30 April 2020 | News/Stories

Doubling down on Gender Lens Investing: What can investors do right now in the face of the COVID-19 crisis?

by Prachi Maheshwari and Rebecca Fries


As the world economy grapples with unprecedented shocks during the COVID-19 crisis, many investors, philanthropists and development finance institutions (DFIs) are pouring efforts into creating the best possible strategies for supporting the short-term survival of Small and Medium Enterprises (SMEs) and the long-term economic recovery in emerging markets. The role of women’s SMEs in improving outcomes in emerging economies is widely recognised.

Investing in women’s SMEs will support locally driven, inclusive solutions to social and economic problems that have surfaced during the crisis and ensure that the solutions impact the lives of women and girls. This strategy will strengthen the sustainability of investor portfolios and consolidate gains in the field of gender lens investing, to date.  By prioritising this approach, governments, DFIs and private investors could expand their economic recovery responses through women’s SMEs and achieve long-term and robust economic growth.

Investing in Women’s gender lens investment portfolio offers a window into why this approach is crucial to the survival of women’s SMEs. Undertaken in March 2020, an assessment of 27 women’s SMEs across three South East Asian countries reveals that despite an otherwise stable business outlook, the majority expect a significant fall in revenues and profit margins as a direct consequence of COVID-19 disruptions in the short and medium term. The findings from this assessment echo the broader challenges faced by SMEs as highlighted in recent Pan-Asian research, which indicates that almost 50% of SMEs have one month’s worth—or less—of available cash reserves. Nearly 30% of SMEs expect to lay off 50% or more of their workers. Immediate capital infusion is required to keep many of these companies afloat and resilient through the COVID-19 crisis and resulting economic downturn.

Despite the challenges that COVID-19 presents to businesses, many women’s SMEs have already shown strong resilience in the face of economic shock within their operations. Specifically, women’s SMEs in agricultural value chains and tech-enabled companies have proven capabilities to enable the supply of essential services during the ongoing crisis. While the pandemic has accelerated the pace of weeding out the businesses lacking innovation and that are failing to adapt, the economic shock has also impacted businesses with a positive outlook and growth prospects that would otherwise be viable. Such companies will be crucial to the post-COVID recovery and as such, need to be included in the broader economic response to the crisis.

While governments and DFIs continue to develop fiscal and economic stimulus packages directed at businesses impacted by the COVID-19 crisis, women’s SMEs may not automatically benefit from such interventions for several reasons. First, economic relief packages typically target asset heavy industries (specifically in the manufacturing sector), which have low representation of women’s SMEs. Preliminary analysis of an OECD (Organisation for Economic Co-operation and Development)  SME policy responses document shows a lack of gender analysis and capital allocation towards women’s SMEs and other minority communities. Second, such policy responses take time to implement, when the COVID-19 disruptions demand immediate relief for cash-strapped SMEs on the brink of insolvency through no fault of their own. Third, financial and non-financial measures (such as loan structuring mechanisms, concessional capital, loan deferments and relaxed lending policies) gravitate towards traditional borrowers and risk reinforcing gender biases in a financial industry where women entrepreneurs remain grossly underserved. Persistent gender inequality limits women SMEs’ potential as well as being an enormous opportunity cost for the national economies. Economic responses to the COVID-19 crisis need to be intentional about not further entrenching gender inequality in the SME sector through the recovery period.


What investors can do:  Allocate and activate capital for economic recovery with a gender lens

With the challenges previously outlined as the backdrop, DFIs and private investors have opportunities to actively respond to COVID-19 with gender inclusion at the core.

Investors can allocate capital with a gender lens for women’s SMEs in economic stimulus packages and investments: Governments, DFIs and private capital providers can allocate a proportion of their capital using a gender lens up front.

  • Governments can include targets for women’s SMEs within the traditional banking sector disbursements of stimulus packages, including subsidised financing and loan guarantees.
  • DFIs have an opportunity to integrate a gender lens into their portfolio, parallel to their contribution to gender and women’s SMEs through programs such as the 2X Challenge. Relief financing packages such as the USD 14 billion response spearheaded by World Bank Group[1] and other similar initiatives could mandate women’s SME targets in capital injection interventions.
  • Private capital providers have the capacity to respond rapidly and flexibly to the liquidity crunch facing women’s SMEs. Organisations such as Investing in Women and Visa Foundation are already leading the way in allocating resources and capital for women’s SMEs.

Investors can activate local investment solutions for immediate relief response and long-term resilience. Effective intervention and lasting results require localised measures that respond to the rapidly shifting economic context within emerging countries.

  • Emergency support can be channelled through effective localised financial intermediariesEntities such as non-banking financial institutions, gender lens investors, impact investors and other investors with local reach and access to women’s SMEs have the capacity to respond immediately to the liquidity crisis.
  • Long-term resilience will be reinforced through stronger mobilisation of local capital and financial models that have gender lens investing at their core. In the post-COVID-19 environment, foreign investments and international development financing into emerging markets will likely initially shrink. The growth of gender lens investing will thus rely on mobilising innovative and flexible local capital, including sources such as high net worth individuals (including women), family offices and foundations.

Gender should not be a sidebar during times of crisis and economic recovery.  These strategies offer investors a way to direct their capital in response to new economic realities with inclusion at the core.  Going back to business-as-usual is not an option, and we must learn from previous times of economic crisis, conflict and health pandemics. Preserving the gains towards building inclusive, resilient and sustainable local economies driven by women and men is imperative.

Prachi Maheshwari is an Impact Investing Advisor at 
Investing in Women, an initiative of the Australian Government that catalyses inclusive economic growth through women’s economic empowerment in South East Asia. 

Rebecca Fries is the Founder and Managing Director of Value For Women, whose expertise centres on gender inclusive business and investment practice across the globe.

[1] https://www.worldbank.org/en/news/press-release/2020/03/17/world-bank-group-increases-covid-19-response-to-14-billion-to-help-sustain-economies-protect-jobs

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