Investing in Women

June 22, 2016

Plant

SOM Professor Jane Hughes discusses searching for the silver bullet that will transform the lives of impoverished women worldwide

This article was written by SOM professor Jane Hughes and originally appeared in its entirety in the Fall 2015 issue of Management Magazine.

When Professor Muhammad Yunus first encountered Sufiya Begum in 1976, the 21-year-old mother of three was mired in intractable, grinding poverty. She wove beautiful bamboo stools but earned virtually nothing due to the stranglehold of middlemen, who lent her 22 cents for the raw material for the stool, and bought the finished stool back at 24 cents—yielding Sufiya just two cents profit per stool. For lack of just 22 cents, Sufiya was essentially a bonded slave to the middlemen. Yunus realized that Sufiya’s life could be changed with a 22- cent loan, and that there were many more women like her. So he tried a small experiment, lending $27 to 42 people in the rural Bangladeshi village of Jobra who, like Sufiya, were dependent on middlemen. And thus was born Grameen Bank and the worldwide, multibillion-dollar microfinance industry—an institutional response to the trap of poverty and a lifeline for millions of women around the globe.
 

The development of innovative financial instruments to transform women’s lives has included groundbreaking initiatives from microfinance to gender lens investing to women’s impact bonds. While these approaches vary in their methodology, metrics, and outcomes, they share a common commitment to investing in women, as well as the dual goals of improving women’s lives and, through empowered women, improving economic and social development for all. Most of these financial innovations focus on women’s access to credit—or lack thereof—and on the development of women entrepreneurs and womenowned businesses. The open question, then, is whether these innovations have proven to be truly transformational, or merely new and shiny. Is support for women entrepreneurs the most efficient and effective use of capital? Does it achieve the scale and scope necessary to become truly transformative? Or are there deeper problems that are being overlooked that will impede the broader transformation these investments are hoping to achieve?

Read the full article in the Fall 2015 issue of Management Magazine.


Jane Elizabeth Hughes is a richly experienced thought leader and practitioner in global business education and innovative finance. She is a former Director of Social Finance, a pioneer in the impact investing market, where she managed the knowledge management and international work streams. She is currently consulting with major institutions to advance the field of transformational finance, with a focus on Latin America.