SMEs are critical to the El Salvadorian economy, representing 99% of all companies, contributing an estimated 35% of gross domestic product (GDP) and generating around 700,000 jobs. Women play an important role in this sector, as they own 64% of all micro-enterprises.
A crowded market – with limited opportunities for capital for SME
While the financial system in El Salvador is very crowded and has many players (25 supervised entities and more than 120 unsupervised entities), the percentage of the SME market served by the financial system is only 40%, with less than 20% of the SMEs financed by regulated financial entities. One of the main barriers to credit for SMEs, especially women-owned and women-led, is the lack of mortgageable assets or pledge-able collateral.
Overcoming market barriers to support women owned and led small businesses
In an effort to overcome these challenges, Athena Global provided advisory support to the Small and Medium Sized Enterprise (SME) division of an El Salvadoran bank as part of a donor funded program for gender lens investing. The project goal was to develop a gender segmentation strategy for lending to WSME (women owned or led SME) and design a customized loan product targeting women as a segment in its SME portfolio. Ultimately, the project aimed to drive healthy capital to WSMEs in the country and help them grow into solid and sustainable businesses.
Building an evidence base – and shifting mindsets – for gender focused products
The project took place over several months. It included 1) a diagnostic (using a proprietary Rapid Diagnostic methodology) with all the functional areas of the bank and 2) a comprehensive market assessment to understand specific insights and opportunities, as well as sales, distribution, and cross-selling channels for a gender-focused product. The diagnostic and market assessment identified high-level strengths and gaps and possible solutions to enable the bank to take advantage of this market opportunity. Athena recommended focusing on “low-hanging fruits” before embarking on more significant initiatives that may have budget implications and require buy-in from a broader audience.
The result – immediate capital for WSME
All of Athena’s engagements are women- and client-centered. We consider each client’s and market’s particularities rather than offering a one-size-fits-all approach. In this case, this approach led to two high level wins:
- An evidence base was built for “de-risking” gender by showing that gender-equitable businesses provide sufficient financial returns worthy of commercial investment beyond grant funding.
- The project also helped the bank to see the opportunity in gender lending products within a larger gender segmentation strategy—and within their own context.
The result was a gender lens product that was launched into the market and deployed more than USD $10M during its first 6 months to women-owned/led SME clients. The engagement also resulted in a replicable approach and methodology to expand across the SME and other divisions.
Athena is committed in all of our engagements to providing our clients with best practices and nuanced, success-based, insights to deliver commercially oriented solutions with positive social impact. We strive to bring creative and positively disruptive solutions to those businesses, ideas, and products that have been left out of the traditional financing space. Contact us to learn more, or download the case studies below.