Norman Alex has recently examined the importance of the growth in female wealth by looking at successful female entrepreneurs and business executives. However what is perhaps more important is to increase micro-investments available to women in the developing world. Most economists agree that this is one of the most effective ways to eliminate poverty in the Third World. The following article illustrates the impact of this strategy.
Impact investing: How to connect the backstreets to Wall Street
CANBERRA — Courage and audacity are needed to encourage investors to focus on impact and help deliver sustainable change and opportunities for women. Durreen Shahnaz, founder of Impact Investment Exchange, shared this message to an audience in Canberra Nov. 11, as she discussed putting women at the core of creating value in a global society.
Beginning 30 years ago on Wall Street, Shahnaz discussed her “anthropological” study of the men — and few women — that were controlling the wealth of the world. And when she returned to her home country of Bangladesh to work in a small bank, Shahnaz was inspired to create IIX as an avenue to connect the back streets of low-income countries to Wall Street — and women in particular.
Bringing impact investing to the financial world has not been easy — and Shahnaz shared her insights into the thinking and strategies required to build impact investing success.
1. Have courage to redefine what is possible
“Have the courage to embrace system-wide risk,” Shahnaz said.
The promotion of impact investing, she explained, not only requires courage but a willingness to change the status quo. IIX aims to give women a voice in the global financial market to show investors the impact-side of their investment, beyond personal financial reward.
To achieve this at scale, IIX is enabling women to communicate through their mobile phones on the impact the investment is making on their lives and opportunities. Encouraging investors to think about impact, Shahnaz said, is critical to fill the SDG investment gap of $7 trillion.
“Have the courage to defy the status quo,” she said. “But don’t do it to appease someone. Redefine what is possible — it doesn’t have to be done the way it has been done. And let’s have the courage.”
2. Build an ecosystem that enables people to do what they do best
In building and bringing to market financial products and services, including bonds, Shahnaz said IIX is able to succeed because it pulls together different people that bring particular expertise — and leaves them to it.
“We have been cognisant of the fact that we can’t do it all,” Shahnaz said.
But with IIX’s objectives, it needs to build an ecosystem of partners that can — combined — do it all. IIX has brought together the private sector, philanthropic organizations, donors, and more as partners over the past decade. These partners can help translate betwen financial and development sectors and help communicate how impact investing can make a difference to both sides.
This is an ecosystem Shahnaz plans to keep growing to build on IIX’s ability to support clients and investors.
3. Make everyone feel good
Equity@Scale is one IIX offering that aims to provide organizations with access to information, networks, capital, and resources that can help build empowerment for women. Shahnaz said the key is making sure anyone who wants to do good feels that way about their choice, and opens up the education process to encourage investors.
“I do think that there are many opportunities to open up the market much more this way,” she said. “If we are going to change the market it should not just be about the entrepreneur. There are many other people who need to be part of the economy.”
4. Recognize that stories don’t sell
When it comes to engaging investors and the market, Shahnaz said that stories don’t open the market.
“It really is about having the right financial products and all the nuanced financial requirements,” she said. “It is important to have the heart, but you must have the head. That has been probably one of the challenges where we rely too much on the story — and then you move back to philanthropy.”
To move the needle, Shahnaz said money has to be a part of the equation.
“And there is nothing wrong with that.”
When IIX first began, Shahnaz considered who was the right person to help sell impact investing. And it meant that at the start, Shahnaz was not doing the selling.
“It was a concerted decision and a very uncomfortable one for me, but I had a team of Caucasian, Indian, and Chinese men who would go out and meet investors,” she said. “Investors would embrace them.”
Thinking about the greater goal — which was the impact on the women she was aiming to help — enabled Shahnaz to put men on the frontline of sales. Reading books on women who wielded power behind the scenes reinforced that strategy was the success for other women like her who aim to build systemic change.