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This article was produced with the support of Standard Bank Group
There is a compelling correlation between gender balance and fund performance: companies with diverse management teams are more profitable and create greater value. This is the conclusion of the International Finance Corporation (IFC) report titled Moving towards gender balance in private equity and venture capital.
The report also indicates that gender- balanced portfolio companies experienced a 64% increase in company valuation between two rounds of funding or liquidity events. However, only 12% of senior general partners in sub-Saharan African private equity (PE) and venture capital (VC) firms are women.
A separate study by Beiyun Xiao, Pia Helbing, and Theodor Cojoianu at the University of Edinburgh, Andreas Hoepner from the University College Dublin, and Xi Hu from Harvard Law School showed that PE firms which are at least 50% owned by women are 6.8% more likely to pursue impact investments.
These findings, among others, indicate that despite the strides that have been made in diversifying business and spreading investment, a tangible gap still exists.
The gap is an opportunity
While this can be interpreted as a negative point, it presents an opportunity. Financial institutions such as PE, Private Debt and VC are good sources of capital into the business sector; but, as the research demonstrates, women have little control of this pool of capital and assets.
Diversifying the pool of asset allocators is imperative to help drive more inclusive capital that will lead to the development and funding of innovative solutions needed to address the broader economic challenges prevalent in and across Africa.
The case for greater diversification is supplemented by the widely held view that women entrepreneurs and investors are more likely also to invest in other women-owned and women-run businesses; this allows for the gradual and sustainable growth for this demographic group.
These have been one of the many driving principles behind Standard Bank Group’s open adoption of the African Women Impact Fund (AWIF). Initiated by a pioneering collaboration between the United Nations Economic Commission for Africa (UNECA), UN Women, the African Union Commission, and the African Women Leadership Network (ALWN), this programme aims to increase female representation among investors through targeted financing. Just over four years since its inception, there is a great amount of groundwork done to create a beneficial model that is conducive to the greater objective and sustainability of its goals. The initiative aims to raise $1bn in the next ten years that will be allocated to women asset managers in the African continent who in turn invest in high-impact and under-served sectors, most of which feature women-led businesses. Although we have seen impressive strides, there is more work to be done.
Collaboration to address challenges in entrepreneurship.
Emerging female fund managers face various hurdles. Institutional investors may have restrictive mandates that limit their ability to invest in one asset class versus another, focus in specific regions at a set time, and/or need to comply with specific investment limits that are not achievable for first-time fund managers.
In some cases, these hurdles are insurmountable. However, given the relatively finite pool of female fund managers, there is value in supporting the facilitation of capital to gender-diverse and women-led investment structures to enable truly catalytic change in the industry.
Another major challenge faced by female fund managers is a lack of the track record that would help build their profile and credibility within the institutional investor base. Established female fund managers may have to take the risk of leaving a big company to strike out on their own, a venture that requires intensive work to create a standalone brand that investors will be comfortable with.
Female fund managers also need assistance in allowing them the opportunities to build on their experience and expertise. The AWIF provides a platform for female fund managers to build on their profiles and channel them to investors for them to get the financial boost needed.
Through the AWIF there is a partnership with the global investment house RisCura, which has a broad and deep understanding of African markets and is committed to finding and nurturing women fund managers through hands-on engagement. AWIF leverages off RisCura’s leading Manager Development Programme that provides tailored middle- and back-office support and access to best-practice resources to mitigate downside risks and accelerate fund manager learning curve.
The firm has over 20 years’ experience in developing managers that today are market leaders and currently manages $400m of assets under their Manager Development Program. This kind of programme empowers female fund managers at the same time pursues a bigger industry objective of the UN sustainable development goal (SDG) 5, covering gender equity, ensuring value and wealth creation for investors in the AWIF.
A shortage of networks
In addition to the existing challenges highlighted above, there is also a shortage of networks that are dedicated to female fund managers to help them build on their databases, exchange in skills and support systems. The AWIF network is a powerful advocacy tool, but more importantly in a fund-management context, it allows us to reach more current and prospective female fund-managers, many of whom have been discouraged by the bias experienced by themselves or their peers in the investment industry.
Through our networks we can achieve the continent’s gender equity goals in growing female fund management talent that can lead to greater impact and value creation for the African economy.
As key agenda drivers in the business setting, the private sector needs to be receptive to women in leadership roles, entrusting them to reshape the business landscape and drive growth of the business and the overall landscape. This will require something of a mindset shift. Investors into the region need to consider a gender-lens investment model to ensure they assign and direct funds into the market while pursuing a female inclusive economy.
Gender equity is more than a throwaway line and more than a simple employment target to meet. It is the elevation and empowerment of women in decision making roles and influence in business culture.
As a company that believes in the growth of this continent we call home, Standard Bank believes that we have a role to help drive the necessary shift in perceptions. But, as with the most effective shifts in global trends, it will take a collective effort.
As former President Nelson Mandela once said, “it always looks impossible until it is done.”
