Still Less Than Half: Gender Focus in Development Finance

Gender gaps in participation in the labor force, entrepreneurship, pay, share of senior management, and executive board positions–as well as access to finance, markets, and skills–have been well documented. The enormous costs of those gaps to macro-economies and the global economy have been repeatedly quantified, including by a recent World Bank estimate of foregone global wealth due to gender inequality in earnings of about $160 trillion. Given their understanding of these costs, you would think that development finance providers would rush into the gender equality space for large assured returns on their aid and investment dollars. It’s worth taking a comprehensive look to see if that’s the case.

The gender focus of aid to governments

This recent policy brief by the OECD Development Assistance Committee (DAC) Network on Gender Equality (GENDERNET) examines how much official development assistance (ODA) is dedicated to gender, as either a primary (principal), or secondary (significant) objective. Minimum criteria for a project/investment to meet the secondary objective standard are not onerous. They require that: a gender analysis be conducted and inform design, at least one explicit gender equality objective is defined and measured, and results data are disaggregated by gender where applicable and reported. Qualified projects/investments therefore include those where only a portion of the financing or budget targets gender objectives.

The bottom line? Despite much talk about mainstreaming, in more than half of ODA provided by the 30 DAC country members, gender gains are not a priority. And the share is especially low for ODA focused on reducing poverty and promoting economic gains.

On average for 2017-2018, only 4 percent of ODA went to programs primarily focused on gender equality and women’s empowerment. The good news is that the share of ODA targeting gender as a secondary objective is much higher—42 percent—and the trend over time is decidedly positive. But the overall share masks great disparities across aid areas. Aid to promote human rights and women’s participation in the media scores high in gender focus—above 50 percent. But only about a third of aid directed at economic progress is focused on gender as a primary or secondary objective.

Equally important, different DAC members show a wide variation in shares of ODA with a gender focus. Canada, true to its feminist foreign assistance policy, has the highest share at 90 percent. Unfortunately, the United States has the fourth lowest share of the 30 members at a little more than 20 percent.

Aid to the private sector

What about other official flows (OOF), defined by the OECD to include public commercial and concessional finance in support of the private sector? Unfortunately, the OECD does not have the data at this point for a comprehensive answer. However, an OECD policy paper provides data from a sample of about a third of bilateral OOF providers. These data suggest that a third of these flows was “found to integrate or be dedicated to gender equality”—consistent with the ODA share for aid focused on the economy and poverty. We at CGD are in the midst of analyzing the results of a survey of the gender policies and practices of 16 multilateral and bilateral development finance institutions (DFIs) that will help give us a fuller picture of gender integration in DFI investments.

Private foundations

Next, let’s look at private foundations. Not much joy there either. Based on the same definition for gender focus, the GENDERNET policy brief reports that in 2018 only 23 percent of the finance provided by 33 foundations focused on gender equality and women’s empowerment, mainly in health.

Blended finance

Finally, we can look at public and private blended finance transactions—projects combining commercial and concessional finance with the objective of catalyzing private finance for investment with development impact. A report from Convergence, the global network for blended finance, finds that 25 percent of blended finance transactions are “aligned” with SDG 5 (Gender Equality). Of that 25 percent, 20 percent have gender as the principal focus, and 80 percent have gender as a partial focus. Partial focus is defined here as deals that trace and monitor their impact on women and girls but may or may not include a stated gender-related objective.

Mainstreaming gender

There is no shortage of ways to integrate gender into aid-supported investments in economic growth and poverty reduction. Benefits for women and girls can be incorporated into investment choices and design across at least six dimensions: improved access to products and markets (as consumers and producers); human capital, income and wealth benefits; provision of basic needs and reduced vulnerability; women’s ownership and leadership; labor and market standards that protect and empower women; and innovations in technology and business models that benefit women and girls. In my experience as a former development finance practitioner, it was rare to come across a project or investment where integration of gender into analysis and design did not produce opportunities for significant benefits for women and girls.

Real gender mainstreaming, backed by real institutional resources and commitment, is a choice available to all development finance providers. Earmarking certain portions of aid budgets and investment portfolios as funds for women plays an important role but is no substitute for mainstreaming. Gender cuts across all SDGs. It is hard to understand why the share of development finance dedicated to gender equality, at least as a secondary objective, is not way above 50 percent, if not close to 100 percent.