Women and girls represent one half of the global population, yet only about half of working-age women are employed and women represent less than 37% of global GDP. On June 9, at the G7 summit in Quebec, Canada, the G7’s development finance institutions (DFIs) announced a new USD 3B commitment to gender equality and women’s empowerment.
The 2X Challenge: Financing for Women (‘2X Challenge’) is an ambitious blended finance initiative that calls on the seven DFIs to mobilize their own funds, as well as private capital, with the aim of advancing women as entrepreneurs, as business leaders, as employees, and as consumers of products and services that enhance their economic participation.
What makes this new commitment unprecedented is its pledge to engage the private sector. While there is no doubt that 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 plays a critical role as both an investor in and an implementer of initiatives that support women’s economic empowerment, including growing access to finance and equalizing labor market imbalances.
The figure below describes five key considerations for women’s economic empowerment and highlights the roles of both the private and public sector:
What this table makes clear is that achieving gender equality and the targets set out under SDG 5 will require unprecedented levels of financing – in scale, scope, and quality – from all sources (public, philanthropic, and private) and at all levels (local, national, and global).
The 2X Challenge coming out of the G7 meetings, shows that the G7 DFIs – FinDev Canada, the United Kingdom’s CDC Group, the United States Overseas Private Investment Corporation (OPIC), Italian Cassa Depositi e Presiti (CDP), French Proparco, Japan Bank for International Cooperation (JBIC), and German Investment and Development Corporation (DEG) – are committed to using innovative ways, including blended finance, to mobilize investments and initiatives that provide women in developing countries with access to leadership opportunities, quality employment, finance, enterprise support.
Given the need to mobilize additional sources of capital, there is great potential for blended finance to be deployed to increase the scale and impact of projects and programs that focus on or impact women and girls.
Yet to date, blended finance transactions have not integrated gender in a comprehensive or standardized way. According to Convergence’s historical deals database, which includes nearly 300 closed blended finance deals, only one third of deals included one or more metric(s) on the impact on women and girls.
Still, gender-related blended finance is growing and more key actors in the blended finance space are looking to deploy a gender-lens moving forward. Two actors that come to mind are the Impact Investment Exchange (IIX) and Women’s World Banking (WWB). IIX sponsors and manages blended finance solutions (e.g., the Women’s Livelihood Bond) to mobilize private sector development, with an emphasis on three pillars: women’s empowerment, community resilience, and climate action. WWB, one of our grantees, is a leader in promoting women’s economic empowerment and is currently in the design-phase for a USD 100M blended fund, which will leverage concessional equity to attract commercial investors to invest in women-focused institutions.
The 2X Challenge will be hosting an online platform to publicly track progress towards mobilizing USD 3B and to coordinate efforts across participants. This is an excellent opportunity to explore and advance best practices for blended finance with a gender lens, and hopefully show the world the role blended finance can have in advancing gender equality and women’s empowerment.
By Justice Johnston, former Manager at Convergence