One of FMO’s aims is to actively contribute to reducing inequalities by, amongst other things, seeking investment opportunities that positively contribute to the full inclusion of women in economic, social and public life.
Nevertheless, a gender-focused approach to agri investments remains less evident and needs to be explored further. There is evidence that investing in a ‘gender neutral’ way is not sufficient to reduce gender inequalities - or can even exacerbate pre-existing inequalities. What is required instead, as FMO discovered through its latest study with LadyAgri, is a gender-positive approach.
The 2019 evidence map for Building Prospects, a fund investing primarily in agribusiness and managed by FMO on behalf of the Dutch Ministry of Foreign Affairs, identified the absence of a gender lens as one of the critical gaps in its investment strategy. As a result, FMO contracted LadyAgri to carry out a strategic study on how FMO could maximise the impact on gender equality through Building Prospects and in the agri value chain in Sub-Saharan Africa.
The study sets out to identify business opportunities in the agri value chains with the highest impact on women
The study sets out to identify business opportunities in the agri value chains with the highest impact on women as well as to provide recommendations for a gender-positive approach to Building Prospects investment decisions.
Between June and December 2019, LadyAgri visited four countries: Zambia, Malawi, Kenya and Côte d’Ivoire, conducting interviews across 71 companies, NGOs, FMO staff and other relevant stakeholders.
Because the majority of women in the agri-value chain fall beneath the radar of banks and DFIs, it is crucial to identify where they work and what their roles are. Many are ‘invisible’ because agri commodities are often sold by men, and the land used to cultivate them is registered in the man’s name, leaving the role of women in the production process undetected. In addition, many women are seasonal workers and less likely to have full-time contracts. It is therefore difficult to identify female participation in the agri sector as women rarely appear in official statistics. It is almost as if they did not exist at all in some agri value chains whilst the opposite is true. Women dominate the workforce at different value-chain stages: production (42%), processing (82%), distribution (71%) and in food services sector (88%) in West Africa[1], although these figures vary per crop and country.
The LadyAgri study revealed that, fruit and vegetables (Kenya), sweet potatoes (Zambia and Malawi), cassava and shea butter (Zambia and Côte d’Ivoire) are women-dominated at all stages of the value chain, whereas for other food items, females are prominent at the processing, packing and distribution stages (e.g. fish in Zambia and Kenya). However, these roles are often informal, unacknowledged and under-resourced.
Barriers are typically linked to traditional customs, unequal land property rights and limited personal asset ownership
Investments in any of the value chain stages using a gender-positive approach requires identification of the barriers and constraints that women face. At the same time, the approach must reflect specific market needs and respect socio-cultural norms. Barriers are typically linked to traditional customs, unequal land property rights and limited personal asset ownership, as distribution and control of these key assets are skewed towards men across Sub-Saharan Africa.1
Since land and/or property are assets required by banks to secure SME loans, women are excluded if unable to produce individual or joint title deeds in their name. Facilitating access to finance, or technology and other inputs for female smallholders provides a great opportunity to have a positive impact on yield and production while also fostering gender equality.
FMO wanted to gain more insight around applying a gender lens to women-owned or led agribusinesses. 57% of the agri-businesses interviewed were women-owned and 83% of them were considered too small[2] for direct investment by Development Finance Institutions (DFIs) or impact investors.
The interviews revealed a need for focused capacity building and mentoring to develop business plans and, in the medium term, bring the companies to a “bankable stage”[3] from the perspective of the DFIs.
The gender sensitive approach should not only focus on female-owned or -managed companies but could also target impact along the value chain
For the businesses with an annual turnover of USD 3-15mln, the gender sensitive approach should not only focus on female-owned or -managed companies but could also target impact along the value chain. Given their size and market share, these businesses can considerably impact women within their business activities as workers, customers or product distributors. This would also have a positive ripple effect on communities in terms of rural livelihoods.
Identifying women in the workforce offers a great opportunity for gender impact in DFIs’ and impact investors’ portfolios. In some value chains, women represent over 80% of the workers predominantly in packing, processing and seed production. They are often preferred for their specific skills and contribution to ensuring product quality. Addressing the socio-economic exclusion of women is nevertheless a delicate matter which means that when applying a ‘gender lens’ impact investors such as FMO must ensure that companies offer a gender responsive workplace including, for instance, child-care facilities.
Encourage large agri-corporates to consider a gender-inclusive strategy
Financing large agri-corporates is another way to positively impact women by encouraging them to consider a gender-inclusive strategy which can lead to new market opportunities, segments and overall business growth. This is important as DFIs and impact investors are more likely to work directly with large agri corporates. Helping all parties involved to achieve healthy returns can have a positive impact on women. Therefore, investors such as FMO have a key role in applying the ‘gender lens’ to ensure women are included in their business models and strategies, and have tools in place to avoid their exclusion.
In this respect, the study proposed a tool for agri corporates that can also help FMO to: a) identify the role of women along the value chain, b) identify gaps and opportunities to improve impact on gender equality through the envisioned transaction and c) identify projects eligible for the 2x Challenge.
Based on the findings and recommendations, in the next six months FMO will pilot the gender lens tool for Building Prospect investments in agribusinesses. In the medium term, this is expected to lead to concrete opportunities for FMO to improve gender equality in the agri space. FMO will also explore a recommendation to put in place an incubator facility to reach women-owned or led agri SMEs via local banks.
[1] OECD/SWAC (2019), Women and Trade Networks in West Africa, West African Studies, OECD Publishing, Paris, https://doi.org/10.1787/7d67b61d-en.
[2] FMO follows IFC classification of company size based on annual turnover: microenterprises (< $ 100,000 ) and small ($100,000 - < 3 mln)
[3] World Bank Africa Gender Innovation Lab 2017 Michael O’ Sullivan Gender and Property Rights in Sub-Saharan Africa A Review of Constraints and Effective Interventions