To provide easy loans to small ventures, the Bangladesh Securities and Exchange Commission has taken an initiative to launch "Orange Bonds" – a type of financial instrument that aims to finance gender equality.
Terming the initiative a "groundbreaking step" for women entrepreneurs, Chairman of the stock market regulator Prof Shibli Rubayat-Ul-Islam said they are now working on the bond guidelines.
"Women entrepreneurs who run small ventures are often unable to make strides thanks to scant access to bank loans and high-interest rates. Our Orange Bonds will offer them an easy financing solution," he told The Business Standard.
The idea of this sustainable financing is relatively new, as it aims to remove gender bias and improve women's equality and living standards in developing countries. The initiative "Orange Bonds" is derived from the colour of UN Sustainable Development Goal (SDG) 5: Gender Equality.
Prof Shibli Rubayat-Ul-Islam said there are many women in rural Bangladesh who want to do something on their own. But, many of them do not understand how to avail bank loans while some do not even have a bank account.
"Our initiative is for them to offer easy financing," he added.
He said angel investors – high-net-worth individuals who fund startups at the early stages – will put money into a taka-several-crore fund, from which the women entrepreneurs would avail the financing. They would repay once their firms started to make profits.
He mentioned that he has already talked to some international charities.
Many banks offer credits to small women entrepreneurs on easy terms. But the loans often elude small businesses thanks to loan terms, collateral and other issues.
According to a central bank report, some 2.80 lakh small entrepreneurs took loans in the April-June quarter of the current year. Of them, 38,000 were women who availed a total of Tk2,700crore in bank loans.
Globally, the Orange Bond Initiative will tap into the $100 trillion bond market to place women at the forefront of capital markets as solutions to achieve the UN's 17 SDGs and build a more inclusive, climate-resilient future for all.
The main objectives of the Orange Bond Initiative are to build a gender-empowered financing system and to mobilise new sources of capital for women's empowerment by using capital in ways that value women and girls as solutions to a more resilient, green future.
The first Orange Bond is expected to be issued by Singapore-based Impact Investment Exchange (IIX) in the last quarter of 2022.
It is expected to unlock $10 billion for gender lens investing by 2030.
Among others, key founders of the Orange Bond Initiative are the Australian Department of Foreign Affairs and Trade (DFAT), the United Nations Capital Development Fund (UNCDF), and global asset manager Nuveen.