Demystifying the WE Finance Code: A Primer on this Fast-Moving Vehicle for Change

If you’re concerned with general equality in finance, you may have heard of the WE Finance Code . But you might be wondering exactly what it is. So, we adapted a speech given by Wendy Teleki , Head of the We-Fi Secretariat , into this blog post:

A few years back, we at We-Fi were reviewing our work.? We were asking ourselves:

How can we leverage this powerful platform to more systematically eliminate barriers for women entrepreneurs around the world – to be greater than the sum of its parts?

We-Fi is a partnership of 14 donor countries and 7 Multinational Development Banks that was established in 2018 and is housed at the World Bank. We-Fi has invested over $350 million to support women entrepreneurs, and now has activities in 69 countries working with over 400 public and private sector partners. We have helped catalyze $3. 6 billion in finance for women entrepreneurs, improved access to markets and skills, and changed discriminatory policies around the world.

In our research into systemic change, we came across the UK’s Investing in Women Code , a partnership between the government, associations and financial institutions in the United Kingdom.? At its core, the Investing in Women Code is a simple, voluntary pledge financial institutions in the UK make committing to indicators in three areas: Leadership , Data and Action. When it was created in 2018, 11 financial institutions signed on – today there are over 250 signatories, and registration of women–led businesses in the UK has tripled.?

We wanted to take this model but make it flexible, so that other countries could adapt it to their own unique context. Thus, the WE Finance Code was born as a global, multi-stakeholder initiative with We-Fi’s Governing Committee agreeing to support countries that would pilot the Code.? We thought we would get 6-10 countries of interest but instead, we are supporting our Implementing Partners to help 24 countries roll out the Code – and counting!

The financial institutions and others that take the pledge make three promises:

• LEADERSHIP: Designating a member of their senior management team to champion the organizations’ efforts to support women-led businesses
• ACTION: Expanding and introducing new measures that will support women entrepreneurs
• DATA: Monitoring and reporting annually a commonly agreed upon set of indicators on the level of financing provided to WMSMEs or supporting others’ efforts to do so

What does that mean, in practice? As one-third of the pilot countries have launched, we have identified Five Steps in the process of adopting the WE Finance Code. We’re sharing them here for people who might be wondering whether their countries or organizations could become part of the Code.

1.) Identify Champions

The first thing needed to adopt the Code is for private and public sector champions in the country to commit to supporting the initiative. These are leaders from key institutions who are passionate about closing finance gaps for women, are influential in their markets, and can bring resources to bear to ensure the Code’s success. We've seen National Champions who are leaders from central banks and ministries, banks and other financial institutions, industry associations and other ecosystem partners.

2.) Build Your Coalition

Once the National Champions are identified, they work to build a coalition. Of course, that includes banks and microfinance institutions, and may also include fintechs, funds and others. Regulators, policymakers and organizations in the financial infrastructure, like credit bureaus and firm registries, are also important parts of a national coalition. Researchers and data management companies can also play a role, while investors, donors and development banks can provide capital, incentives and technical assistance.

Together the members of the coalition create reinforcing incentives across the ecosystem.

3.) Customize the Code to the National Context

The coalition-building process is part of adapting the Code to each unique national context; so is deciding exactly what indicators to measure, and which regulator, agency or association will collect the data for aggregation.

4.) Launch of the Code

Once the unique national framework is set, it is time for financial intermediaries to sign on. The Code is a broad and inclusive effort, meant to capture the majority of financial organizations in a country, not just the market leaders.

When financial intermediaries sign onto the Code they will make the same three commitments. We’ve also seen ecosystem partners sign the Code. In those cases, they indicate how they will contribute to closing finance and data gaps based on their own areas of domain expertise.

5.) Implementing and Reporting

Once the Code is launched, it is down to brass tacks. The signatories will implement their commitments with the support of others in the coalition. They have a year to provide baseline data related to funding women entrepreneurs. Thereafter they will report annually on both the data and other activities in their commitment.

That’s it. One of our partners, Inez Murray , CEO of the Financial Alliance for Women , says she has never seen any initiative in international development embraced at the speed at which the Code is sweeping around the world. It’s spreading like wildfire, she says, “...it’s very simple in concept and it’s very powerful."

“I haven’t seen progress like this in all my years.”

To learn more about the WE Finance Code, visit www.wefinancecode.org

To stay up-to-date on all of the latest WE Finance Code developments, tools, and training opportunities, subscribe to the quarterly Code Communiqué.