Reducing inequalities vs financial sustainability
In many countries around the world, women, youth and rural communities are not seen as equal to men, adults and urban communities. These marginalised groups are often excluded from the formal economy, which not only undermines their sense of fulfilment and self-worth, but also hampers social and economic development.
We strongly feel that women, youth and rural communities have a fundamental human right to be included and treated equally. We also believe that the business case for including women, youth, and rural communities in the formal economy is strong. That is why FMO is passionate about reducing inequality.
Achieving equality, however, is frustratingly difficult. It requires transformative change that can only come about if many different stakeholders work together using innovative approaches. In practice this means smaller but time-consuming investments with a higher probability of not delivering the returns our customers expect.
And herein lies our dilemma. On the one hand we need to explore uncommon approaches with uncertain outcomes. On the other hand we need to ensure we invest sustainably over time and that we offer our investors market-based opportunities.
In all honesty, we don’t have a perfect solution to this dilemma. What we try to do, however, is two things. First, we look for attractive investment opportunities in inclusive models that deliver and are scalable, and translate these into structural approaches and new products, such as gender lines and FinTech. Second, we actively look for blended finance opportunities, as a temporary tool, to transform and grow the business towards bankable and financially sustainable investments.