DFC aims to mobilize $6B through expansion of 2X women's initiative

WASHINGTON — The U.S. International Development Finance Corporation announced a new target for its 2X Women’s Initiative Thursday — it will aim to mobilize $6 billion in private sector investment over three years.

DFC’s predecessor, the Overseas Private Investment Corporation, formally launched the initiative in 2018 and it has since mobilized more than $3 billion in funding for “gender smart” investments. Building on its efforts to invest in women has been a key focus area for DFC in its coronavirus response, the corporation’s CEO Adam Boehler told Devex.

“One of the main reasons we focused on it is because when you look at folks that are disproportionately displaced or hurt by coronavirus they are women in a lot of cases,” he said. “We've had big expansion efforts in the area.”

The new commitment was announced at an event Thursday that featured presidential adviser Ivanka Trump, who has championed the administration’s Women Global Development and Prosperity, or W-GDP, initiative. 

“The Trump Administration is committed to ensuring that women have an equal opportunity to participate in the economy at home and around the world. W-GDP’s 2X Initiative is taking bold action with a new goal of $6 billion in capital to support women-owned, women-led, and women-supporting projects across the world,” Ivanka Trump said in a statement to Devex.

When 2X launched, only about four deals in OPIC’s pipeline met the criteria. Since its launch, 95 deals meeting the 2X criteria have been closed and there are now 106 in the pipeline, Charity Wallace, DFC’s managing director of global women's issues, told Devex.

Putting intentionality around gender-smart investing has made a striking difference in how the agency looks at potential deals, Wallace said.

Moving forward, the initiative will likely focus on a few issue areas including the gender digital divide and water, sanitation, and hygiene, she said.

While there have been specific 2X commitments for Africa and Latin America in the past, Wallace said she expects the initiative will make investments across all emerging markets. DFC is also working to build out opportunities in areas where “it is more difficult to work,” including Pakistan, she said.

Whether a deal qualifies as part of the 2X initiative is based on a set of criteria that were agreed to by the participants of the G-7’s 2X Challenge.

Those criteria include whether a business is majority owned by women or founded by a woman; the share of women in senior management or on the board; the share of women in the workforce; whether a product or service specifically or disproportionately benefits women or if a certain percent of loan proceeds in a deal through financial intermediaries supports women. The percentages of workforce or leadership participation varies by industry, with sectors that typically have lower participation having a lower threshold. A deal has to meet one of the criteria to qualify, though sometimes it will meet more than one.

When a 2X deal goes through, DFC sends a side letter to clients laying out the criteria they have agreed to, such as a 30% lending target for women, and asks the client to let the agency know if that changes.

DFC also collects data annually from its clients and relies on that self-reporting to track adherence. DFC has restrictions on investing in upper-middle-income countries, but 2X deals are an exception. But in these transactions, the targets are part of the term sheet and a deal can be considered in default if the criteria is not met, Wallace said.

DFC made several other announcements at Thursday’s event, including the Global Nutrition Alliance — a new initiative in partnership with the Eleanor Crook Foundation — that aims to mobilize $100 million in private sector investment to reduce malnutrition in low-income countries, with a focus on women and children.

DFC also announced a $92.3 million loan to support small- and medium-sized enterprises in Honduras; a new memorandum of understanding with Microsoft to work on closing the digital divide, particularly for women; and a $350,000 collaboration with Taiwan to support women’s entrepreneurship and gender-smart investments in low-income countries through training programs.