News

Transforming financial inclusion for women around the world

The world’s largest gender-lens investment fund - Global Gender-Smart Fund – kicks off

June 14, 2024

Women-owned and women-led SMEs face a $1.7 trillion finance gap globally. This lack of access, combined with underrepresentation of women in finance, limits their economic potential and broader societal impact. Financial institutions miss out on $700 billion in potential revenues by failing to adequately serve this market.

But this week, efforts to close that gap got a shot in the arm with the launch of the Global Gender-Smart Fund (GGSF), a $500-million blended finance fund targeting underserved women and women-led business in developing markets. GGSF has big plans. By 2029, it aims to increase by 50% the number of female or women-owned/-led business borrowers. Aligned with the 2X Global agenda, the Fund also wants to improve gender equality at the level of the financial institutions themselves and achieve 50% women employees within ten years. It plans to do this by improving, on the one hand, the gender-balance at senior level and, on the other hand, working conditions for women.

The fund’s founding shareholders include the German development bank (KfW), the International Finance Corporation (IFC), and the Development Bank of Austria (OeCB). The German Federal Ministry for Economic Cooperation and Development (BMZ) has funded the creation of a technical assistance facility to enable engagements with partner financial institutions on critical areas of improvement that are identified during due diligence. Together with Women’s World Banking, NIRAS will provide technical assistance to strengthen the provision of gender-smart and responsible financial services to underserved women and women-owned or women-led businesses in emerging markets, with the aim to improve livelihoods, support income generation and employment, and promote women in leadership.

"It was inspiring to join the launch of GGSF yesterday together with our partner Women World Banking. It marked the beginning of a journey. We as TA providers to GGSF just joined, but we are excited to be part of this collaboration, demonstrating that gender inclusive finance is not just necessary for our society in a socioeconomic sense but that it is also simply good business," says Jane Bech Larsen, NIRAS fund management expert and Contract Manager to GGSF. "Thanks to BMZ, OeCB, IFC, Triple Jump, responsAbility, Incofin and especially contracting partner Innpact. We look forward to the collaboration."

NIRAS' Jane Bech Larsen (2nd from left) and Nawal Allal (4th from left) at the launch of GGSF in Amsterdam

Expected impact:

+50% women, women-owned or women-led business borrowers by 2029
50% female employees at financial institutions by 2033
Around 30 technical assistance interventions annually

Financial targets

$700M total assets target by 2026
$150M+ first loss component

GGSF is not a new fund, so to speak. It is building on the successful 15-year track record of the Microfinance Enhancement Facility (MEF), which focused on low-income households and micro-entrepreneurs. As the microfinance industry matured and financial inclusion efforts shifted, MEP shifted its strategy and structure to focus on gender-smart and responsible financial services concentrating on underserved women as well as women-owned and women-led businesses in developing markets, and GGSF was born.

As the Fund transitions into its new mandate, Ruurd Brouwer, Chair of the Board, explained: “The Fund’s founding shareholders – KfW, the IFC, and the OeEB – have been instrumental in defining the Fund’s new impact focus. The Board is looking forward to providing oversight and support to the world’s largest gender-lens investment fund, addressing the $1.7 trillion gender gap through financial inclusion.”

GGSF attracted strong private sector interest, in particular from M&G Investments which has provided $120 million in senior notes to support the growth of the portfolio. Innpact Fund Management, the alternative investment fund manager based in Luxembourg, serves as alternative investment fund manager and global portfolio manager. Innpact Fund Management is a 100% subsidiary of Innpact S.A. The sourcing, relationship management, and investment decision is conducted by three portfolio managers – Incofin, responsAbility and Triple Jump – all three leading impact investing specialists with extensive global experience.

Patrick Goodman, Founding Partner at Innpact, reiterated: “The great collaboration of the different parties in the Fund - shareholders, investors, portfolio managers, service providers - is an impressive achievement and it is inspiring to see such great industry leaders coming together to serve a common impactful objective. We expect this evolution of the Fund will be transformational in addressing gender issues through financial inclusion thanks to the breadth of countries and financial institutions the fund invests in. The strong blended finance structure of the Fund, preference for local currency financing, and support from committed DFIs and donors, will enable additional private sector financing, allowing the Fund to grow and increase its impact on women in developing markets.”

You can learn more about GGSF on the website: https://ggs-fund.com/