Economic policy

Why investing in women is smart economic policy

A growing body of evidence around the world shows that gender diversity is linked to business innovation. An innovative mindset is six times more likely in more equal cultures than in less equal ones. If the innovation mindset in all countries increased by 10%, we could expect an $8 trillion increase in global GDP by 2028. But the truth is, we still have a long way to go before you get there.

The gap between men and women is wider than ever. The Covid-19 pandemic has shaken the very foundations of humanity and left many women even more disadvantaged than before. For our businesses to thrive in this world of constant pandemics, we have no choice but to accelerate innovation – and investing in gender mainstreaming is one of the most effective ways to achieve it.

More women = more profit, even during Covid-19

Khethiwe Nkuna

Gender diversity has been shown to lead to higher levels of success over time for companies that engage in it in a strong and meaningful way. Data from Fortune 500 companies from 2001 to date shows that those with female CEOs or boards with people of different genders do better as an organization. Mixed teams outperform male-dominated teams in terms of sales and profits.

Additionally, Fortune 500 companies with a higher proportion of female directors perform better financially than those with a low balance of female directors. The Pipeline, a diversity and inclusion advocacy group, recently published a report stating: “FTSE companies without women at board level are ten times less profitable than those whose boards have women occupying a third of the positions.

If we look to the future, it is clear that these trends are not going to change. Various organizations have a better bottom line. They are more productive, profitable and resilient because diversity brings new perspectives and means our businesses better represent the people we serve. They are better for employees, better for customers, better for communities and better for the economy.

According to Women Count 2021, companies without a woman on their executive committee saw their profits drop by 17.5%, while those with female representation ranging from 1 to 24% saw their revenues increase by 1.3%. According to the study, companies with 25-49% of their executive committee achieved profit margins of 4.5%, while those with more than 50% achieved profit margins of 21.2%.

Achieving these results, especially in light of the extreme circumstances of the pandemic, is an impressive achievement. Interesting questions about the evolution of results compared to previous years for companies without women on the executive committee are necessary. Companies that have made progress in increasing the representation of women on their boards have seen their profit margins steadily decline over time. As a result, in 2020 the company had a profit margin of just 1.5%, which was below the industry average.

Our continent can benefit from investing in women

The challenge of achieving gender equality in South Africa and across the continent begins at fundamental levels with reduced access to education for women and oppressive cultural norms. It also extends to the workplace, where unequal pay and privileges, as well as persistent underrepresentation in leadership positions, limit women’s progress and the achievement of gender equity.

The 2019 Global Gender Summit, held in Rwanda, highlighted the grim statistics: “Women are responsible for 60% of the work done in the world, but earn only 10% of the income and 1% of the assets. In Africa, 70% of women are financially excluded. The continent has a $42 billion financing gap between men and women.

Global Gender Summit 2019

The overall gender gap in sub-Saharan Africa is 32.7%, as only 67.2% of the gap has been closed. The WEF’s 2021 Global Gender Gap Report indicates that of the 35 countries in this region, only Namibia and Rwanda have closed at least 80% of their gaps. Eleven countries closed between 70 and 78% of their gaps, 19 other countries between 60 and 69% and three countries (Mali, Chad and Congo, Dem. Rep.) closed less than 60% of their gaps (59.1% for Mali and Chad and 57.6% for the Democratic Republic of Congo). The business sector in Africa lags even further behind, even though women’s equality could add 10% to the GDP of the African economy, or $316 billion by 2025.

We recognize the business value that gender mainstreaming brings, and Accenture is committed to accelerating workplace equality as responsible business leaders and driving our innovation agenda. Several years ago, we set ourselves two clear goals: to achieve an equal workforce by 2025 – and we are well on our way to achieving it. Today, our workforce is 51% female and the percentage of female general managers is over 26%.

Treating our gender goals like any other business priority, we hold leaders accountable, collect data, measure progress and publish workforce demographics in critical geographies. To build a sustainable economy, we believe the private sector must work with government to maximize the potential of people and businesses across the country.

Our goal is to add value to the South African vision by improving the way the nation works and the lives of the people. We see transformation as essential to making this prosperous vision a reality.

Khethiwe Nkuna is CSI and Commercial Manager for Accenture Africa.

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