By Indigo Elliott Phibbs, Learning and Communications Specialist
A report by Australia’s Department of Foreign Affairs and Trade (DFAT) and Value for Women (V4W), Gender Lens Investing in Southeast Asia, shared mounting evidence that gender lens investing can deliver both financial returns and impact for investors, showcasing BIDUK’s innovative approach.
The report calls for scaling up these investment practices, finding that gender lens investing, or intentionally incorporating gender factors into investment analysis and decisions, provides sustainable, high-impact opportunities for investors in Southeast Asia. Through case studies, research and interviews, the report demonstrates that capital allocation with a gender lens can increase financial returns for investors, deliver strong impacts in promoting gender equity, and open up new opportunities for investors.
Here are three highlights from the report:
- Gender lens investing can increase financial returns for investors, particularly in Southeast Asia.
The report found that GLI offers huge opportunities for investors. Evidence shows that gender diversity and women in leadership can drive higher profits and generate better results in businesses, leading to increased financial returns for investors. Furthermore, the life-time value of a financial client is typically higher for women than men because women tend to be more loyal, have better repayment rates and refer more customers.
For impact conscious investors, gender lens investing offers many channels for mitigating gender inequalities and addressing the historical gender bias women have faced in accessing capital. The report points to Southeast Asia as a region of significant opportunity, due to the high concentration of women entrepreneurs and the substantial financing gap they face. The report states that the financing gap for women-MSMEs is an estimated US$26.1 billion in Indonesia and Vietnam alone.
BIDUK is a leading pioneer in Indonesia working to bridge this financing gap for early stage, and often women-owned or -led businesses, without requiring collateral. We work with businesses that have an ambition for growth (known as small and growing businesses or SGBs) who face barriers in accessing capital to find the best financial solutions for their companies.
- Flexible processes and customized products can be immensely beneficial for SGBs
Women’s World Banking found that a staggering 80% of women-led SMEs in Indonesia were unserved, underserved or relying on informal credit. These gaps were attributed to a lack of necessary documentation, limited collateral, onerous process requirements, high transaction costs and limited knowledge of financing options.
The rigid financial products often offered by traditional financial institutions forces SGBs to retrofit their financing needs, rather than supporting these businesses to grow. This is why BIDUK was created out of an awareness that financing should not be one-size-fits-all. By offering unsecured, flexible financial products that are customized to each client’s needs, we’re helping early-stage businesses get the capital they need to expand. As our founder, Kaylene Alvarez, is quoted saying in the report, “we meet our clients where they are, not where we want them to be.”
The report points to the value of this approach, stating “early success on the [BIDUK] platform shows that customizing financial products and services that meet the needs of SGBs, especially women-led ones, is a viable and high demand approach to close the gap for enterprises that don’t have access to traditional kinds of formal financing.”
- Supporting women-led businesses provides huge opportunities, even if this is not yet recognised on a mainstream level.
While progress has been made, the report found that there still is a way to go in making GLI more commonplace in Southeast Asia. “GLI is still not mainstream among local investors because most investors don’t recognize the business case for supporting women-led businesses,” the report states. Furthermore, several of the report’s interviewees “saw a gender lens as falling within the domain of philanthropy rather than a business opportunity for investing.”
Despite this, there is a growing adoption of GLI practices. “Most local impact investors remain hesitant to identify as gender lens investors even if they apply GLI practices.” BIDUK aims to remain an advocate for GLI, contributing evidence that by financing women-led businesses, investors can address gender inequalities while earning financial returns.
At BIDUK, we believe that gender lens investing is smart investing. We celebrate women as capable business leaders however we acknowledge there is still more work to be done in convincing the wider SGB financing sector of this. If you are interested in finding out how you can contribute to this dialogue, visit our website to get in contact with us!