Loan Guarantees — and System-Change — for Women in South Africa
One of the most compelling aspects of gender lens investing is its potential to incorporate women and girls into systems that have excluded them — and to change those systems. To change them by applying values and practices women prioritize in order to build more just and inclusive societies.
When Shared Interest was launched in 1994, just after Nelson Mandela was elected president, to enable international investors to put their money work in helping to build a more equitable South Africa, race was not the only vehicle for exploitation in that country. As Shared Interest developed a fund to guarantee local commercial loans in Southern Africa to “excluded” entrepreneurs, farmers and home-owners, we focused on loans to black people — and particularly to low-income black women, who were triply disadvantaged by their race, class and gender. They found themselves at the top of the unwritten list of people the financial institutions considered “unbankable.”
Now I ask, why should they not study further to become agricultural technologists — and come back and help us and communities like ours?Sibongile, member of the Siboshwa sugar cooperative in Mpumalanga, South Africa
Since then, the majority of Shared Interest’s 2.3 million beneficiaries have been women. From the beginning, we have asked ourselves how to make the most impactful use of our guarantees. We have come to appreciate that it is not enough to increase the number of women business- and home-owners and workers served. As Criterion Institute posited in their newly published State of the Field of Gender Lens Investing report, we found we must also develop demonstration projects and paradigms that empower women and begin to change the systems that have kept them poor and powerless.
We have noted the impact on black women who use our guarantees and the technical support of our South African partner organization Thembani (also a woman-led not-for-profit). We have celebrated their success as they access commercial credit for the first time, launch new businesses, purchase and expand commercial farms, and win government contracts to construct drainage systems, roads and schools to impoverished communities that have not enjoyed them before.
These substantial achievements have enabled women to challenge “old boys’ networks” that include bankers and businessmen most comfortable with lending to and buying from other white men. With our guarantees, black women have also challenged tenure arrangements (particularly in traditional communities) that make it difficult for them to obtain and work the land.
In working with the Women’s Development Bank, we and our South African partner, the Thembani International Guarantee Fund, have also helped launch and guarantee a portfolio of loans to women becoming commercial farmers for the first time — obtaining credit and contracts, and establishing new precedents and opportunities for other women and girls in their communities.
We have also been gratified by the shift in some commercial bankers’ attitudes and readiness to lend to women as they repay their loans and expand their farms and enterprises. This has begun to open the doors of credit to women to follow. The greater systemic change will, of course, take much more time and concerted effort.
But while gender lens and impact investing tend to measure success in terms of beneficiaries and bottom lines, we appreciate that our women clients have used the guarantees to build not only financial capital but also social capital.
The combination of the two is doubly transformative. Our guarantees to microfinance institutions such as the Small Enterprise Foundation (SEF), for example, have enabled SEF to expand its network of what is now more than 110,000 rural women who save and borrow together. They have used their community networks (borrowing groups and village centers) to launch additional local health and empowerment projects that range from mobilizing their villages to prevent HIV/AIDS to improving the services of local health-care centers.
Though rural women’s cooperatives, such as a group of poultry farmers in Swaziland, they build on the practices of collaboration and mutual support so strong among the region’s rural women. They share information, skills, and encouragement, and purchase and sell together to enhance their bargaining power. Widows in the group with as many as 10 children now provide reliably for their families — and teach them about collective strategies for economic and social empowerment in their communities.
The changes also take place on a more subtle, but profound level. Sibongile, a member of the Siboshwa sugar cooperative in Mpumalanga, South Africa, told me that the success of her cooperative had elevated her goals for her children. “I used to say I would be happy if they just went further that I did and completed Standard 10 in secondary school. But now I ask, why should they not study further to become agricultural technologists — and come back and help us and communities like ours?”
When I asked her whether the cooperative had transformed her feelings about herself, she thought and then answered slowly, “Now I know that I have power. My power is in this cane.”
Gender lens investing is essential to lift as many women as possible out of poverty and increase their leverage in the systems within which they operate. But unless we use the gender lens to invest in challenging and changing those systems, we will relinquish the greatest potential of the field as it struggles to be born.
Donna Katzin is the founding executive director of Shared Interest, a social investment fund that mobilizes the financial and human resources of South Africa’s lowest income communities of color. Since 1994, Shared Interest has helped to create more than 180,000 new small and micro-enterprises, 1.9 million jobs, and 120,000 affordable homes — benefiting 2.3 million economically marginalized South Africans — the majority of them women.