Breaking the boys’ club: If investing in women yields good returns, then why are we still fighting for their inclusion?

The Aspen Network of Development Entrepreneurs

According to research by Statistics South Africa, nearly half (47%) of South African women are unemployedi. This comes as would-be female employees have a tougher time finding work than men, thanks to the inequalities they face, including unequal pay and fewer leadership positions among others, while at the same time struggling to maintain a matriarchal role in society and family.

It is for reasons like these that African women often turn to self-employment by starting their own businesses. According to the World Economic Forum, women make up 58% of Africa’s self-employed population and contribute around 13% of the continent’s Gross domestic product GDP, with Sub-Saharan Africa, in particular, having the world’s highest rate of women involved in entrepreneurial activity at 26%ii.

Despite this, women continue to earn lower profits than men as a result of the imbalances between opportunities to scale, access to funding, and training between men and women-led businesses on the continent.

The irony is that if women-led Small Growing Businesses (SGBs) provide great investment opportunities, why do we not see more investors including female investors actively working towards closing the gender-lens investment gap?

Investors are becoming increasingly interested in gender-lens investing, closing the gender gap, and women’s empowerment. The World Economic Forum revealed that 68.1% of the Global Gender Gap was closed in 2022, compared to 67.7% in 2021iii. Other improvements made to close the gender gap, can be seen more in Western countries. The top three world’s most gender-equal countries are Iceland, Finland, and New Zealandiv.

To accelerate these gains and ensure that gender-lens investing becomes more than just a ‘nice-to-have’, it is critical that the ecosystem collaborates with policymakers who hold the regulatory power to unlock further gains for women entrepreneurs, as well as their communities who benefit tremendously from gender-lens investing. One way to alleviate poverty is to empower women economically, especially through entrepreneurial projects and financing that encourage women to engage themselves in entrepreneurial income-generating activitiesv.

Sub-Saharan Africa has the highest rate of entrepreneurship in the world, with approximately 42 percent of the non-agricultural labor force classifieds as self-employed or employers. Yet most SGBs are unable to grow their businesses beyond small-scale subsistence operations, impeding their contribution to poverty reduction and shared prosperity. This is particularly so for womenvi.

This depends on us supporting the success of women entrepreneurs, through global network organizations such as the Aspen Network of Development Entrepreneurs South Africa (ANDE SA) established the Gender Equality Initiative (AGEI), with the support of USAID and the Visa Foundation, to support women as leaders, employees, and consumers in the SGB sector. This global effort is aimed at bringing experts together to move the needle on gender equality in entrepreneurship, providing funding to pilot projects in Asia and Africa to address the gender finance gap, helping build know-how among investors to incorporate gender into their business models, and looking at the intersection of gender and climate.

ANDE SA’s Chapter Head Sekai Chiwandamira says: “We must be cognisant of the fact that the battle of closing the gender gap is not as simple as it is made out to be. It is quite complex and governed by the ecosystem. If the ecosystem is conducive, and provides an enabling environment, then it becomes possible to address the gender gap. However, if the ecosystem is highly fragmented, acting in silos and not embodying the principle of gender-lens investing, it becomes even more challenging to close the gap.”

While there has been somewhat level of progress in bridging the financial gap, it requires a collective effort from the SGBs themselves, the ecosystem, government, investors and even corporates.  To actively engage investors to venture into gender-lens investing, ANDE awards grants and incentives to funders and investors who make gender-smart decisions and provide women with the tools for accumulating assets, generating income, managing financial risks, and enabling women business owners to fully participate in the economy.

Chiwandamira adds: “If we truly want to change the status quo, we have to change the way we do things, and our attempt at encouraging financial inclusion for women is by rewarding investors and helping them prioritise pipeline opportunities and make gender-smart business decisions. An example of this is the Gender-lens investment Pay for Results Facility grant where performance award fees are provided to investors for predetermined gender equality achievements to increase the gender impact of their portfolios.”

The Pay for Results grants are provided through the Alitheia IDF Fund and are intended to cover costs associated with developing the systems and processes necessary to take a ‘gender lens’ approach to investment. The grant payment will be contingent upon completion or partial completion of achievements with a clear path to gender impact.

For Africa to achieve financial inclusion for women in the SGB sector, it requires a collective effort. By reaching this goal, not only do we encourage economic growth, but we move South Africa a step closer to achieving the U.N. Sustainable Development Goals—especially Goal 5, ‘Achieve gender equality and empower all women and girls’.

About ANDE 

The Aspen Network of Development Entrepreneurs (ANDE) is a global network of organizations that propel entrepreneurship in developing economies. ANDE members provide critical financial, educational, and business support services to small and growing businesses (SGBs) based on the conviction that SGBs will create jobs, stimulate long-term economic growth, and produce environmental and social benefits.

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