fostering partnerships, technology, and innovations, members develop unique solutions and products towards sustainable financial services for W-SMEs. These unique stories reflect the tremendous collective impact of our community in providing financial services to W-SMEs, thereby, closing the gender finance gap and facilitating W-SMEs full contribution to the global economy.

Here are some of the captivating stories and innovative initiatives from our remarkable community:

•  Small Business Silver Lining supports small business owners through its Silver Lining Action Plan (SLAP), a tech-enabled, data-driven program, which helps users set defined goals and plot an attainable route to them using behavioral psychology. Silver lining has worked with 14,000 small businesses in more than 76 countries, helping them to become more profitable and sustainable. Read more

• Overview of the European Investment Bank’s support for gender equality and women’s economic empowerment. It details the Bank’s activities in the sector and highlights key projects. The stories, videos and case studies, illustrate how the Bank’s financing and advice help countries, regions and cities. Read more
   
• Alraedah provides financial services to women-SMEs to achieve their business and personal financial goals, and thereby improve lives. In this video see how Alraedah supported the small dream of a W-SME into a leading confectionary business in Saudi Arabia. Watch the video
   
• Stanbic IBTC’s strong commitment to empowering women led to the creation of an innovative value proposition called Blue Blossom. This unique offering provides women in business comprehensive financial (bank and non-bank) and non-financial benefits, empowering women to take control of their finances, future and live a fulfilling lifestyle. It provides solutions aimed to foster the growth and success of women entrepreneurs.
  The GoBloom Community’s value proposition recognizes that today’s woman requires tailored non-financial solutions alongside comprehensive support to foster learning, connections, wellness, and personal development. Read more
   

• FMO - Dutch entrepreneurial development bank's innovative women and climate project empowers rural women entrepreneurs in India and promotes the use of clean energy products to drive change. Read more

• Access Bank Plc innovative 'W' initiative tailors products and services to meet the unique needs and requirements of women SMEs. In this video a client shares her experience, and the impact of the W-Power Loan on her business. Watch the video
   

• Funding Societies | Modalku Group offers innovative alternative financing services to women-SMEs. In this video, the founder of a fast growing cookie bakery in Malaysia attests to the benefits and flexibility of Funding Societies | Modalku Group's Digital Financial Services. Watch the video