Sustainable Financing: Entrenching Gender Bonds

When Gender Bonds are mentioned, what's the first thing that comes to mind? Even though the term gender encompasses both men and women, societal discourse often conflates gender with women thus the associating of gender with women. 


Is this problematic? Absolutely. 


 In a society striving for equal and equitable treatment of all genders, this association of gender solely with women's issues poses challenges. While significant progress has been made in advocating for women's rights, it is evident that excluding men from these efforts hindered progress in achieving true gender equality and equity 


We need inclusive approaches but this is a discussion best saved for another time. For now, let's focus on the matter at hand: gender bonds. 


Gender bonds, also referred to as sustainable or social bonds, are a subset of global debt capital market instruments. They are designed to advance gender equality and sustainable development by financing projects that empower women and address the gender gap.  


Unlike traditional bonds, gender bonds target initiatives supporting women's empowerment, gender equality, and improved access to finance. Investors contribute to positive social impact by directing proceeds from these bonds to projects benefiting women in areas such as leadership, entrepreneurship, and community development. By integrating gender considerations into their objectives, they empower women and raise awareness of gender inequality. 


For instance, the year 2023’s International Women's Day theme, "Digital: Innovation and Technology for Equality. Sustainable investments should have seen gender bonds issued to support projects promoting digital inclusion for women in sectors like finance, while also addressing online safety for women and girls. 



In 2023 we saw institutions such as the Asian Development Bank (ADB) raise about $11.5 million through the issuance of its second gender bond that sought to expand access to credit for women and agricultural workers. 


Gender bonds can be issued through two approaches: 

(a) "use of proceeds," where issuers allocate all bond proceeds to predefined projects; 

(b) "performance-based," incorporating quantifiable indicators to assess impacts and sustainability targets. 


The premise is that investing in companies promoting gender equality isn't just morally responsible but can also yield higher financial returns. With the growing focus on sustainable investment, there's a need for more investment products dedicated to addressing gender issues. 


Some countries, like Mexico and Nigeria, have already issued gender bonds. The sub-Saharan Africa's first Gender Bond listed by Tanzania's NMB Bank Plc was the NMB Jasiri Gender Bond. Proceeds from the NMB Bank Gender Bond were geared towards financing several women-owned small and medium-sized businesses in Tanzania to grow and create jobs. 


The question for entities in Kenya and the rest of Africa is whether they are ready to reap from the benefit of gender bonds as a financial instrument? It will be interesting to see gender bonds issued in 2024 in line with this year’s women’s day theme of ‘Inspire inclusion'. The campaign recommends areas for action to improve inclusion, such as: forging women's economic empowerment. recruiting, retaining and developing female talent. 


To benefit from gender bonds, entities must demonstrate leadership in advancing gender equality and be prepared to diversify their investor base, leveraging new financing sources. As the demand for gender-focused investments grows, prioritizing gender equality could be a strategic opportunity for issuers to differentiate themselves in the sustainable bond marketplace. 


The Financial Sector Deepening (FSD) spearheaded the launch of a toolkit for  Gender Bonds Toolkit for Africa


The Toolkit offers a comprehensive resource for investors looking to explore into the realm of gender bonds and provides valuable insights, strategies, and guidance for navigating the complexities of gender-focused investments. It also equips you with the knowledge and tools necessary to make informed decisions and drive meaningful impact. 


This launch underscores the importance investors must attach to gender bonds. As an investor you should be poised to leverage gender bonds. The question that begs is do project owners possess the necessary skills to benefit from the wealth of opportunities presented by gender bonds set to be issued? 


This is where we come in as Procunomics limited. We offer expertise in  assisting businesses and entities prepare for and maximizing the advantages of gender bonds. Reach out to us today, and we will guide you through this journey. 

Written by Stella Amisi Orengo

Date Published : Feb 28, 2024