The Importance of Driving Female Inclusion in Fund Management in Africa

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 according to the International Finance Corporation (IFC) report titled Moving towards gender balance in private equity and venture capital.

The report also indicated that gender balanced portfolio companies experienced a 64% increase in company valuation between two rounds of funding or liquidity events. However, only 12% senior general partners in sub-Saharan African PE and venture capital firms are women. A separate study by Beiyun Xiao, Pia Helbing, and Theodor Cojoianu from the University of Edinburgh, Andreas Hoepner from the University College Dublin, and Xi Hu from Harvard Law School showed that Private Equity (PE) firms in which women own at least 50% 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. While this can be interpreted as a negative point, it presents an opportunity. Financial institutions such as Private Equity, Private Debt and Venture Capital (VC) are good sources of capital into the business sector, however, 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 to also invest in other women owned and run businesses which allows for the gradual and sustainable growth for this demographic group.

This has been one of the many driving principles behind Standard Bank Group’s open adoption of the African Women Impact Fund (AWIF). Initiated by the 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 amongst investors through targeted financing.

Four years into its inception, there is 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 $1 billion 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 underserved sectors, most of which feature women-led businesses. Although we have seen impressive strides, there is more work to be done.

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challenges in entrepreneurship.

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 according to the International Finance Corporation (IFC) report titled Moving towards gender balance in private equity and venture capital.

The report also indicated that gender balanced portfolio companies experienced a 64% increase in company valuation between two rounds of funding or liquidity events. However, only 12% senior general partners in sub-Saharan African PE and venture capital firms are women. A separate study by Beiyun Xiao, Pia Helbing, and Theodor Cojoianu from the University of Edinburgh, Andreas Hoepner from the University College Dublin, and Xi Hu from Harvard Law School showed that Private Equity (PE) firms in which women own at least 50% 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. While this can be interpreted as a negative point, it presents an opportunity. Financial institutions such as Private Equity, Private Debt and Venture Capital (VC) are good sources of capital into the business sector, however, 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 to also invest in other women owned and run businesses which allows for the gradual and sustainable growth for this demographic group.

This has been one of the many driving principles behind Standard Bank Group’s open adoption of the African Women Impact Fund (AWIF). Initiated by the 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 amongst investors through targeted financing.

Four years into its inception, there is 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 $1 billion 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 underserved sectors, most of which feature women-led businesses. Although we have seen impressive strides, there is more work to be done.