Why blended finance is a feminist issue

Added 08 Mar 2018

This International Women’s Day we expect to see leaders across the world speaking out in favour of women’s equality and empowerment under this year’s theme of “press for progress”. Top-level political pressure for progress plays an essential role in delivering a world where the rights of women and girls are respected, protected and fulfilled.

However, strong political commitments need to be matched by coherent policies at all levels – including on all forms of development finance. One increasingly fashionable form of finance is blending – combining concessional public finance (such as aid) with commercial finance to fund development-related activities in the global south. But until recently, blending had received less attention from a women’s rights perspective.

In November last year Eurodad published a briefing that aimed to unpack some of the potential gendered implications of blended finance – focusing on marginalised women, such as women with disabilities. Our analysis highlighted two key risks.

The first risk is opportunity cost. In the absence of an overall increase in aid or other concessional public finance, every Euro invested in blending is a Euro taken away from other uses. Realising women’s rights requires dedicated resources – for example, to invest in sexual and reproductive health services; to train judicial staff on handling cases of gender-based violence; and to fund women’s rights organisations. If implemented equitably in a way that supports the rights of the very poorest, none of these activities is likely to offer much prospect of short-term profit, making them poorly suited to blending. So if blending increases, this risks diverting resources away from some of the things that matter most for women’s rights.

The second risk is that the design and implementation of blended finance projects may exacerbate inequalities between women and men. Many women face a complex mix of social, economic and political discrimination, which reduces their chances of benefiting from blended finance projects, unless deliberate action is taken. For example, a blended finance project that seeks to improve opportunities for producers of cash crops isn’t much use to women if the cash crop sector is dominated by men – unless complementary actions are taken to break down the barriers that have excluded women in the first place. And if women are benefiting less from a project than men, then the net result of the intervention will be to widen gender inequalities.

Exacerbating inequalities

In the past, some blended finance projects have missed important opportunities to ensure that women benefit on an equal footing with men. A 2016 independent evaluation of seven major European Union blending facilities between 2007 and 2014 found that “gender was rarely targeted” – even in sectors such as financial inclusion, where there are known to be significant gender disparities.

What is more, some blended finance-funded projects have not only exacerbated inequalities: they have also been associated with direct infringement of other rights – from alleged land grabs in Mexico to forced evictions in Kenya – with redress sometimes being elusive. Where blended finance infringes on the rights of communities living in poverty, then marginalised women – who have less access to financial resources, intangible support networks and power – are likely to be among the hardest hit.

Some recent policy developments, such as the approval of the regulation of the European Fund for Sustainable Development, include some more positive language on gender. However, the devil will be in the detail of how this is implemented. Significant concerns remain in the absence of strong safeguards including:

Pressing for progress

Eurodad has previously set out its position that human rights impact assessments should be systematically integrated into economic policy making. Assessing the women’s rights impacts of blended finance is a case in point. In particular, we recommend that:

  • The decision on whether to use blending should be made democratically by countries in the global south, not by donors – and the voices of those who experience discrimination, including women, should be heard loud and clear in the decision-making process.
  • Blending should only go ahead if democratically owned country-led decision-making processes prioritise blending over other ways of using scarce international public funds to support national sustainable development strategies, and deliver human rights for all, including women and the most marginalised.
  • If blending does go ahead, blending projects must be carried out in a way that fulfils human rights obligations, including the rights of women and marginalised groups. This means tackling exclusionary barriers, and overhauling transparency and accountability.

With upcoming discussions on development once again putting blending centre stage – at both the UN Financing for Development Forum and the Organisation for Economic Co-operation and Development (OECD) – now really is the time to press for progress.