Gender Smart | October 19, 2023

Through a gender lens in Latin America, investors see opportunities for impact and alpha (videos)

Dennis Price

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ImpactAlpha Editor

Dennis Price

Oct. 19, Medellín – The women of Comuna 13, a sprawling neighborhood in the hills above downtown Medellín, turned to graffiti art, hip-hop music and street performances to combat violence and corruption – and transformed the dangerous enclave into one of Colombia’s most vibrant cultural hubs.

Such narrative reclamation and economic transformation is the promise of the GLI Latam Forum, this year in Medellín (ImpactAlpha is the media partner of the GLI Forum Impact, which covered some travel costs). The nonprofit development innovator Pro Mujer organized the convening, now in its fourth year, to showcase the social and economic power of investing in, and investments led by, women in Latin America.

“Investing in women, without a doubt, will create a virtuous cycle that is unstoppable,” said Pro Mujer’s Carmen Correa. “We want more investors coming into Latin America, investing with a gender lens,” Correa told ImpactAlpha (watch ImpactAlpha’s interview with Correa)

Family affair

Latin America’s growing range of gender-lens investment products reflects the growing appetite from local investors. Correa counts some three dozen gender lens funds in the region.

Rodrigo Villar and Daniela Pacheco’s new Empodera360 fund, for example, will use revenue-based finance and venture debt to help women-led ventures expand health access to women across the region.

“I didn’t know that there were so many products,” Maria Hollan, a next-gen impact investor at Timke Ventures, a Mexico-based family office, told ImpactAlpha on video (watch the interview). When wealthy Latin American families “want to do impact, they want to do it in the region,” says Hollan. 

The ImPact earlier this year released a report on the impact portfolios of Latin American families that included responses from about 60 families. More than three-quarters make impact investments in response to local concerns. 

“We see a lot of momentum for families wanting to do more and more,” The ImPact’s Linda Rincón told ImpactAlpha (watch ImpactAlpha’s  interview with Linda Rincón). Latin American family offices, says Rincón, show an “increasing interest in innovative finance structures, where families can play a catalytic role.”

Product diversity

Debt products are proliferating in the region to fill gaps in credit access for women. GLI Forum participants acknowledged that women are higher quality borrowers than their male counterparts.

Bolivia’s Adjunta Bancosol is reorganizing from the “top-down” to increase its lending to women. In Ecuador, Banco Pichincha, with five million clients, sees a “massive opportunity” to close lending gaps to women-owned small businesses. 

Microwd, a Madrid-founded fintech company with operations in a half-dozen Latin American countries, lends exclusively to women. Women borrowers, who have made the company profitable, are “social drivers” in their communities, says founder Alejandro De León

“The market is huge and increases every year,” León told ImpactAlpha. Tech has transformed the types of businesses women can build once they have access to capital. “Before it was only cows and pigs,” says León. “Now it’s also apps, delivery and restaurants.”

Financial institutions and social enterprises are increasingly issuing social and gender bonds to finance female business owners. 

With two gender bonds issued this year, Pro Mujer has tapped Argentina’s capital markets to finance women entrepreneurs. Banco Davivienda, Colombia’s second-largest bank, issued a $100 million gender-linked bond last year. 

A “diversity and inclusion social bond” issued in August by Ecuadorian savings and credit cooperative Jardín Azuayo will support lending to women and low-income entrepreneurs.

Climate + gender

Investments in women drive the care economy, reproductive health, climate friendly agriculture, and equitable development in communities significantly impacted by climate change. 

Women and poor communities, for example, are significantly more impacted by climate change, Nisha Biswal of the US International Development Finance Corp. told ImpactAlpha (watch our interview with Nisha Biswal). “As we think about adaptation, as we think about mitigation, we need to think about these communities.”

At the intersection of climate and gender, there’s also an opportunity. “As we are talking about the energy transition the world is undergoing, as we think about the new economy that is being unleashed, the clean economy,” says Biswal, “we need to make sure that that economy is an inclusive one.”

The DFC is increasingly using a gender-lens across its portfolio of financial, energy and infrastructure investments. Just this year, the US development finance institution has deployed $2.54 billion in gender-related projects through its 2X Challenge to advance gender equality.  

In Latin America, the DFC is using guarantees to help institutions on-lend to female borrowers. It’s also seeding new gender-lens investment structures, such as social and gender bonds. 

“We need to deploy much more capital in Latin America,” says Pro Mujer’s Correa. “And for that, we need to showcase what is going on.”

Video production by ImpactAlpha’s Cesar Chavez. 

ImpactAlpha is the media partner of the GLI Forum Impact, which covered some travel costs.