The gender imbalance caused by women not participating fully in the global jobs market is creating an economic gap, which development funds are aiming to bridge through gender bonds and targeted financing. 

Anne-Marie Chidzero is the chief investment officer of FSD Africa Investments, an organisation that aims to reduce poverty through stronger financial markets. She also helped launch a fund, Alitheia IDF, that invests in female-led companies, and is a vocal supporter of the importance of gender balance in business and markets for the continent.

African women tend to be excluded from manual jobs on offer in the manufacturing or agriculture sectors because of social stigma and discrimination. If the gap between less inclusive countries and advanced economies were filled, based on the male-to-female participation ratios of 2018, 44 million African women would have joined the labour market across the continent, noted Andinet Woldemichael of the African Development Bank in an opinion piece for think-tank Brookings’s Africa Growth Initiative. Naturally, this would have translated into large economic gains: in the case of Niger, for example, it would have boosted gross domestic product by nearly 50%. 

Starting the conversation

How can capital markets fix a social problem? Only five years ago, mentioning gender bonds would have been a conversation stopper, says Ms Chidzero. But, she adds, things are changing. 

Development finance institutions have begun to direct funds towards female entrepreneurs, from the Asian Development Bank to the Inter-American Development Bank and the World Bank’s International Finance Corporation. The Alitheia fund that Ms Chidzero co-founded was supported by the African Development Bank. 

Overall market data points to a hopeful momentum. Social bonds issuances – which include gender bonds – have jumped to a total of $38.5bn between January and June, a figure more than four times the volumes raised in the first half of 2019, according to data provider Dealogic. The figure is also more than double the total raised through social bonds in that year, according to a variety of other sources. 

Covid-19 helps to explain the sudden rise as issuers have rushed to tap the market to contain the economic effects of the pandemic. But to ensure that the trend continues beyond the emergency and applies to gender bonds too, definitions and metrics are important.

This is where the work of organisations such as FSD Africa is crucial. It is focusing on South Africa, Kenya and Nigeria as potential inaugural markets, defining standards and eligibility criteria for use of proceeds. Currently, the 13 bonds issued worldwide solely with a gender-related purpose have relied on the broader social bond principles by the International Capital Market Association, the UN’s Sustainable Development Goals or the UN Women’s Empowerment Principles, says FSD Africa. Specific guidelines will help, as will a sustained discussion around this type of product.

Help one, help all

Quantifying investments’ positive impact on women is possible even when these refer to projects that ultimately have a broader scope, says Mary Njuguna, FSD Africa’s capital market specialist.

Investment into water infrastructure or vaccination facilities, for example, lead to significant improvements for the wider population and the economy, but also has a specific gender-related angle. Women are often solely responsible for transporting water to their homes and for children’s health, for example. Specific aspects of those projects could be financed through gender bonds.  

A gender perspective may bring extra capital to large developments from investors looking for themed products. The development of these products could benefit more than just emerging markets, where bias against women may be more obvious. Based on economic participation, education, health and political empowerment, the World Economic Forum calculates that it will take 95 years to close the gender gap in sub-Saharan Africa and 140 years in North Africa and the Middle East. But it will take 151 years in North America.

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