In 2021, a woman-owned coffee enterprise in Rwanda received its first formal loan of $100,000 from a lender that was supported by Aceli’s financial incentives. The loan enabled the entrepreneur to improve production on her own coffee farm, purchase from 1,425 farmers (including 537 women) and employ nine workers (six women). Within a year, the business increased revenues by 60%, more than doubled its coffee purchases from farmers, repaid its loan, and accessed a new loan of $150,000.
Meanwhile, a maize aggregator in Rwanda also received its first formal loan in 2021 of $30,000. While this business is owned by a male entrepreneur, it creates economic opportunities for numerous women employees (six of its 15 full-time workers are women) and farmer suppliers (101 of the 123 smallholder farmers selling to the enterprise are women).
Much of the dialogue related to “gender inclusive” or “gender smart” investing is focused on facilitating access to finance for women entrepreneurs. Aceli’s experience mobilizing lending for small- and medium-enterprises (SMEs) in the agriculture sector points to the need for a “both / and” strategy – both increasing the number of women-owned agricultural SMEs that are able to access finance and recognizing that male-owned enterprises have an important role to play in women’s economic empowerment. As Aceli enters our third year of operations, we are drawing upon recent analysis of the loans supported by our incentives to understand the various ways in which women benefit from access to finance for agri-SMEs and how we can optimize our incentives, technical assistance, and market facilitation to promote economic opportunities for women entrepreneurs who have struggled to access finance as well as for the large numbers of, managers, employees, and farmers who can benefit from agricultural SMEs, regardless of the entrepreneur’s sex.
Data findings from two years of incentivizing gender inclusive lending
Aceli is a market incentive designed to address the high risks and transaction costs of lending to small- and medium-enterprises (SMEs) in the agriculture sector. By 2025, we aim to mobilize $600M in capital by 2025 to 1,500 underserved agricultural SMEs in East Africa. Our incentives steer lenders to seek out and serve the highest impact SMEs with a particular focus on women-led businesses or SMEs that otherwise meet the 2X Challenge Criteria  for gender inclusion based on the composition of their leadership teams, board members, employees, or farmer suppliers.
In this blog and a forthcoming learning brief, we share learning related to gender inclusion from Aceli’s work over the past two years with 25 lenders in Kenya, Rwanda, Tanzania, and Uganda. With support from USAID INVEST, we analyzed 467 loans registered for Aceli incentives from the program’s launch in September 2020 thru June 30, 2022.
Reach. The enterprises receiving Aceli-supported loans collectively employ 9.8k workers, including 4k women (41%), and create market access for 427k smallholder farmers, including 178k women (42%).
Above target. At launch, Aceli set a goal of 30% of loans meeting the 2X criteria in line with the threshold established by 2X for a “gender inclusive portfolio.” To date, 68% of Aceli-supported loans (319 of 467) meet the 2X criteria.
Gender inclusion vs. women-owned businesses. The majority of Aceli’s supported loans that meet the 2X criteria do so based on: women employees (43% of total loans), senior leadership (31%), board members (22%), or farmer suppliers (21%). Only 8% of Aceli-supported loans go to businesses that are fully or majority owned by women.
Gender and access to finance. SMEs that are gender inclusive have higher revenues and receive larger loans than non-gender inclusive SMEs. By contrast, women-owned SMEs (100% or majority) have significantly lower revenues ($376k v. $865k) and receive smaller loans compared to male-owned SMEs ($98k v. $137k). Interestingly, women-owned businesses receive larger loans relative to their annual revenues compared to male-owned businesses (46% v. 38%).
Women-owned businesses are more gender-balanced. Women-owned businesses hire a slightly higher percentage of women employees (41% v. 33%) and are significantly more gender-balanced in senior leadership (57% of leadership roles held by women v. 23%) and in their boards (62% v. 16%) than male-owned businesses. However, both women- and male-owned businesses purchase from a similar percentage of women farmers (44% for both groups).
Differential treatment? Women- and male-owned businesses tend to receive a similar percentage of the loan amount they request (~89% across ownership categories) and interest rates are comparable across Kenya, Rwanda, and Tanzania, though there appear to be some differences in Uganda.
What’s next? The gap between the large proportion of enterprises that meet the 2X criteria and the small percentage of women-owned SMEs has prompted us to reassess how Aceli promotes economic opportunities for women. Over the past six months, we’ve:
- Revised our gender impact bonus to offer a “double bonus” for loans to SMEs that meet multiple criteria across women’s leadership (i.e., ownership, management, board) and participation as employees and farmer suppliers;
- Set targets and developed a strategy for reaching more women-owned SMEs through our technical assistance (currently 27% of SMEs accessing Aceli-supported technical assistance are women-owned and we’ve set a target of 40% by 2025);
- Offered a series of workshops on gender lens investing for 17 lenders and deeper advisory engagements with two lenders in partnership with Value for Women (VfW);
- Launched a matchmaking service to connect SMEs graduating from Aceli’s technical assistance program to lenders; and
- Begun exploring with VfW how to support continuous improvement on gender inclusion for SMEs (eg, in their hiring and human resources practices).
Informed by learning with our partners and across the growing sector of practitioners testing and refining approaches to gender lens investing, Aceli will continue to evolve our product offering to address deeply entrenched barriers for women entrepreneurs and women’s economic empowerment more broadly. Our upcoming learning brief will go into more detail on Aceli’s learning to date and our thinking on this topic.
Aceli Africa (Aceli) is a market incentive facility that seeks to bridge the gap between capital supply and demand for agricultural SMEs and unlock their growth and impact potential. Aceli raises grant funding from public and philanthropic donors and offers a combination of financial incentives for lenders and technical assistance for both SMEs and lenders. More information on Aceli’s work promoting gender inclusion in the agri-finance sector is available in a companion blog co-written with Value for Women, case studies detailing two gender lens advisory engagements by VfW with Aceli lending partners, and our forthcoming gender inclusion learning brief.
 Aceli’s incentives share in the risk and defray the transaction costs so the lender can cover its costs; an impact bonus is included to motivate lenders to seek out and serve gender inclusive businesses. Read more about Aceli’s incentives here.
 The 2X Challenge outlines and defines an international standard / set of criteria for gender inclusive portfolios within Development Finance Institutions to increase private sector investments in women around the globe.
 Aceli is a market incentive facility designed to increase lending to high-impact agricultural SMEs. Launched in 2020, Aceli is currently working in Kenya, Rwanda, Tanzania, and Uganda with 27 financial institution partners, including commercial banks and non-bank financial institutions domiciled in the region as well as international impact investors. Participating lenders are eligible for financial incentives that are tiered to offer lenders larger rewards for loans registered with Aceli that are to higher impact SMEs as described further here.
 The disparity in loan size for gender inclusive SMEs relative to non-gender inclusive SMEs may be partly linked to value chain as a higher proportion of the former (40%) operate in formal value chains (eg, export crops such as coffee as opposed to informal value chains for staple crops) than the latter (24%). However, women-owned SMEs have a similar distribution by value chain than their male-owned counterparts so other factors account for the differences in enterprise size.