FSD Africa, British International Investment, and the United Nations Entity for Gender Equality and the Empowerment for Women have introduced a gender bonds framework, aimed at integrating gender considerations into capital markets issuances across Africa.
This framework targets the streamlining of the gender bonds issuance process, previously hindered by uncertainties. Mary Njuguna, a senior principal specialist in capital markets at FSD Africa, disclosed that approximately USD 735 million worth of gender bonds have been issued in Africa over the past three years, in contrast to a global issuance totaling USD 14.5 billion.
Gender bonds are specifically crafted financial instruments directed towards financing initiatives promoting gender equality and empowerment.
These endeavors encompass supporting women’s empowerment, facilitating access to education and healthcare for women and girls, combating gender-based violence, and fostering women’s economic inclusion.
Despite constituting a mere fraction of the global sustainable investment market, estimated at over USD 40.0 trillion, gender-labelled financial products amount to approximately USD 17.0 billion worldwide, as per the International Institute for Sustainable Development. In Africa, where economic vitality hinges on Micro, Small, and Medium Enterprises (MSMEs), regardless of gender, gender bonds could serve as a crucial instrument. Njuguna highlighted that a staggering 90.0% of businesses in Africa are MSMEs, contributing 80.0% to the workforce and 50.0% to the GDP. However, only 18.0% of MSME lending in the region reaches female-led MSMEs, despite women displaying superior non-performing loan rates.
Overall, gender bonds possess the potential to mobilize substantial resources and attention toward bridging the financing gap for women and advancing gender equality. However, their effectiveness hinges on factors such as investor demand, issuer transparency, and the efficacy of funded initiatives in effecting tangible social and economic changes for women and girls.
