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Mobilizing $100 Million in Private Capital for Women’s Economic Empowerment

How USAID INVEST and Women’s World Banking mobilized millions of dollars to empower women living in the world’s most fragile countries.

In Uganda, Jacinta Keburungi’s prepares flowers for a wedding for her flower business. (Photo: USAID)

By Emily Langhorne, INVEST Communications Specialist

In September of 2012, the International Space Station had been experiencing electrical problems for over a week after one of its four Main Bus Switching Units malfunctioned. Armed with technical tools, astronauts Sunita Williams and Akihiko Hoshide ventured outside to repair the unit. Over eight hours later, they aborted the mission; metal shavings had accumulated around the unit’s bolts, and their tools were incapable of clearing away the debris.

The situation became more dire in the days that followed. One of the station’s switching units also failed, further diminishing the power supply. Williams and Hoshide went outside again, armed this time with a common household tool: a toothbrush. The team had modified it slightly, attaching the brush to an Allen wrench and an ACME bolt. After four hours of scrubbing, Hoshide and Williams successfully removed the debris and repaired the unit.

Even though they were working in the “final frontier,” Hoshide and Williams discovered that they could best achieve the results they needed by using a familiar tool.

Recently, the United States Agency for International Development (USAID) — the federal agency that leads U.S. Government humanitarian and international assistance efforts — has been venturing into a new frontier and learning similar lessons.

By exploring blended finance approaches to solving development challenges, USAID has been discovering new ways to mobilize private capital for development objectives. This year, USAID repurposed a familiar tool, the deliverables-based contract, to catalyze investments into a $100 million blended finance fund dedicated to improving women’s economic empowerment throughout the developing world.

The Perfect Partnership: USAID and Women’s World Banking

Empowering women economically is essential for breaking cycles of generational poverty and generating economic growth. Although research has shown that there’s a positive relationship between women’s empowerment and economic growth, globally women’s employment is still at only 45.3 percent compared to 71.4 percent for men.

Committed to improving economic opportunity for women, USAID’s Office of Gender Equality and Women’s Empowerment (GenDev) wanted to use its resources to increase commercial investments that promote financial inclusion for low-income women in developing countries, with an emphasis on growing digital financial services.

Digital services are essential for expanding the reach of financial products and services to low-income women. There are one billion unbanked women throughout the world. However, two-thirds of unbanked adults have access to a mobile phone, which means that mobile saving accounts can create tremendous opportunity for women in developing countries where self-employment is the norm.

When these self-employed women keep money in their home, the men in their family may take control of it, or societal pressures may dictate that they share it with their relatives. As a result, these female microentrepreneurs cannot invest money earned in their business or long-term savings. Mobile savings accounts provide them with an alternative to keeping cash in the home, which is especially important for those women who lack the ability to open a bank account locally. Self-employed women in possession of a mobile savings account have reported greater household decision-making power than those without one, suggesting that mobile savings accounts also have the potential to alter the societal norms that keep millions of women in subordinate positions within their families.

Together with INVEST, a USAID initiative that mobilizes private capital to get better development results, USAID’s GenDev Office identified Women’s World Banking as the perfect partner for designing a blended finance strategy centered on supporting financial institutions dedicated to empowering women.

For over 40 years, Women’s World Banking (WWB) has been a global leader in women’s financial inclusion. By creating and scaling financial solutions, strengthening institutional gender diversity, and financing women-focused institutions, the nonprofit has played a critical role in the economic advancement of women around the globe.

Rather than relying solely on its limited funding sources, e.g. grants and subcontracts, WWB realized that it could increase its impact by working with the investment community. Recognizing the potential of gender-lens investing to grow women’s financial opportunities, it established a for-profit asset management company Women’s World Banking Asset Management (WAM).

WAM is a wholly-owned subsidiary of WWB, designed to raise commercial capital and make investments into financial institutions that promote women’s economic empowerment. Acting as WWB’s investment arm, WAM raises, manages, and deploys private capital alongside its own.

In 2012, WAM launched its first fund, WWB Capital Partners (WWBCP I). A $50 million, traditional private equity fund, WWBCP I invests exclusively in women-focused financial services providers. WWB serves as the general partner, and all other investors are limited partners. Making 10 investments in eight countries, the fund has received favorable returns for investors. In 2017, its portfolio companies reached more than 4.5 million women, providing them with microloans, small- and medium-sized enterprise loans, agriculture loans, savings accounts, insurance products, and more.

A cooperative of women run a tailoring business in Somalia. (Photo: F. Shideh, TIS IOM/USAID)

Despite the success of WWBCP I, WWB understood that having a seat at the decision-making tables of their investees required much larger investments. In 2017, WAM launched Women’s World Banking (WWB) Capital Partners Fund II, a $100 million blended finance fund committed to investing in women-focused financial service providers, especially those providing products and services to low-income women in Africa, the Middle East, and the Indo-Pacific region.

INVEST recognized WWB Capital Partners Fund II (WWBCP II) as the ideal investment opportunity for USAID. There was just one problem: USAID can’t act as a traditional investor. It can’t hold equity and typically doesn’t deploy debt.

Thinking Inside the Box: An Old Tool, A New Use

Because USAID could not hold equity in the fund, INVEST’s team had to find a different way for USAID’s GenDev Office to deploy its funding into WWBCP II. To do so, they took a commonly used tool from USAID’s toolbox, the deliverables-based contract, and repurposed it in a new way.

In a deliverables-based contract, payment is tied to the completion of specific deliverables. For example, USAID hires a firm on a deliverables-based contract to translate a report. The translated report is the deliverable. Before work begins, USAID and the firm agree upon a fixed price for the report, which USAID pays to the firm after it submits the finalized report.

To make this approach work for WWBCP II, INVEST structured a contract in which the deliverable was the fund’s successful raise of $100 million in capital. Designing the contract required some internal navigation at USAID, and INVEST had to work closely with the legal team there; however, the new use of the contract did not necessitate the creation of any new legal structures or authorities. Using a deliverables-based contract, USAID could provide a $500,000 catalytic contribution over two phases. For each phase, the fund’s deliverable would be the successful close of a round of fundraising and the accumulation of $50 million in investments.

WWBCP II has an innovative three-tier structure in which development agencies, risk-sharing lenders, and commercial investors pool their resources and agree upon a scheme for priority of return. Tier one investors are risk-sharing lenders, such as the Overseas Private Investment Corporation (OPIC), and they make up 20 to 30 percent of the fund’s investments. These organizations lend money as debt to the fund under the agreement that they have the first priority of return, with a return rate limited to four percent.

Meanwhile, tier two investors are commercial investors that contribute 50 to 60 percent of the fund’s revenue in the form of equity investments. They expect to receive market-rate returns (approximately 15 percent), have no limits on their rate of returns, and have second priority of return. To ensure there is an attractive rate of return to bring in commercial investors, tier three investors, such as development agencies, make concessional contributions, limiting their return to a maximum of two percent. If there are losses, tier three investors absorb them, thereby providing protection to the other investors.

Through this blended finance structure, USAID’s concessional capital mitigated risks for commercial investors, “crowding in” investors who would otherwise regard investment in women-focused emerging-market financial institutions as too risky. The structure also makes it possible for the fund to invest in more low-income and fragile countries where commercial investment is sorely needed but would not naturally result in market-rate returns.

Because USAID’s GenDev Office sought to prioritize digital financial services as a key criterion of its investment, INVEST combined $100,000 in technical assistance with the catalytic contribution. With this money, WAM can assess and, if needed, improve the digital financial service capacities of the fund’s portfolio companies.

By supporting WWBCP II, USAID is increasing the ability of low-income women to access to the financial services that they need for their families and businesses to be successful. USAID’s partnership with WWB illustrates how an international development agency can serve as a catalyst, providing the initial seed money that in turn attracts commercial investors with sizeable resources. Its contribution to WWBCP II also demonstrates that mobilizing capital doesn’t have to be unnecessarily complex. INVEST’s innovative approach centered on reimagining the use of the deliverables-based contract, a common tool that was already at USAID’s disposal.

Sometimes, using a simple, familiar tool is the best strategy for achieving results.

After all, a three-dollar toothbrush did once save a $100-billion space station.

To learn more about the partnership between INVEST and WWB, check out INVEST Close-Up: Catalyzing Private Investment for Women’s Economic Empowerment.




INVEST, a USAID initiative, mobilizes private investment for development goals. It drives inclusive growth and sustainable development in emerging markets.

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INVEST, a USAID initiative, mobilizes private investment for development goals. It drives inclusive growth and sustainable development in emerging markets.

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