Semra Atabey and her family trace back their ownership of about 10 acres of land located in northwest Turkey for nearly 100 years. She was born into a family of farmers and eventually established her own farm, which grew into a successful business selling organic fruits and vegetables. As the operation expanded, large regional retailers—especially those catering to Istanbul’s urban residents—began to offer Atabey’s brands on their shelves.
While Atabey is gratified that her organic products attract users, she’d like to reach an even larger market. But being a woman entrepreneur poses challenges and getting financing to fund growth for a small enterprise tops that list. Women represent only 10 percent of the total number of entrepreneurs in the country, and they face an array of challenges—starting with the narrow role women play in traditional Turkish society. Often, an absence of relevant education, lack of access to finance, and limited options for childcare pose additional obstacles for women who try to start a business.
IFC’s 2018 investment of $75 million in Garanti BBVA, one of Turkey’s largest private banks, will help address the working capital needs of women-owned businesses like Atabey’s. This investment was in the form of a gender bond under IFC’s social bonds program. This is the first emerging-market, private-sector bond dedicated to financing enterprises and companies owned or managed by women. The investment was conducted in partnership with the Women Entrepreneurs Opportunity Facility, launched by IFC through its Banking on Women program, and Goldman Sachs’ 10,000 Women initiative.
"This is the first emerging-market, private-sector bond dedicated to financing enterprises and companies owned or managed by women."
“There is a growing investor appetite for ESG (Environmental, Social, Governance) bonds,” says Ebru Dildar Edin, Executive Vice President, Corporate and Investment Banking at Garanti BBVA. “Gender bonds are an attractive and innovative alternative investment instruments for investors who target a niche segment.”
By expanding financial access to Turkey’s women-owned SMEs, the IFC financing is expected to promote greater opportunities for other underserved groups as well, especially in terms of employment. Proceeds of the bond will strengthen the financial sector through diversifying and deepening capital markets and products. Ultimately, it is also expected to increase the presence and participation of women in the Turkish economy.
“Gender bonds are an attractive and innovative alternative investment instruments for investors who target a niche segment.”
IFC’s gender bond “is a landmark transaction dedicated to financing emerging-market enterprises that are particularly underserved because they are owned or managed by women,” says Vittorio di Bello, IFC’s Regional Head of Industry for Financial Institutions Group for Europe and Central Asia.
This is especially important in the context of the Turkish economy—where banks are inclined to channel their limited resources to larger, better rated customers, causing the financing to women-owned SMEs to be even more restricted.
Even in better times, women entrepreneurs in Turkey have not had equal access to financing. Women are under-represented in entrepreneurship and business ownership as well as in management due to significant sociocultural and economic barriers. Turkey has one of the lowest female workforce participation rates among countries with similar income levels: only a third of Turkish women are economically active, compared with an average of 62 percent in upper-middle income countries.
Women here also have lower levels of financial inclusion. As recently as a few years ago, 70 percent of Turkish men had formal accounts compared with only 44 percent of women, according to a Global Findex Survey.
Addressing Structural Barriers
The proceeds from IFC’s Gender Bond are intended to address these concerns. The funds are strictly earmarked to finance small, women-owned enterprises.
Part of IFC’s work with Garanti BBVA also included helping the bank establish an environmental and social management system to be applied to the portfolio of women-owned small businesses. This is a group the bank expects to expand, says Ebru Dildar Edin of Garanti BBVA: “As the status of women rises in Turkey and other emerging economies, there is a wider market for financing women business owners. Therefore, we think that the market for Gender Bonds that specifically target this segment of the population will grow.”
With the bank’s financing to Atabey, she plans to expand her company’s sales operations and have an easier time meeting the demand of large retailers. She also dreams of reaching a special class of consumers: children. “We want to [supply food to] all schools’ dining halls, and especially preschool education institutions,” she says. “Our children are our future and I want to grow healthy generations.”