Tanzania’s Gender Bond: A New Era for Impact Financing in East Africa
The African Development Bank’s article on affirmative finance action in Africa placed the disparity in the financing gap facing women in Africa at $41 billion – a damning figure. While the female entrepreneurship rate in Sub-Saharan Africa is 25.9%, three-fourths of women on the continent remain financially excluded. In a bid to contest this trend, enters Tanzania’s Jasiri Bond – the first gender bond issued in sub-Saharan Africa.
The Gender Bond
Gender bonds are debt instruments designed to advance gender equality by funding projects that empower women as entrepreneurs, employees, and leaders. As a type of social bond, they target systemic gender inequalities while promoting broader economic and social impact. This is because most gender bonds state that their proceeds will be used to invest in firms that achieve a certain level of female board representation, in leadership positions or a proportion of women employed. This could increase women’s influence to shape public policies that address gender inequality.
Tanzania’s issuance of the gender bond represents a groundbreaking step towards increasing women’s access to capital and economic empowerment. With over 54.3% of enterprises in Tanzania owned by women, they make up a significant proportion of Tanzania’s informal and small business sectors. Hence, increased funding for women-owned enterprises can lead to higher productivity, job creation, and economic growth. This article will explore the Tanzanian Jasiri Bond, examining its impact on the economy and labour market, with a focus on how it has supported women’s economic empowerment and growth of women-led businesses.
Background
By design, gender bonds target women's financial barriers in many economies, aiming to reduce the gender gap and promote inclusive growth. Conversely, impact financing is an investment strategy that aims to generate measurable social or environmental impact alongside a financial return. Impact investors seek to contribute positively to society or the environment while achieving financial goals. Impact financing spans various investment instruments that address different social or environmental issues – aside from gender bonds, such as green bonds, social bonds, and sustainability bonds.
Impact financing plays a crucial role in addressing social issues by directing capital toward businesses that have a positive social impact. It addresses critical social challenges by funding projects like affordable housing, healthcare, and education, which often struggle to secure traditional investments. It incentivises innovation for social welfare, driving solutions in clean energy and global health, while influencing policy and market practices through environmental, social, and governance (ESG) aligned investments. This ecosystem demonstrates the broad benefits of impact bonds globally, but further emphasis is needed on how such instruments can address Tanzania's specific challenges. By narrowing the focus to Tanzania’s unique social and economic needs, the discussion can better highlight the transformative potential of social bonds in the local context.
Some of the factors that investors should consider before investing into social bonds is to ensure that the bond has clear and measurable social goals, to verify that funds are driving genuine social impact and track progress, ensuring alignment with their objectives. It’s crucial to evaluate whether the bond issuer provides transparent impact reporting and metrics to track progress. Secondly, investors should assess the financial stability and risk profile of the bond. This includes understanding the creditworthiness of the issuer, potential returns, and how the bond aligns with their risk tolerance. Lastly, they should review the regulatory environment and government support in the region, as favourable policies and incentives can enhance the bond’s success. Aligning investments with regional initiatives can reduce risks while amplifying financial and social returns.
Tanzania’s Jasiri Gender Bond
Launched in February 2022 on the Dar Es Salaam Stock Exchange, the Jasiri Gender Bond in Tanzania is a pioneering financial tool aimed at advancing gender equality by promoting economic participation for women, especially in entrepreneurship. It prioritises agriculture, education, and healthcare, where women are highly active. Launched by the Tanzanian government with support from the Capital Markets and Securities Authority, this bond mobilises funds to empower women-led businesses.
Aligned with International Capital Markets Association guidelines, the bond framework strengthens the local regulatory landscape for ESG investments, fostering sustainable and inclusive finance. Notably, with the support of FSD Africa, the Jasiri Gender Bond facilitated rapid fund deployment, fully allocating $27. 8 million to women-owned enterprises well ahead of schedule. Offering a competitive interest rate of 14%, compared to the market average of 19%, it offers stable and competitive fields which are attractive to investors seeking stable income sources. Having raised over $30 million, benefiting over 6,000 women through microloans bonds, it has provided capital to over 200 SMEs and 3000 MSMEs throughout Tanzania.
The Jasiri Bond also ensures transparency and accountability in fund use, attracting impact-focused investors. With investment support from banks such as International Finance Corporation – that subscribed to 31% of the bond – the investor’s confidence in the Jasiri gender bond has increased significantly. The annual return on the bond is currently 8.5%, with an oversubscription of 197%. Most of the funds’ investors are domestic – 69%.
The growth of the gender bond promises not only to increase economic growth, but also attract investors that want to diversify their portfolio. To address collateral constraints, the bond collaborates with the African Guarantee Fund, enhancing secured loan access for women entrepreneurs typically underserved by conventional banks. Moving forward, the National Microfinance Bank aims to expand the Jasiri initiative by increasing outreach, improving financial literacy, and innovating services tailored for women.
By directing investments into these areas, the bond aims to reduce gender inequality in income, wealth distribution, and access to productive assets. Moreover, it encourages private and public sector entities to align with the UN's Sustainable Development Goal (SDG) 5, which emphasises gender equality and women's empowerment. The gender bond also targets increasing women’s representation in economic decision-making processes and fostering a more inclusive financial ecosystem where women can contribute to and benefit from the country’s economic progress. This approach promotes sustainable development by recognizing that empowering women enhances household welfare and societal progress, making gender equity a key element of Tanzania’s growth strategy.
Despite the advancements that the Tanzanian economy has made in the credit market, there are some challenges that this initiative is bound to face. In the East African region, deeply rooted gender biases and traditional attitudes may limit women's access to opportunities in business and finance. These cultural norms hinder women’s participation in the formal economy and may affect the effectiveness of the bond in reaching its full potential. Although the bond has been successful in mobilising funds, many women in rural or underserved areas still face challenges in accessing financial services due to low income and financial illiteracy. This may prevent some potential beneficiaries from fully utilising the opportunities the bond provides.
The success of gender bonds in East Africa could lead to new impact bonds focused on youth entrepreneurship, showcasing the potential of targeted financial instruments to drive social change and attract investment for key developmental challenges. For example, the Sustainable Agriculture Bond could finance smallholder farmers by helping them adopt climate-smart techniques, enhancing healthy food production and environmental resilience.
To attract impact investors, bonds must incorporate clear social impact metrics and regular evaluations, ensuring transparency and accountability. Clear social impact metrics are essential to define and measure the success of the bond. These metrics provide a framework for assessing the outcomes, helping investors gauge the real-world impact of their contributions.
Additionally, regular evaluations, preferably conducted by independent third parties, assess the effectiveness of the bond in meeting its objectives and help identify areas for improvement. Using blended finance models that combine grants with investment capital or incorporate partial credit guarantees can significantly reduce investment risk, thereby attracting more investors. Grants provide the initial funding needed to de-risk projects by covering high upfront costs or supporting early-stage activities, such as feasibility studies or capacity building. Investment capital then leverages these grants, scaling the impact while ensuring financial sustainability. Similarly, partial credit guarantees reduces the risk of default for investors, making it easier to secure financing for projects that may otherwise be deemed too risky.
Conclusion
East Africa holds great potential for expanding gender bonds to advance gender equality, financial inclusion, and economic resilience. These bonds align with regional goals to bridge gender gaps in finance, healthcare, and education. In the bid for greater inclusion, collaboration between public and private sectors is key. A symbiotic relationship can be facilitated as governments can provide policies and incentives and private firms design products for women-led businesses. Scaling opportunities include leveraging the growing ESG investment trend and the region’s focus on digital financial inclusion via mobile banking. Gender bonds, targeting sectors like agriculture, healthcare, and education, can foster sustainable growth, reduce poverty, and promote inclusive economic development.
