Malala Yousafzai, 2014 Nobel prize winner and human rights activist once said, “We cannot all succeed if half of us are held back” and the truth of her words is even more poignant today.
The COVID-19 pandemic has forced us to reconsider many crucial aspects of modern society. Extended periods of lockdown, quarantine, and social distancing have had a profound economic, social and psychological impact on us all, including how we live, work, socialize, and consume. Nonetheless, it has been women who particularly bear the brunt of COVID-19’s economic hardships. As the lockdowns press on with hundreds of millions of children out of school, the increased burden of childcare has been severely restricting for women in employment and women entrepreneurs. As a result, women remain the primary caregivers tasked with fulfilling domestic responsibilities. Women are also at the forefront of the overburdened healthcare sector, placing them at direct risk of contracting COVID-19.
Asia Pacific is home to some of the largest economic powerhouses of the 21st century and yet there is a persistent gender gap, particularly on inclusion in financial systems. Socio-cultural norms coupled with the disparities in access to everything from education, healthcare, technology, finance, legal and land rights, has precluded women to realizing their full potential According to the International Monetary Fund, the economic loss arising from the disempowerment of women was estimated at 10 per cent of GDP in advanced economies and 30 per cent in South Asia.
The COVID-19 pandemic has put a spotlight on these gender disparities worldwide. Women-owned businesses in the formal sector, which are skewed towards smaller firms and consistently grapple with access to finance and investments, tend to have more restricted growth trajectories. This has meant that downturns in the investment climate, recessions, including those caused by the COVID-19 pandemic, have a higher negative impact on these enterprises that often lack the financial cushion to weather long periods of uncertainty and volatility.
As women-led enterprises are known to hire more women, this has a knock-on effect on women’s participation in the workforce. The informal sector is a major employer of women in the region. For example, in South Asia, over 80 per cent of women in non-agricultural jobs are in informal employment. Not only does this mean that women in the informal sector possess little job security in periods of lockdown and economic recession, but also in most cases they are not eligible to receive COVID-19 benefits released by national governments.
This year marks the Decade of Action, with only 10 years remaining to achieve the Sustainable Development Goals (SDGs), a key pillar of which is SDG5 – Gender Equality. Investing in women represents the difference between building back to where we were before the pandemic hit and truly building back better. As governments across the Asia Pacific roll out economic stimulus packages in response to COVID-19, it will be essential for them to dedicate resources for women led enterprises including those in the informal sector. Impact linked loans, a mechanism wherein a component of interest repayments is linked to predetermined metrics could be deployed by governments and tied specifically towards supporting SDG 5.
While governments can do more to highlight, prioritize and earmark resources, the role of private capital cannot be understated. In fact, the private sector has a critical role in advancing the economic empowerment of women. Gender Lens Investing (GLI), is an incredibly important tool that can be deployed by the private sector. GLI comprises investments that can increase access to capital for women entrepreneurs, promote gender equity in the workplace, or support the development of products and services that primarily benefit women. It is applicable to a range of sectors and areas most affected by the pandemic. Examples in the Asia Pacific region include the Impact Investment Exchange’s Women’s Livelihood Bond Series that has been designed to empower over a million women and their families in the most vulnerable communities in Asia.
For the Micro, Small and Medium Enterprises (MSMEs) sector, a third of which are women owned, this also means deploying financing products with longer, more flexible repayment terms for female owned businesses. Similarly, blended financing instruments that provide capital at concessional rates could be used for more mature enterprises, particularly those that cater to underserved markets or segments. Finally, innovative financing mechanisms such as Pay for Success instruments, where the financial risk is shifted from traditional funders—primarily governments—to private investors have witnessed a number of successful pilot programmes in the region. An example of this is the Educate Girls Impact Bond in India which was set up to improve the education outcomes of 18,000 school girls.
Clearly the tools, frameworks and institutional mechanisms to direct increased financing towards women already exist, they have been piloted, tested, and refined. What is needed now is to bring these approaches front and center – and prepare to scale up. The COVID-19 crisis has laid bare the underlying inequalities and vulnerabilities of millions of women. The inclusion of women is essential for ensuring that COVID-19 recovery plans are effective in rebuilding more robust national economies and ensuring that, going forward, social equity becomes a foundation of national resilience.
Joanne Manda, UNDP Asia Pacific Regional Advisor Climate & Innovative Finance and Karanraj Chaudri, Advisor, India/ South-Asia, Social Impact Investments
Edited by Tomi Soetjipto and Ranjit Jose
This article was first published in The Bangkok Post