Gender equality is more than a moral imperative; it is a cornerstone of socio-economic development and women’s rights, essential for advancing the United Nations’ Sustainable Development Goals. Sub-Saharan Africa, with a gender parity score of 68.2%, ranks above Southern Asia and the Middle East and North Africa regions, illustrating the continent’s notable strides in empowering women and girls. Legal reforms on the age of marriage and gender-based violence are pivotal in this progress. Despite being the world’s youngest continent, with 60% of its population under the age of 25 and facing high rates of youth unemployment, Africa maintains a female labour force participation rate higher than the global average of 50%.
A Multi-Trillion Dollar Opportunity
Closing the gender labour gap presents a substantial economic opportunity. A McKinsey study indicates that achieving gender parity in the workforce could add up to $28 trillion to the annual global GDP by 2025, equivalent to the combined economies of China and the US. Structural barriers, such as unequal land rights, persist, hindering women’s economic participation by impeding asset accumulation necessary for securing loans.
The Credit Gap
Women entrepreneurs across Africa face a daunting $42 billion shortfall in financing, particularly in agriculture, where there is a deficit of $15.6 billion. Nevertheless, women are pivotal in Africa’s SME sector. In Sub-Saharan Africa, out of 44 million micro, small, and medium enterprises, more than a quarter are female-led. This contrasts sharply with Europe, where female entrepreneurial activity stands at just 5.7%.
The World’s Largest Emerging Market
Bridging the gender divide and meeting unmet demands in sectors such as water, telecommunications, energy, healthcare, and childcare could boost African economies by an equivalent of 10% of their collective GDP by 2025. Globally, women control over $20 trillion in annual consumer spending. In Africa, women are the primary decision-makers for 89% of household purchases. Recognising the influence of the female consumer is vital, particularly in the African context.
Gender-Lens Investing: A Strategic Approach
Gender-lens investing (GLI) is gaining momentum globally as an investment approach focused on improving access to entrepreneurship, leadership opportunities, employment, finance, and products and services that enhance women’s economic participation in developing markets. The 2X Challenge, led by Development Finance Institutions (DFIs) and International Financial Institutions (IFIs), has laid a solid foundation for GLI in Africa, encouraging private investors to adopt it strategically. From 2021 to 2022, the initiative exceeded its target, driving gender-lens investments totalling $16.3 billion and benefiting 473 businesses across Africa, Asia, Central and Eastern Europe, Latin America, and the Caribbean.
German DFI, DEG, has been a proactive pioneer in this space, connecting clients to networks and resources of the female economy as a partner of The Boardroom Africa and as a founding member of the 2X Challenge. In recent years, several funds such as Alitheia Capital and Aruwa Capital Management have emerged with a strong focus on gender. Notably, private equity represents the highest asset class globally for the number of GLI-focused impact funds available for investment.
Conclusion
The collaborative efforts in gender-lens investing underscore the importance of women’s economic empowerment in impact investing and highlight our collective responsibility to advance towards a more gender-equal society. Investing in women is not just a matter of fairness; it is a strategic economic necessity that promises substantial returns for Africa and the world at large.
The Southern African Times remains committed to shedding light on the significant link between investing in women and fostering sustainable development, recognising the transformative potential that lies within the empowerment of women across Africa.
