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Design of a blended finance facility to enable access to finance for gender focused climate smart solutions

Convergence awarded a proof-of-concept grant to Beyond Finance Consulting Limited for the design and launch of Beyond Finance Asia-Pacific Facility, a blended finance vehicle that will invest in companies primarily serving women, including companies led or founded by women in Asia and Africa.

Women are a growing segment of consumers. According to the 2X Challenge, women constitute the world’s largest emerging market, more than twice the size of India and China combined. However, women in low-income communities in emerging countries face barriers when accessing a range of affordable products and services, for instance they are more likely to have less or no access to clean energy, and water and sanitation. In sectors where they represent a huge part of the workforce, such as sustainable agriculture, they are often excluded from managerial positions, funding, and may not possess collateral. Failing to understand and serve the needs of women in emerging countries represents a loss of business opportunity and has an adverse impact on the provision of climate smart products and services.

Beyond Finance Asia-Pacific Facility will provide private debt to companies in emerging Asia and Sub-Saharan Africa. It will operate alongside a technical assistance facility with a core focus on the food- water-energy nexus and financial inclusion in frontier markets that will aim to develop better-designed climate smart solutions by applying a gender lens. While the technical assistance facility will support investees in identifying and meeting targets related to climate change and gender equality, the fund will offer innovative financing mechanisms such as KPI-linked loans to encourage investees to achieve their pre-agreed gender and climate related targets.

Beyond Finance was previously awarded a grant under the Indo-Pacific design funding window to explore the feasibility of the facility. Convergence’s proof-of-concept grant funding will support Beyond Finance Consulting Limited, a first-time fund manager and an all women team, to build on the progress made at the feasibility study stage and to complete all design activities and prepare the facility for launch.

Design question and learning potential for the market: How can a blended finance vehicle be designed to support climate smart solutions in emerging economies?

Identifying the challenge that women face to access finance in emerging markets, Beyond Finance is working on the design of a vehicle that serves this market gap. Beyond Finance has successfully completed the feasibility study stage where they assessed the legal, operational and financial structures necessary to implement the Beyond Finance Asia-Pacific Facility. They will utilize the proof-of-concept stage grant funding to finalize these elements alongside activities such as confirming investee pipeline and fundraising.

Beyond Finance will also be exploring a unique capital structure for the facility where micro-levy donations could be used to capitalize the junior tranche. Micro-levy donations are a fund pool created through the sale of water bottles at large grocery retailers. Since corporates and retailers are an untapped investor segment in the blended finance ecosystem, the use of micro-levy donations as catalytic capital in the facility could offer an opportunity for a new set of investors to participate in blended finance.

In addition, the proof-of-concept stage grant funding is instrumental for Beyond Finance to identify the appropriate design of the technical assistance facility, which can support climate smart solutions in Asia and Africa to strengthen their climate and gender lens. The grant funding will also be crucial to explore impact-linked loan structures to incentivize companies to achieve pre-agreed climate and gender-related targets.

    In progress
    Year and Quarter
    Gender-Responsive Climate Finance Window, 2022, Cycle 2
    Design Activity
    Proof of Concept
    Region Focus
    South Asia, Central Asia, Southeast Asia, West Africa, East Africa
    Sector Focus
    Financial Services, Agriculture, Housing and Real Estate