Gender and Local Economic Development: Unlocking Domestic Capital for Women’s Economic Empowerment and Entrepreneurship

  • March 08, 2016

  • New York, USA

Overcoming structural barriers to women’s participation in the local economy, and recognizing and addressing women’s multiple roles as consumers, employers, entrepreneurs, and employees in the design of financial solutions, can have powerful impacts on the lives of women.

They can improve women’s earnings and consumption, strengthen household resilience, foster greater investments in child well-being, and enhance aspirations for the next generation of girls and women.

Recognizing that a blend of gender-sensitive public and private investment will be required to advance local development, in 2014 UNCDF, UNDP and UN Women designed the Inclusive and Equitable Local Development (IELD) programme, to test ways of unlocking private finance for potentially transformative infrastructure projects that benefit women.

On the occasion of this year’s International Women’s Day, #UNCDFExpertsChat spoke to Mohammad Abbadi, Local Development Finance Programme Manager at UNCDF. As a member of the Practice Management Team, Mohammad provides day-to-day programme and financial management support to the pipeline of projects and programmes in the areas of local development finance.

Mohammad is also the practice focal point for gender equality and women’s economic empowerment, and helped UNCDF design its newest flagship IELD programme.

Additionally, Mohammad provides frequent capacity building and tailored trainings to the staff of the local development finance practice on programme and financial management.

Mohammad holds a Master degree in Public Administration from Rockefeller College of Public Affairs at SUNY Albany, New York; and a Bachelor’s degree in Economics from Hampshire College, Amherst, Massachusetts.

#UNCDFExpertsChat: What is the development challenge you are trying to solve? How does UNCDF’s IELD programme solve that challenge?

Mohammad Abbadi: IELD’s objective is to unlock domestic finance, public or private, for women’s economic empowerment, entrepreneurship and income generating activities. Globally, women do nearly 2.5 times as much of unpaid care work as men, with large gender disparities in time spent cooking, cleaning and caring for household members. Women’s time burdens significantly reduce their capability to perform income-generating work and contribute to local economies at large.

In Least Development Countries (LDCs), access to basic infrastructure and services remains a major bottleneck to women’s economic empowerment. Women’s involvement in paid work varies greatly across countries depending on the extent and coverage of public services such as water and sanitation, access to energy, health, and childcare.

The problem is two-fold: on the one hand, there has been limited investment by the local public sector in infrastructure designed to reduce impediments to women’s economic empowerment. On the other hand, there have been limited partnerships between the private sector, especially domestic commercial financing institutions, and women entrepreneurs who face steep obstacles in accessing adequate financial resources.

Inclusive and Equitable Local Development (IELD) is a joint UNCDF, UNDP and UN Women initiative which aims at supporting governments and the private sector at the local level to design, plan, implement and sustain local public and private investments, with a particular emphasis on unlocking barriers to women’s economic empowerment and entrepreneurship.

#UNCDFExpertsChat: What is the last mile financing model of IELD? How does it build public/private partnerships?

Mohammad Abbadi: IELD’s Transformative Impact Financing Approach (TIF) was systematically designed to unlock public and private finance to address constraints on women's participation in local economic development and income generating activities.

Starting with its gender-sensitive Local Economic Assessment tool, IELD identifies the most pressing bottlenecks preventing women from entering the labour market and accessing basic public infrastructure. At the same time, it provides an overall perspective of the potential areas for private sector growth, value chains, forward and backward linkages in the local economy, and its relation to national and regional economies.

Following the Local Economic assessment, the TIF identifies locally-generated investable pipelines of projects that have a transformative impact on the local economy, entrepreneurship and job creation. By matching locally born investments that employ local capacities and drive local economies, TIF utilizes UNCDF's local development finance instruments, such as seed capital grants, local development funds, private sector finance, SME cluster finance, reimbursable grants, and guarantees to unlock domestic public and private capital to finance these women-led or gender-sensitive businesses.

Whether public, private or public-private investments, IELD creates the pipeline of investments in strong collaboration with local authorities, local communities, and the private sector.

#UNCDFExpertsChat: How does IELD support the achievement of the SDGs?

Mohammad Abbadi: Many of the SDGs are linked to IELD’s focus area, including women’s empowerment, local economic development, and public-private partnerships. IELD aims to empower women economically by removing or reducing the infrastructure impediments that prevent women from entering the labour market. This is done by unlocking domestic capital for public and private infrastructure projects, which can have a transformative impact on women’s economic empowerment and entrepreneurship. Therefore, IELD’s focus areas and expected outcomes will make crucial contributions to the realization of SDG 1 on ending poverty, SDG 5 on achieving gender equality and women’s empowerment, SDG 8 on promoting inclusive and sustainable economic development, SDG 9 on building resilient infrastructure, as well as SDG 17 on strengthening global partnerships.

As studies have shown that women’s economic empowerment can have positive influence on other areas such as health and education, IELD could also indirectly support the achievement of other SDGs and serve as a catalyst to accelerate overall sustainable development.

#UNCDFExpertsChat: The SDGs have a strong focus on leaving no one behind. How does IELD reach poor communities and under-served regions in LDCs? How does it make sure that it reaches women and vulnerable groups?

Mohammad Abbadi: IELD is by design inclusive, in that it seeks to enhance women’s participation in income-generating activities and economic empowerment at the local level in LDCs. The target beneficiaries of the IELD Programme are local women and local communities. Traditionally in some societies, men are breadwinners, and women are mostly restricted to domestic work or other forms of unpaid work. Without improved infrastructure, women are even more constrained by the heavy time burden of such work, such as collecting fire wood. Unpaid care work is commonly undervalued by society and policymakers, despite the fact that its monetary value is estimated at from 10 to over 50 per cent of GDP.

IELD will make sure that women are reached and supported in different ways. First, IELD will identify the most pressing bottlenecks faced by women locally to increase their economic participation in consultation with local governments and communities, and therefore women’s needs will be acknowledged and addressed. Then IELD will work on gender-responsive infrastructure projects with local governments, which will largely reduce the time that women spend on unpaid care work and benefit the whole community. In the meantime, IELD will invest in women-led businesses and women’s capacity building in entrepreneurship. In a word, working bringing together local women, local communities, local authorities and the private sector is the key to success of IELD.

#UNCDFExpertsChat: Can you give an example of how IELD has made a difference to the lives of poor people and communities?

Mohammad Abbadi: IELD is in its initiation phase, but it is testing financing instruments which have been proven to work by other UNCDF programmes, such as the Local Finance Initiative programme which promotes sustainable economic growth by unlocking and re-investing domestic resources and services into local economies.

In Kibaha Town of Tanzania, through the Local Finance Initiative, UNCDF has utilized its Transformative Impact Financing approach to support local governments and the private sector to establish a modern market. With an investment of technical expertise and seed capital of US$250,000, UNCDF has unlocked US$7.6 million commercial loan from Tanzania Investment Bank to finance this project. Serving more than one million consumers, this well-structured formal market has largely improved women’s market access for agricultural products and businesses, created economic opportunities, and diversified local economic activities. It provides a favourable environment for women entrepreneurs to establish businesses, which can increase household income and therefore have a multiplier effect in the local economy.

Similarly, UNCDF has developed a bus terminal in Kibaha and a radio station in Ileje by providing “last mile” seed grant capital along with technical expertise and unlocking substantial amount of domestic resources from public and private sector finance. The bus terminal provides crucial transportation infrastructure to over 60,000 passengers daily, and it significantly increases women’s mobility as well as their access to transportation, goods and services, products and markets. The radio station provides substantive information to residents within the community and beyond, and significantly empowers women with knowledge in different areas.

These projects are examples of the kinds of investment IELD will develop and target, which shows huge potential in transforming communities and people’s lives for the better.

#UNCDFExpertsChat: What are the lessons learned from IELD's implementation so far?

Mohammad Abbadi: IELD was just launched. Unlocking domestic finance for women entrepreneurs is a process which requires a change in mind-sets at the local level. It is a time-consuming process, which includes capacity building for entrepreneurs, capacity building for domestic banks, and awareness raising to allay concerns about local risks and overcome cultural, legal and institutional impediments which hinder women’s access to financial capital to name a few. However, once proof of concept is demonstrated, and we can show that local infrastructure projects can yield financial and social returns, domestic commercial banks are increasingly willing to lend to local businesses and women entrepreneurs.

#UNCDFExpertsChat: What's the plan for scale up? What can we look forward to in the future of IELD?

Mohammad Abbadi: The IELD Programme will have a piloting phase of five years, with an initial country presence in three to four LDCs, and an intention to systematically grow the country presence based on availability of resources, country demand and, most importantly, the capacity of the project to deliver effectively the desired results. Future country expansions and considerations will be done through a call for proposal to country offices, upon which a criteria-based evaluation will be performed and presented to the IELD Steering Committee for decision.

The IELD Programme has three main expected outcomes: 1. Women have greater access to information and have better ability to develop effective partnerships; 2. Barriers are eliminated and an enabling public and private policy and institutional environment is created for women’s local economic empowerment; and 3. Domestic financing is unlocked and increased for gender-sensitive local basic services and local economic development.

#UNCDFExpertsChat: What's exciting about working in this space?

Mohammad Abbadi: Women have huge potential in accelerating local development, but their efforts and capabilities are largely invisible due to social norms and weak infrastructure. I am very excited to witness the birth of IELD and very much looking forward to its transformative impact on women’s economic empowerment and local development. I truly believe that the key to sustaining our future economies will depend on whether we invest in women today, and this project is an exciting way of making that happen.