The International Finance Corporation (IFC), a member of the World Bank Group, has invested $75 million in a bond issued by Turkey's Garanti Bank, the group confirmed yesterday.
The issuance was the first private sector gender bond in emerging markets dedicated to financing enterprises and companies owned or managed by women. The investment was in partnership with the Women Entrepreneurs Opportunity Facility (WEOF), launched by IFC through its Banking on Women Program, and Goldman Sachs' 10,000 Women initiative.
"The new bond has a six-year term maturity and is issued in line with IFC's social bonds criteria. All the financing raised through the issuance is earmarked for on-lending to Garanti Bank's women-owned small businesses. The issue is expected to triple the number of loans to these clients over the next five years," the statement read.
In Turkey, nearly 30 percent fewer women than men have access to financial services, the IFC said and added that only about 9 percent of small and medium enterprises are owned by women and these face a credit gap of $5 billion, constraining growth.
The gender bond, a new financing structure both in the Turkish market and international capital markets, will help create funding to support these women entrepreneurs and business owners, it stated.
"We are delighted to be able to introduce this new funding instrument to the Turkish market to obtain fresh funding for women entrepreneurs through this pioneering bond issue," said Garanti Bank CEO Fuat Erbil.
"We have been offering products and services for women entrepreneurs since 2006, including over TL 5 billion [$1.08 billion] in financial support, to help them grow and, in turn, drive broader economic growth."
The collaboration is part of IFC's strategy in Turkey to boost financial inclusion, especially for women entrepreneurs. Over the last seven years, the IFC has worked with Turkish banks to provide $61 million in financing for women entrepreneurs under its Banking on Women program, launched a program to support women in supply chains, and engaged in efforts to increase the number of women on company boards.
"Strengthening women's participation in Turkey's economy helps to unleash the untapped potential for employment and economic growth. Our partnership with Garanti Group in Turkey and the region ensures that smaller companies and women entrepreneurs will continue to have access to the funds they need to grow and create jobs," said Wiebke Schloemer, IFC regional director for Europe and Central Asia.
The WEOF is a first-of-its-kind facility dedicated to expanding access to capital for 100,000 women entrepreneurs globally. IFC's Banking on Women Program has committed 64 investments globally worth $1.71 billion and advised on 39 projects since its launch in 2010. Of these, the WEOF has supported over $1 billion in commitments to financial institutions in 26 countries.
"This exciting deal allows Garanti Bank to access an innovative financing tool to promote gender-based financing and could be a model that is replicated in other markets," said Cristina Shapiro, Head of 10,000 Women program. "Goldman Sachs research shows that closing the credit gap for women-owned SMEs in emerging markets could push income per capita an average of 12 percent higher by 2030. Women entrepreneurs have real potential to impact Turkey's future growth."
Turkey is IFC's second-largest country exposure globally with a $5 billion committed portfolio, and IFC's office in Istanbul, established 30 years ago, is one of its largest outside Washington, D.C. providing services across regions. Since its first investment over half a century ago, the IFC has supported Turkey's private sector with over $15 billion in investments in more than 350 projects.