How Blended Finance Can, and Should, Support Gender Equality


The 2030 Agenda provides the opportunity to address the structural drivers of economic and social inequality and achieve sustainable development for all. It further recognizes women and girls as powerful agents of change in the implementation of the Sustainable Development Goals (SDGs) and acknowledges the crucial contribution they will make towards progress across all the  Goals and Targets. Despite this recognition, however, gender inequality remains entrenched in every society across the globe.

Women and girls make up half of the world’s population, but their potential remains untapped due to discrimination and violence, limited access to education and economic opportunities, and barriers to participation in decision-making processes. Today, women represent half the world’s working-age population but generate only 37% of the global GDP. While the 2030 Agenda states that “gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world,” and calls for “the systematic mainstreaming of a gender perspective in the implementation of the SDGs,” there are still significant challenges in realizing this ambitious goal. One of the largest barriers is the funding gap for SDG 5: Gender Equality. This, however, cannot be achieved solely by the provision of official development assistance (ODA), and requires crowding-in of commercial funding through “blended finance.” Blended finance is a mix of concessionary and for-profit capital that contributes to the achievement of the SDGs, and is being increasingly used by the public, philanthropic, and private investors as an investment structure.

The employment of blended finance for gender equality is growing. For instance, last year the G7 countries launched the 2X Challenge: Financing for Women, calling for their seven development finance institutions (DFIs) to commit to mobilizing $3 billion together with the private sector to advance women as entrepreneurs, business leaders, employees, and consumers, and enhance their economic participation. While this initiative is an important step towards reaching gender parity, the use of blended finance in achieving SDG 5 remains limited.

According to Convergence, of the 100 blended finance deals included in its database, only 25 percent were gender-related deals. While the gender-related deals were diverse in size, deal type, region and sector focus, and blending archetype, 80 percent had only a partial gender focus, meaning only 5 of the 100 blended finance deals targeted women specifically. In other words, there has not been as much emphasis on achieving gender equality as there should have been in  majority of the deals.

To date, the blended finance deals that included a principle gender focus were in health and education sectors. The proportion of deals with a principle and partial gender focus in the health sector were 13 percent and nine percent respectively; whereas it was 10 percent and 30 percent in the education sector. Similarly, nine percent of all deals in the financial services sector had a principle gender focus, and 29 percent had a partial focus. These statistics are concerning.

Considering that around 90 percent of blended finance structured investments are in strong alignment with Goal 1 (No Poverty), with concentrations on Targets 1.2 (reduce poverty), 1.4 (equal access), and 1.5 (build resilience) the proportion of deals that target women and girls that include a gender-related impact objective needs to increase significantly. If not, blended finance deals may inadvertently exacerbate inequalities faced by women.

For instance, if a blended finance deal that focuses on the creation of loan facilities in developing countries that allow entrepreneurs and SMEs to have access to capital, which they otherwise could not access, and that deal does not state a gender-related objective, it, in essence, is widening the gender gap. By depriving women of their right to financial inclusion, which is recognized as an enabler of other developmental goals in the 2030 Agenda, that deal works against eradicating poverty. Considering that there is an estimated $300 billion credit shortfall for women owned MSMEs, a loan facility deal that does not actively include women is essentially preventing them from equitably participating and competing in the markets, given their historic exclusion. Presenting women with the same opportunities as men would not only contribute to their economic empowerment, but would benefit society as a whole by creating an enabling environment for inclusive economic growth.

One example of an effectively inclusive blended finance fund is the Women Entrepreneurs Opportunity Facility (WEOF), a joint initiative launched by IFC and Goldman Sachs 10,000 Women Program in 2014. With $43 million investment from Goldman Sachs Foundation and $100 million from IFC, the facility was created to increase women’s ability to access capital. As of 2018, the facility invested more than $1 billion in women entrepreneurs in emerging markets, which exceeded its initial goal of $600 million. The initiative reached 50,000 women entrepreneurs, and is aiming to reach 100,000 more over the next 10 years. While these efforts are admirable, it must be noted that markets are not gender neutral. The provision of access to capital alone neither addresses the multidimensional barriers women face, nor increases their market competitiveness. Therefore, addressing gender inequality requires a holistic approach, as well as collaboration among governments, the private sector, and the civil society to ensure that discriminatory practices are eliminated and women have equal capacity as men to exercise agency.

The Beijing Declaration and Platform for Action is an agenda for advancing women’s rights, adopted by the UN in 1995 at the 4th World Conference on Women. Given its mandate on the use of gender mainstreaming as a “strategic approach for achieving gender equality and women’s empowerment at all levels of development,” it is crucial for blended finance deals to mainstream gender in a comprehensive way. After all, “the achievement of full human potential and of sustainable development is not possible if one half of humanity continues to be denied its full human rights and opportunities.”

Author: Sule Dedekarginoglu


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Grace Stone