‘Our courage is our capital.' That’s the message that women clients of Mann Deshi Bank in India sent to the World Economic Forum when Chetna Gala Sinha, founder and chairperson of the bank, told them she was co-chairing WEF at Davos with Christine Lagarde in 2018. Not legal tenure, property, or commercial track record but courage - plus huge doses of realism, determination and lived experience – underpin their business acumen.
Chetna started the bank because a woman blacksmith needed a tarpaulin for rainy days, and, like other women, could not get credit. To get a banking licence from the Reserve Bank of India, the women who applied had to demonstrate their numeracy skills, challenging the regulators to test their ability to calculate interest rates.
I love this tale, shared in this edition of CLUED-iN, because it speaks to the experience of so many: successful business built by overcoming scepticism and meeting practical needs.
I find any discussion about women in business and finance fills me with optimism and frustration, celebration and caution at the same time. Optimism at the pace of change in gender-smart finance today and celebration of what entrepreneurial women can achieve. But caution that the solutions are not just about women as entrepreneurs nor access to finance. And frustration at the mainstream business world that lives in the past.
Let me set the context of frustration first, to show just how far away we are from understanding or meeting women’s needs. A few months ago, I was reviewing an evaluation of an investment by a development finance institution in an energy project. The evaluators did not even bother to say whether their ‘local stakeholder’ interviewees included any women. When I read agricultural project reports, they often refer to ‘farmers’ with no question of whether this is registered farmers (often mainly men, perhaps with some female headed households) or actual farmers who do the work (roughly half women). The most basic gender disaggregation is not yet standard in finance.
When it comes to business leadership, a male entrepreneur can be described as “young and promising” but a female entrepreneur is described as “young and inexperienced” as Adesuwa Okunbo Rhodes points out in her interview. Sadly, the data confirms the challenge. The influential 2018 analysis by the Boston Consulting Group found that companies founded or cofounded by women got less than US$1 million of finance compared to over US$2 million for those founded by men, despite delivering twice as well on revenue per dollar invested.
But the wonderful contributions to this edition of CLUED-iN celebrate women founders. We have voices of women running thriving businesses with women workers: Reese Fernandez-Ruiz, founder of Rags2Riches, working with Filipino artisans; Brigitha Faustin, founder of a sunflower business working with women growers in Tanzania; Nathalie Aldana, sourcing speciality food products grown, processed and packaged in Colombia and sold in Sweden; and Ajaita Shah running Frontier Markets, a female sales force-driven commerce platform in rural India. Their successes are all cause for celebration.
It’s not just that their businesses are growing and supporting women’s livelihoods. There is something very grounded in how they evolve, with a huge emphasis on working with not for women. Mann Deshi Bank is run by rural women, not just for them. Rags2Riches has worked hard to explore what the women artisans need on top of income – learning from a cooperative structure that failed and focusing on the priorities set by women.
My optimism comes from the pace of change we hear from pioneers explaining how and why they are innovating in finance to support women: Adesuwa Okunbo Rhodes, on founding of Aruwa Capital in Nigeria, Jessica Espinoza, VP at DEG, on progress of the global 2X Challenge which she co-chairs, Robert Kraybill, CIO of IIX, on the first publicly traded Women’s Livelihood Bond, and Chetna Gala Sinha, on the drivers of Mann Deshi Bank in India. All of these financiers are also market builders of course, but to add to the mix, we have Suzanne Biegel, the dynamo behind Gender Smart, and Amanda Epting and Jona Repishti of MIT’s D-Lab.
The gender smart finance space seems to be gathering success and strength. The first ever publicly listed Women’s Livelihoods Bond, launched by IIX, is entering its fourth incarnation, with coupons all being paid as planned. The 2x Challenge commitment made by development financial institutions, to allocate $3bn to gender smart finance in 2 years, has already been far exceeded, and a portfolio of 2X Flagship Funds are now being developed.
Of course, progress does not just depend on the flow of capital – which after all remains a tiny drop in the overall ocean – but changing the rules of the game. There has been a huge focus on getting women into decision making roles in the finance industry for good reason. They bring new ways of making decisions and can counter the implicit bias that has ruled so far. Adesuwa founded Aruwa Capital Management to change the narrative for women as capital allocators, entrepreneurs, consumers, and stakeholders in Africa and globally. Or as she puts it, the way to ‘provide women with more seats at the table is for us to create our own tables.’
My caution is that rules of the game don’t bend easily, and we can expect a juddering shift over many years. Jessica Espinoza describes how diverse fund managers ‘start their own funds to transform investment culture and change the way capital is allocated through innovative investment strategies.’ Yet investors with gender bias advise them to adopt traditional models – and so ‘perpetuating the problem they wanted to fix in the first place.’
While the spotlight is shining on unconscious bias in investor circles, the risk is that other entrenched inequalities impeding genuine change get less attention. Assumptions abound about what food, sleep, education, legal rights, social life or inheritance women get and what paid or unpaid work they do. These constrain how women consumers can benefit from goods and services of business, or how women entrepreneurs can gain from increased financial access. For example, research is emerging explaining cases where returns on investment in women-owned enterprise were limited because their funds were also invested in their husbands’ businesses.
The finance and entrepreneurial space cannot single-handedly change social norms and legal rights. But equally, redirecting finance and business support will be less impactful if done without reference to these. And it will be more impactful if explicitly relating business to changes in norms, whether that is ILabaYou‘s approach to sharing laundry in the Philippines or investing in girls’ technical training. Recognising that the finance can only take women as far as social norms allow, a recent evaluation of Women’s MSME finance for FMO explicitly recommended that they encourage their financial sector clients to partner with women’s rights organisations to build knowledge and collaboration.
The inspiring contributions in this CLUED-iN show just how much is possible and positive. What we need now is to speed up rewiring the system, so that these examples are not surprising but are simply how business and finance work.