Investing in women for recovery

Pursuing equality makes the difference between just building back and building back better. By Joanne Manda and Karanraj Chaudri

Malala Yousafzai, the 2014 Nobel Prize winner and human rights activist once said, “We cannot all succeed if half of us are held back” and the truth of her words is even more poignant today.

The Covid-19 pandemic has forced us to reconsider many crucial aspects of modern society. Extended periods of lockdown, quarantine and social distancing have had a profound economic, social and psychological impact on us all, including how we live, work, socialise and consume. However, these impacts have had a disproportionate impact on women.

With continuing lockdowns and hundreds of millions of children out of school, the increased burden of childcare has been severely restricting for women in employment and women entrepreneurs. Women continue to be primary caregivers tasked with fulfilling domestic responsibilities. Women are also at the forefront of the overburdened healthcare sector, which puts them at direct risk of contracting Covid-19.

Asia-Pacific is home to some of the largest economic powerhouses of the 21st century and yet there is a persistent gender gap with regards to women’s access to and inclusion in financial systems. Socio-cultural norms coupled with disparities in access to everything from education, healthcare and technology to finance, legal and land rights has presented a host of obstacles to realising the full potential of women.

According to the IMF, the economic loss arising from the disempowerment of women was estimated at 10% of GDP in advanced economies and 30% in South Asia.

The Covid-19 pandemic has put a spotlight on these gender disparities worldwide. Womenowned businesses in the formal sector, which are skewed towards smaller firms and consistently grapple with access to finance and investments, tend to have more restricted growth trajectories.

FINANCIAL CUSHION LACKING

Women-led enterprises are known to hire more women, which has a knock-on effect on women’s participation in the workforce. But downturns in the investment climate and recessions, including those caused by the pandemic, have a higher negative impact on these enterprises as they often lack a financial cushion to weather long periods of uncertainty.

The informal sector is a major employer of women in the region. For example, in South Asia over 80% of women in non-agricultural jobs are in informal employment. Women in the informal sector possess little job security in periods of lockdown and recession, and in most cases they are also not eligible to receive Covid-19 benefits released by national governments.

January this year marked the start of the Decade of Action, with only 10 years remaining to achieve the Sustainable Development Goals (SDG), a key pillar of which is SDG5 — gender equality. Investing in women represents the difference between building back to where we were before the pandemic hit and truly building back better.

As governments across Asia-Pacific roll out economic stimulus packages, it will be essential for them to dedicate resources for womenled enterprises including those in the informal sector. Impact-linked loans, wherein part of the interest repayments is linked to predetermined metrics, could be tied specifically towards supporting SDG5.

While governments can do more to highlight, prioritise and earmark resources, the role of private capital cannot be understated. In fact, the private sector has a critical role in advancing the economic empowerment of women.

Gender Lens Investing (GLI) is an incredibly important tool. GLI comprises investments that can increase access to capital for women entrepreneurs, promote gender equity in the workplace, or support the development of products and services that primarily benefit women.

Examples in Asia-Pacific include the Women’s Livelihood Bond Series, developed by the Impact Investment Exchange to empower over a million women and their families in the most vulnerable communities.

FLEXIBLE TERMS

For the micro, small and medium-sized enterprises (MSMEs) sector, a third of which are women-owned, this also means offering financing products with longer, more flexible repayment terms for female-owned businesses. Similarly, blended financing that provides capital at concessional rates could be used for more mature enterprises, particularly those that cater to underserved markets.

Finally, innovative financing approaches such as pay-for-success instruments, wherein the financial risk is shifted from traditional funders, primarily governments, to private investors, have witnessed several successful pilots. An example is the Educate Girls Impact Bond in India, established to improve the education outcomes of 18,000 schoolgirls.

Clearly the tools, frameworks and institutional mechanisms to direct increased financing towards women already exist. They have been piloted, tested and refined. What is needed now is to bring these approaches front and centre, and prepare to scale.

The Covid-19 crisis has laid bare the underlying inequalities and vulnerabilities of millions of women. The inclusion of women is essential for ensuring recovery plans are effective in rebuilding more robust national economies and that social equity becomes a foundation of national resilience.