Africa’s long-standing economic issues are well known. Despite having some of the fastest-growing economies in the world through much of the 2010s, the continent is still home to 23 of the globe’s 27 poorest countries.
A lot of discussion around how to fix those issues has centred around moving the continent away from relying on resource extraction for economic activity and towards being a value-add producer and manufacturing powerhouse. As important as those moves are, they may not be enough to shield Africa from the new and emerging challenges it’s facing: from climate change to geopolitical uncertainties and the need to find more sustainable ways of producing food, potable water, and energy.
For that to happen, the continent needs to make better use of its most valuable resource: its people. More particularly, it needs to find better ways of opening up opportunities for the women who make up half its population.
Historically, women have been excluded from the economy and positions of leadership in particular. It’s telling, for instance, that just 8% of companies on the JSE, Africa’s largest stock exchange, are women. That’s a problem because diversity in the workplace isn’t just about equity and equality. It’s also long been advocated as a way of business performance and organisational health while contributing to the wider goal of reviving and uplifting Africa’s economies.
But achieving true equality means looking not just at workplace representation but also at how to best support women entrepreneurs and investors.
Resilience through diversity
The building blocks are all there – Africa currently has the highest percentage of women entrepreneurs in the world, with 25.9% of women in the process of starting or managing a business in sub-Saharan Africa, and women’s participation in the labour force has also increased since 2010.
Despite that, women account for only a small portion of Africa’s GDP (recording just 33% in 2018). It’s therefore critical that businesses in Africa look at gender equality in a new light – not as an obligation but rather as a way to drive innovation that will create new revenue streams, enable increased efficiencies, and build the competitive advantage needed to weather any future disruptions.
The past few years, following the Covid-19 pandemic, have only highlighted the need to build that kind of resilience. By ensuring a more diverse and inclusive workforce through increased gender equality, businesses will be able to take up space in the marketplace in a more responsible way. Because each individual thinks or perceives things differently – influenced by things such as their gender, culture and background experience – we could see new products and solutions emerge because there are things that women want and need that are currently not being catered for.
Additionally, research from benchmark reporter GRESB showcases that diverse boards and leadership teams are less likely to take uncalculated financial risks, thus significantly reducing return volatility.
Unlocking growth and innovation
Investing in women can have other positive outcomes too. It also has the potential to introduce new voices that will foster radical innovation and drive market growth.
That’s because encouraging women to participate fully in the economy doesn’t just benefit them, it also means that their families will see gains in key markers such as nutrition, education, and opportunities. Women are more likely to become employers, creating much-needed jobs. Implemented sustainably, this has the potential to create a virtuous circle, further pushing growth.
As investors we can unlocking that growth and investment by approaching investing through a gendered lens and encouraging the businesses we work with to appoint women to their boards, management positions and other roles. In doing so, we help elevate the economic participation of women and create opportunities.