This International Women’s Day (March 8th) kicks off a yearlong campaign called #BalanceForBetter, which aims to encourage gender balance in boardrooms, in the media, and in wealth as a way for economies to thrive.

While achieving gender equality and women’s empowerment will require significant efforts from government and local civil society, the importance of private sector engagement in advancing women’s economic empowerment cannot be overstated. The private sector is required as both an investor in and an implementor of gender equality and women’s empowerment, supporting more and better access to finance, markets, and product and services for women and girls.

Both blended finance and gender-lens investing represent significant opportunities for development practitioners and commercial investors alike to address gender imbalances, along with the potential to achieve meaningful development impact and mobilize additional financing at scale.

Convergence identifies five sectors / themes where blended finance has played an outsized role in mobilizing additional financing to scale activities that promote gender equality and women’s empowerment, these include: financial inclusion, SME financing, health, education, and infrastructure. Read more in our Blended Finance Deep Dive on Gender (Consultation Paper), commissioned by the Swedish International Development Cooperation Agency (Sida).

More ‘deliberate action’ is needed

Yet, there has been skepticism in the past that blended finance may exacerbate inequalities between women and men. Some argue that that women are less likely to benefit from blended finance projects – unless deliberate action is taken – given the complex mix of social, economic and political discrimination that they face. For example, a blended finance project that seeks to improve opportunities for technical skilled workers may inadvertently increase inequality if those sectors are already dominated by men, unless complementary actions are taken to break down the gender barriers.

Admittedly, our analysis finds that blended finance practitioners have largely not taken deliberate action to integrate gender in a comprehensive or standardized way. Based on Convergence’s database of blended finance deals, approximately one quarter of blended finance deals have targeted – in full or part – women and girls. In the majority of these gender-related blended finance deals, gender is only a partial focus and only 20% of these deals (5% of all blended finance deals) have women and girls as a principal focus.

Figure 1: Gender focus of blended finance and bilateral aid (Sources: Convergence Database & OECD)

However, analysis from the Organisation for Economic Cooperation and Development (OECD) reveals that very similar levels (only 4%) of bilateral aid are dedicated to gender equality as a main objective. In the economic and productive sectors (e.g., infrastructure, banking), where the majority of blended finance transactions happen, this number was even lower, with only 1% of aid dedicated to gender equality and women’s empowerment as the main objective. This reflects the need for more gender mainstreaming across the board to achieve the Sustainable Development Goals (SDGs).

#BalanceForBetter Blended Finance

So how do we get more deliberate about #BalanceForBetter in blended finance? Two important steps are proactive gender assessments (i.e., pre-investment) and effective monitoring and evaluation (i.e., post-investment).

Gender assessments involve carrying out a review, from a gender perspective, of an organization’s or project’s ability to monitor and respond to gender considerations. There are an increasing number of assessment methodologies for gender programming and gender-lens investing that can be leveraged to support blended finance. For example, Women’s World Banking recently launched a Gender Assessment Methodology, which evaluates an institution’s ability to reach and effectively serve female clients. However, it’s important to remember that effective gender assessments require contextualized analysis; being inclusive has much greater potential for impact than setting rigid screens and potentially excluding good opportunities for ‘gender-lens blended finance’.

Monitoring and evaluation is critical for achieving impact and maintaining accountability for ‘gender-lens blended finance’. Metrics are the foundation and the first step in gender-disaggregated reporting to monitor whether women are benefitting equitably from these initiatives and specific attention must be paid to the legal, political and societal barriers women face (such as unequal access to land, unequal power balance in families, lack of redistribution of unpaid care burden). While gender-disaggregated data is common among blended finance transactions, moving beyond ‘counting heads’ is core to the gender-lens investing agenda – and by extension gender-lens blended finance – and it is particularly needed in developing clear and informative metrics, as well as safeguarding against “gender-washing”.

Mainstreaming gender in Blended Finance 2.0

Blended finance has demonstrated the ability to mobilize additional financing for gender-focused projects and companies that advantage women and narrow the gender gap; private sector investors have had a healthy appetite for investment opportunities aligned to SDG 5 (Gender Equality). But there is room for considerably more deliberate action to mainstream gender in blended finance going forward. Gender equality and women’s empowerment is not yet integrated directly into the Blended Finance 2.0 agenda, but indicative objectives could include:

• specific attention to the legal, political and societal barriers women face;
• mandatory gender-disaggregated reporting to monitor whether women are benefitting; and
• comprehensive feedback systems within projects and programs as well as the development community at large.

There’s no doubt that investing in women as clients and as talent leads to stronger institutions, better returns, and a more equitable world. A greater focus on ‘gender-lens blended finance’ is one way to get us there.

By Justice Johnston, former Manager at Convergence