More than the money: Better funding for gender equality through innovative finance
For International Women’s Day we explore how taking a gender approach to innovative financing can support inclusive economic recovery.
Progress toward gender equality can sometimes feel like a game of snakes and ladders. Over the past few years we have worked steadily up the ladder to close the disparities faced by women and girls. In the past decade 131 countries passed legal reforms supporting gender equality. Girls’ access to education is at an all-time high, while maternal mortality decreased by 38%. But at the start of 2021, faced with Covid, diminishing donor budgets and global economic recession, we are at risk of losing these gains and slipping back down the board.
The impact of Covid has fallen disproportionally on women. Women often bear the brunt of unpaid care and domestic responsibilities, both escalating during the pandemic. Women are more likely to work in the informal sector, where workers have received the least protection from government or employer support schemes, specifically in the hardest areas of catering and hospitality. Globally, women make up over 70% of workers in the health sector, thus facing higher infection risks than men in the workplace.
The result is grim: we know from previous economic crises that women are likely to face bigger obstacles when attempting to return to the labour market. There is a real risk that the progress we have made over past decades towards gender inclusive societies is reversed.
Does innovative finance have a role to play in the current crisis?
Deliberate interventions addressing the constraints faced by women and girls can change this trend, but shrinking donor funding means the number of NGOs and other organisations stepping up to the challenge are dwindling. This is not a challenge that government, bilateral and multilateral grant funding can resolve alone — there is a need and an opportunity for private finance to play a bigger role to support an inclusive and resilient recovery.
‘Innovative finance’ describes a broad spectrum of mechanisms that offer an alternative to traditional activity-based funding. It can include investment capital that seeks a balance between social impact and return, but also encompasses results-based financing and broader risk mitigation mechanisms.
But it goes beyond simply raising more capital; how funding is structured and deployed makes a difference to achieving the intended impact and changes to the status quo. If designed correctly, innovative finance can support good interventions to better tackle entrenched social issues, by reordering incentives, creating accountability for results, addressing specific barriers in the system, shifting where risk is held and fostering adaptive management.
Three practical ways you can apply a gender lens when structuring innovative financing models:
- Build gender inclusivity into incentives. Well-designed funding can align incentives across public, private and non-profit partners around a common goal. For example, outcomes-based funding can be targeted at women and harder-to-reach groups by offering higher payments for outcomes achieved by female participants. Or a blended finance fund could offer lower interest rates for businesses that achieve gender equality goals. Or an accelerator fund could prioritise working with smaller, informal sector enterprises, which are often led by women.
- Put women at the centre from the start, then broaden out. Good service design practices put the end-user at the heart of the intervention. To ensure that financing supports female economic empowerment, design models and programmes with women at the centre from the beginning, even if the programme is intended to be broader. These steps ensure that gender barriers are addressed and embedded into the design. This does not mean that you must focus solely on female-led interventions to positively impact women. Going beyond, for example, women-led businesses to consider women as employees, suppliers and consumers ensures impact on gender across the value chain.
- Consider gender in all aspects of economic recovery. When planning for economic recovery, it is crucial to consider where your intervention sits within the labour market. Are the sectors you’re focusing on traditionally male-dominated, such as construction or infrastructure? If so, can you build in ways to address gender inequalities within the sector, or expand to other sectors? We have also found it helpful to think about both demand and supply of labour to ensure that women’s needs are not forgotten. This means interventions that work on the supply side to upskill and empower women to achieve career goals and financial independence, as well as demand-side interventions focused on creating new jobs for women and working with existing companies to create gender-sensitive workplaces. Well-structured, innovative finance can tie these two sides together, ensuring demand and supply grow together.
Coming up! MUVA and Social Finance have been exploring the potential of innovative financing models to increase economic opportunities for disadvantaged urban youth and women in Mozambique. We will be sharing some of the promising models that emerged in future blogs. Watch this space!