This initiative, which launches in Mexico and Central America, is made possible with grant funding support from Walmart Foundation
Take a look around any farming community and you’ll see countless hardworking women producing the food and other commodities that nourish our world. Women plant and tend crops, collect the harvest when it’s ready, work in sorting and processing facilities, oversee finances, manage business operations, train farmers and employees, and own rural enterprises. They constitute 43% of the agricultural workforce in low- and middle-income countries—yet they continue to face inequity. Structural barriers prevent many rural women from owning land, working outside the home, and accessing credit or training that could unlock new economic opportunities.
Agricultural enterprises can help level the playing field by elevating women’s voices and needs, both in the business and on the farm. Since 2012, Root Capital’s Women in Agriculture Initiative has supported agricultural enterprises worldwide to generate opportunities that are inclusive of women. In that time, we’ve provided targeted training and invested $545 million in inclusive agricultural businesses, reaching more than half a million women farmers, 14,000 women employees, and more than 100 women entrepreneurs.
But the gender gap in agriculture is far too big for any organization to address on its own. While many donors and investors are now prioritizing gender inclusion, only 7% of all agricultural investment goes to women. Additionally, there is a $320 billion gender financing gap for small and growing businesses in low- to middle-income countries. That’s why Root Capital—with philanthropic support from the Walmart Foundation, which supports initiatives to grow small producer market access—is launching a new initiative to strengthen gender lens investing (GLI) throughout the sector.
Launching in July 2021, our new GLI initiative has two key components. First, we will use an innovative financing approach to provide much-needed credit to gender-inclusive and women-led businesses in Mexico and Central America. The financing mechanism is adapted from the Social Impact Incentives (SIINC) project that Root Capital piloted with Roots of Impact, IDB-Lab, and Swiss Agency for Development and Cooperation. Experience shows that closing the gender financing gap requires lenders to be willing and able to finance early-stage enterprises in need of smaller loans. However, many lenders won’t finance these businesses because of inherent risks and unattractive returns.
With grant funding support from the Walmart Foundation, Root Capital will be able to overcome the operational cost and risk barriers associated with reaching early-stage, gender-inclusive and women-led businesses. This support will ultimately enable Root Capital to disburse an additional $25 million of investor capital to these businesses, filling a critical financing need that will benefit more than 12,000 farmers and employees. Walmart Foundation’s funding is directly tied to Root Capital’s costs to serve these businesses and the expected impact of the loan. The mechanism will incentivize Root Capital to make investments that put high-impact businesses on a path to growth, thereby diminishing the need for a subsidized loan in the future. We will also publish our results and lessons to help build the evidence base for how catalytic, blended finance can be deployed to increase impact for women.
Importantly, the second component of this initiative seeks to catalyze gender lens investment in the broader agricultural finance sector, knowing that no one lender can tackle the gender financing gap on its own. For this, Root Capital will leverage longstanding partnerships with the Council on Smallholder Agricultural Finance (CSAF)—a pre-competitive network of agri-finance lenders, of which Root Capital is a founding member—and Value for Women—a specialized advisory firm helping organizations advance women’s inclusion. CSAF members have long prioritized gender equity and have recently pursued, individually and through CSAF, a more explicit commitment to GLI. Through this project, members will have the opportunity to participate in a series of trainings and peer-to-peer learning engagements with the goal of strengthening their approaches to gender lens investing. This will include GLI workshops, led by Value for Women, as well as one-on-one advisory engagements over a six-to-nine-month period. These trainings will draw on lessons learned from Root Capital’s own gender lens investing journey—which were documented in a recent case study—as well as specific gender-focused tools and approaches we have developed over the last nine years.
Gender equity is critical if we are to build prosperous and resilient rural communities. Alongside our partners, Root Capital will catalyze more gender lens investing—in our own portfolio and beyond. Together, we can generate inclusive opportunities for women in agriculture.
Photos © Sean Hawkey