To promote gender equity, banks can invest in women-owned or -led enterprises; enterprises that promote workplace equity or those that offer products or services substantially improving the lives of women.
Gender equality is essential to achieving the Sustainable Development Goals.
One major obstacle to women accessing loans is men unwilling to grant them.
Gender-lens investment makes economic sense for banks since women make up 50 % of their customers.
If countries want to reach Sustainable Development Goals (SDGs), they must achieve gender equality first. The world cannot afford to continue with today’s gender gap. According to an International Monetary Fund study, closing the gender gap could increase GDP by 4 % in Japan or Canada and up to 32 % in Niger.
One way is through gender lens investing – the use of capital to generate financial return and simultaneously advance gender equality. This requires an integration of gender analysis with financial analysis. Key gender lenses typically include access to capital, workplace equality, value chains and products and services that benefit women and girls.
Aware that some investments can have a negative impact on gender equality, the European Commission and the European Investment Bank have developed gender strategies and gender action plans. Using sex-disaggregated data the aim is to identify how projects can be improved to cater to the needs of women and to favour projects that target gender equality.
One of the United Republic of Tanzania’s largest banks, Bank of Africa Tanzania, has decided to invest in women, as there is a clear business case to do so. One-third of micro businesses and small businesses are predominantly run by women, yet often they do not have access to formal financial services. The bank develops products targeting women’s needs. Women tend to want to invest in the education of their children and seek a safe way to invest. Since 80 % of the workforce in Tanzania works in agriculture, the bank also sends technical experts to the fields to train farmers to become bankable.
Land ownership, property ownership, women not being able to represent themselves or upgrade their skills, including digital ones, to become entrepreneurs or managers are some of the gender-related difficulties that need to be unlocked to allow women easier access to finance.
Another issue that needs to be addressed is the “tone at the top”. Whether an organisation promotes gender equality depends on top management. It the managers decide there are other priorities and gender equality will be tackled later, chances are they never will.
The adoption of rules regarding movable collateral registries is critical to adapt credit infrastructure. Being able to pledge movable collateral brings power to women and makes a huge difference to their financial situation and their eligibility for loans.
Linked to that and also crucial is digital identity. In many countries people do not have any proof of identity yet banks are required to request one from all customers. Digital identity should particularly help women to access formal financial services.
Traditional investors often assume women entrepreneurs manage small, low-growth businesses and thus tend to invest more in men. So doing, they miss tremendous investment opportunities. According to recent data, women-run companies outperform their male counterparts by 63 %.