Closing the gender equality gap is among the priorities of the United Nations Sustainable Development Goals (Goal 5), along with end ending poverty and hunger, and ensuring quality education. In short, it is, has been, and will continue to be one of the most tremendous challenges of our times. What precedes this article is a plethora of literature telling us “what” to do (provide more leadership and equal opportunities, offer gender-sensitive trainings and access to resources, ensure participation, reform policies). This article focuses not only on how to actually begin putting these “whats” into practice, but also on how to get closer to closing this gap.

One of the most important and effective ways to close the gender equality gap is through women’s economic empowerment. Countless women across the globe face insurmountable barriers to fully participate in and contribute to the economy; these range from discrimination in the workforce, unequal pay, inability to access credit, lack of land ownership, lack of community support, and restricted movement. Others are unable to engage in income-generating tasks as a result of family chores such as washing clothing by hand, fetching water, cooking, and cleaning–also known as “time poverty.” Empowering women economically can reverse all of these trends and help women gain agency and respect in their societies.

There are many places to start, but the question is not “where,” it is “how.” Oxfam America identified a growing, underserved number of women entrepreneurs in Latin America whose businesses had credit needs ($5,000-$50,000) that exceeded traditional microfinance loan sizes (typically no more than $1,000), but were at the same time unattractive for larger commercial banks. They therefore formed a so-called “Missing Middle” of women unable to grow their businesses further.

In Guatemala, this missing middle faced significant constraints in accessing finance: They typically have no collateral to back their loans (only 15% of land is owned by women), interest rates can reach as high as 40% annually, and banks can require up to a 240% guarantee coverage. Banks may also require women to obtain their husbands’ permission to acquire a loan, and oftentimes fail to provide them with a copy of their contract.

Oxfam America proceeded to launch its first impact investing fund, the Women in Small Enterprise (WISE) Fund in Guatemala, with an eye to women’s economic empowerment. The WISE Fund provides a 50% guaranty to local financial institutions in exchange for better loan terms for women. In our most recent partnership with a savings and credit cooperative in Alta Verapaz, we have reduced interest rates from 30% to their lowest rate, 18% (in effect transferring women entrepreneurs to their lowest-risk customer segment), reduced collateral requirements from up to 140% to no more than 100%, and allowed for mixed guarantees.

How this program gets closer to closing the gender gap is by recognizing and accounting for the fact that true empowerment requires more than simply increasing access to finance. Opening up space for women to play a larger role in their surrounding economy can carry a number of implications and unexpected side effects, such as backlash from society or male family members unwilling to question gender roles. These unexpected results may disrupt or completely thwart well-intentioned efforts.  Another way to frame this is that a holistic approach to women’s economic empowerment ensures that years of planning, fundraising, and investing translate into real change instead of an experiment gone wrong.

The WISE program couples access to finance with business skills training that includes hard and soft skills (such as how to negotiate business and household affairs) and, with the support of gender specialists, incorporates male family members so as to reduce negative repercussions as a result of participating in the program. Through evidence generated from fund and portfolio performance and changes observed within the financial partner, WISE advocates for the country’s highest institutions to enact policy changes that will bring about permanency to this work.

Each country, program, and approach faces varying demands and opportunities. What remains clear is that without a holistic approach grounded in the specific context in which women are living, the result will be disappointing. Irrespective of the path chosen, any strategy meant to close this gap should:

  • Place other women in leadership roles in the development and implementation of these programs;
  • Empower women to build negotiation skills; and
  • Be able to generate reliable and persuasive evidence to legitimize advocacy strategies.

Alicia Robinson is Chief Investment Officer at Oxfam America’s pilot Women in Small Enterprise, based in Guatemala, where she lived for ten years. Alicia holds a B.A. from Stanford University and a J.D. from Harvard Law School. Her interests are in the fields of business and human rights in Latin America and human rights-based approaches to economic development.