WDI Leads Research in Gender Equity Impact Investment Effort
Wednesday, December 16, 2020
Study after study has shown that investing in women living in low- and middle-income countries (LMICs) has a strong ripple effect. When women earn more money, either as entrepreneurs or employees, they tend to place more of their economic gains back into their children’s education and health, and also strengthen local economies.
However, there is far less evidence on how gender-focused investing and gender-diverse teams within businesses lead to better financial and social outcomes, and how to go about achieving those goals.
This is the aim of the Gender-Smart Enterprise Assistance Research Coalition (G-SEARCh) which includes six impact investors: AlphaMundi Foundation, Acumen, SEAF, Root Capital, AHL Venture Partners, and Shell Foundation. Impact investors seek social and/or environmental gains in addition to financial returns on their investments. The group came together with a shared goal of supporting small- and medium-sized enterprises (SMEs) in emerging markets to incorporate gender across their respective business models. In addition to providing direct investments, these impact investors are also providing subsidized technical assistance focused on promoting gender equity as a core business principle to these SMEs. The G-SEARCh consortium also seeks to build the evidence base and business case for gender lens investing and this approach.
As the research partner behind the 18-month project, WDI’s Performance Measurement & Improvement (PMI) team is exploring the financial and social performance results of gender-smart technical assistance (TA) provided to these SMEs. These practices can range from internal focused interventions such as recruiting more women employees, refining policies and procedures to skills development, as well as a host of external practices such as conducting market research to better understand women customer needs, and adapting product and/or service offerings to women customers.
“The most exciting part of this research is uncovering the possible links between social and financial performance,” said Yaquta Kanchwala Fatehi, program manager with the PMI team. “We want to better understand if gender inclusivity through technical assistance leads to improved financial performance for these businesses—and subsequently improved returns on investments.”
The project focuses on 29 SMEs across multiple LMICs in Africa, Asia and Latin America. These businesses work in a variety of sectors, including microfinance and financial inclusion, food and agriculture, and renewable energy and climate. WDI will investigate the outcomes of gender-smart TA provided to SMEs supported by their investors. To do this, the team is conducting extensive interviews and surveys to gather data with the additional goal of strengthening interventions. WDI also will investigate the effectiveness of different approaches and tools that the G-SEARCh consortium members are deploying to incorporate gender-smart practices across their respective investees. The research will take into account existing data gathered by investors and SMEs to reduce the burden of data collection.
“The long-term goal of this research is twofold: First, to provide SME leaders with the knowledge and tools to become more inclusive, gender-equitable, and profitable,” said Christine Roddy, Executive Director at AlphaMundi Foundation, which is the lead administrator of G-SEARCh. “Second, we hope to provide tested tools, approaches and frameworks to impact investors as they allocate resources to gender-smart interventions across their portfolios.”
WDI’s team is working closely with G-SEARCh partners to develop a gender lens investment toolkit along with multiple case studies to illustrate various interventions and analysis. These details will be summarized in a report capturing all the insights and recommendations, including the surveys and frameworks. The report, scheduled to be released in late 2021, will be made public so other investors can apply the knowledge toward their respective investment and business practices.
The research fits within WDI’s mission of helping the key players within any business ecosystem understand and utilize the tools of commercial success. The G-SEARCh consortium is supported by Canada’s International Development Research Centre (IDRC) and the Powering Agriculture Investment Alliance, which is funded by USAID, the Swedish International Development Cooperation Agency, GIZ in Germany and Duke Energy.
“The impacts of the COVID-19 pandemic have exacerbated pre-existing gender inequalities, and women and girls in developing countries are the most affected,” said Carolina Robino, Senior Program Specialist at IDRC. “This is timely research that will allow the impact investing industry to learn and share the most effective ways to integrate gender into SMEs. This will provide crucial knowledge to help scale gender lens investing in emerging markets to deliver on gender equality.”
Another intended outcome is to provide best practices and lessons learned to SMEs as they seek to become more inclusive and gender-equitable, as well as to impact investors, who increasingly see the industry as a mechanism for improving gender equality. In its 2020 industry report, the Global Impact Investing Network (GIIN), which includes nearly 300 investors, reported the global impact investing market exceeded $715 billion.
Notice: The views expressed herein do not necessarily represent those of IDRC or its Board of Governors. This work was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada.