Promoting Gender Equality through Performance-based Financial Incentives: An Analysis of IDB Invest’s Experience

This guide highlights the use of performance-based incentives (PBIs)—like interest rate reductions tied to gender targets—as a tool for development finance practitioners to promote gender equality. 

IDB Invest has implemented gender-focused PBIs in Latin America and the Caribbean since 2015, using blended finance from funds such as C2F, We-Fi, and CTF. These efforts aim to improve women’s leadership, employment, and access to finance. 

The guide, based on IDB Invest and Dalberg’s research, offers practical recommendations for development banks and finance institutions to apply PBIs effectively for inclusive development outcomes.

Despite progress in education and workforce participation, gender inequality remains a deep-rooted development challenge in Latin America and the Caribbean (LAC). Women continue to face limited access to asset ownership, reproductive health services, childcare, and higher-paying sectors. Financial inclusion gaps persist: women are less likely to save or borrow from formal institutions, and only one-third of MSMEs are women-led, leaving a $98 billion finance gap. Though female labor force participation has grown, women are still disproportionately represented in low-skilled, low-paying jobs. Systemic barriers must be addressed to close gender gaps in finance and economic opportunity.