Strengthening the financial inclusion of migrant women through the Gender-Inclusive Fintech Fund (GIFF)

Migrants and their families – in particular women – are often excluded from the formal financial system. At the same time, migrants face distinct financial challenges and needs; e.g. they look for ways to send remittances home and to access financial products in their host countries. By actively participating in the financial system migrant women can better manage risks, ensure smooth consumption in the face of shocks, and fund household expenditures such as health, nutrition, and education. Increasing the financial inclusion of migrant women is likely to have substantial societal and economic benefits: research shows that a 10% rise in remittances could lead to a 3.1% reduction in poverty.

Companies using technology to improve financial service products (FinTechs) have the potential to improve (migrant) women’s financial inclusion by offering tailor-made financial services and products. They can do so in an efficient, cheap and customer-friendly way. However, often FinTechs either do not focus on this market-segment, as it is not deemed attractive enough, or they cannot mobilise the necessary private investment in order to scale their operations. The Impact-Linked Fund for Gender-Inclusive FinTech addresses this problem with an innovative approach in that it pays for impact achieved – defined as expanding to market segments key for the financial inclusion of migrant women – and to therefore mobilise financial contributions from impact investors and at a later stage from commercial investors, including from Switzerland. Innovative finance solutions are an important Swiss contribution to the Sustainable Development Goals (SDGs) and the Addis Ababa Action Agenda for Financing for Development.  With only 6% of private finance mobilized by official development assistance currently invested in Least Developed Countries, innovation is key to make finance work for the poorest.

Direct beneficiaries: Early- to growth-stage FinTechs with operations in Africa, the Middle East, or Asia.

End beneficiaries: Migrant women and women impacted by migration. It is envisaged that FinTechs will have 88’000 new women clients (with at least 25% of them being migrant women).

Outcome 1: Women (affected by migration) have increased access to and improved utilisation of affordable financial products and services delivered by FinTechs supported and/or financed through the Impact-Linked Fund for Gender-Inclusive FinTech.

Outcome 2: FinTechs supported and/or financed through the GIFF are financially sustainable which ensures continued delivery of impact.

Outcome 3: The FinTech’s impact-driven approach proves attractive to other FinTechs who replicate their approach and the impact-linked finance (ILF) model - linking financial rewards to the achievement of positive social outcomes – proves attractive to enterprises and impact investors with increased ILF-based deal flows

Expected results:  

·       FinTechs scale and/or deepen their gender- and migration-centred impact

·       FinTechs receive appropriate financial and non-financial support

·       FinTechs have clearly defined exit strategies for continued operations after the ILF intervention

·       Through the programme, other FinTechs become aware of impact and scaling models of the outperforming FinTechs, and begin adopting their approach

·        Through the programme, donors become aware of the ILF model, and start adopting the approach. Impact-first investors begin to view ILF as an attractive means to engage in cooperation with philanthropic bodies and other donors

Results from previous phases:  

1) The programme is based on previous experiences of the Swiss Agency for Development and Cooperation (SDC) in Impact-linked Finance (ILF), in particular the application of so-called “Social Impact Incentives” (SIINC), a concept that was co-developed by the consultancy company Roots of Impact and SDC a couple of years ago. The ILF/SIINC model links financial rewards to the achievement of positive social outcomes, i.e. entrepreneurs are rewarded for the value they create for their clients. First experiences of SDC with SIINC supporting entrepreneurship and vocational skills in Latin America show encouraging results. By providing finance to high-impact organizations (HIO) in the private sector, this approach enables sustainable private sector driven development without interfering with the market. For SDC, this approach has the potential to achieve results for its key beneficiaries at a fraction of the cost of other types of interventions. The GIFF is based on the ILF-model.  

2) The study of the financial sector consulting company Sagana (Opening Credit) mapped and outlined interesting private sector partners in the field of migrant women’s financial inclusion and underlined the importance of partnering with different private sector organisations that coach and support FinTech companies. As no single private sector organisation has deep expertise related to financial inclusion of women migrants, it is important to combine and complement the expertise of different organisations in this programme.

·       SDC contribution to the United Nations Capital Development Fund (UNCDF) programme on financial inclusion/remittances

·       Close coordination with other SDC-programmes financing ILFF-windows to exchange lessons learnt

·       Close coordination with SECO with regards to its support to FinTechs and its priority countries

·        Close coordination and accompaniment by the Competence Centre for Engaging with the Private Sector (CEP) at SDC