Women-owned small and medium enterprises (WSMEs) are critical to Indonesia’s economy, one in which women own 34 percent of medium enterprises and 51 percent of small enterprises. Yet more than 40 percent of the country’s WSMEs lack the financing needed to reach their full potential for growth.
An IFC investment of up to 2.75 trillion Indonesian rupiah ($200 million) in Bank OCBC NISP’s sustainable bond program helped to launch the first-ever gender bond in Indonesia in 2020. The bond is the second to be issued in the East Asia and Pacific region, following the Bank of Ayudhya’s gender bond issuance in Thailand in 2019, also backed by IFC.
Proceeds from the bond will enable Bank OCBC NISP to increase lending to Indonesia’s women entrepreneurs and WSMEs, with the intent of advancing their participation in the economy.
IFC is also sponsoring Bank OCBC NISP’s new green bond, building on the success of a 2018 project that has been fully deployed. Bank OCBC NISP is now expanding its green financing through actions like the development of green projects and the financing of green mortgages.
Reducing the impacts of climate change is important in Indonesia, an archipelago nation that is additionally vulnerable because of decades of rapid carbon-intensive growth. Green financing contributes to meeting the government’s 29 percent target of reducing greenhouse gas emissions by 2030.
In addition to building Indonesia’s bond market, IFC is partnering with Bank OCBC NISP to provide training to the bank’s staff and to Indonesian property developers. IFC will provide Indonesian developers with training to help them to identify eligible green building construction projects and learn how to use EDGE, an IFC innovation to build and brand green buildings in a fast, easy, and affordable way. The bank will work with IFC to increase its capacity on gender finance and to develop a targeted approach, including financial and nonfinancial services, to support the growth of women entrepreneurs. The project aims to demonstrate the viability of WSMEs as a distinct customer segment and support the government’s efforts to establish climate finance as a distinct asset class.
The gender bond is supported by the Women Entrepreneurs Finance Initiative (We-Fi) program, a partnership housed at the World Bank Group that aims to unlock financing for WSMEs in developing countries. We-Fi is also aligned with the government of Indonesia’s goal to reduce Indonesia’s gender gap.
Investing in gender and green bonds, whether by issuing its own bonds or investing in bonds issued by financial institutions and other corporates, allows IFC to build capital markets in Indonesia and throughout East Asia while targeting positive social and environmental impact. These types of bonds are a critical tool to attract private capital to finance important development goals for countries.