By Marjut Falkstedt and Maria Leander
Tosin Akinmusire started with Food Concepts in 2009 as the manager of one of the chain’s restaurants in Lagos. Ten years later, she took over as regional operations manager for the group, which runs the fast-growing Chicken Republic chain, and is now responsible for 23 stores in Lagos and eastern Nigeria.
The success of Tosin, a working mother, is partly the result of gender balance policies Food Concepts has put in place in cooperation with a lead investor, private equity fund Development Partners International (DPI), which helps companies in sub-Saharan Africa integrate gender and diversity into their organisations. The European Investment Bank Group backed DPI’s new fund with a €50 million investment.
Supporting women is just good for business. Enterprises with women in at least half of leadership positions have higher sales growth, are more profitable and get a better return on their assets. Diversity also leads to sounder decision-making and better resilience in times of crisis. Recent research by Morgan Stanley shows that the share prices of gender-diverse firms consistently outperform their benchmarks, while Goldman Sachs found that investment funds run by women had better returns in 2020, despite the market turbulence caused by the pandemic. A Harvard Business Review study showed that diversity in venture capital management teams significantly improved performance, whether measured by the return on their investments in individual firms or the funds’ overall returns.
There is also ample evidence that women are more prudent borrowers and have better repayment rates. Not to mention that roughly 80% of consumer product buying decisions are made by women, which means that firms with women across their ranks often produce better selling products, largely because they took women’s views and experiences into account. In short, firms that fail to make space for women risk performing worse than the competition and failing to meet the big challenges of our time – like climate change.
Despite the overwhelming evidence, we all know that women remain severely underrepresented in the upper management of companies and particularly in the venture capital industry, where roughly one in ten decision-makers is female, as was highlighted in a recent European Investment Bank report, Funding women entrepreneurs. The limited presence of women in venture capital and among business angels is particularly noticeable for start-ups, the engines of innovation. Before the crisis, only 2.8% of venture capital funding went to female-led start-ups. Since the crisis, however, the figure has dropped to 2.3%.
Putting words to work
How do we change things? Like Food Concepts, we needs strategies to promote and support women. Gender biases built up over millennia and they will take time and effort to break down. We need concrete ideas for making sure that recruiting, training, promotion and investment is more evenly distributed.
At the European Investment Bank Group, which comprises the European Investment Bank and the European Investment Fund, we have adopted a gender strategy for our investments with three main pillars: Protect, impact and invest.
- Protecting women’s rights and ensuring no harm is done to them;
- Broadening our impact by making sure that the projects we support respond to the needs of women and men and enhances gender equality;
- Investing directly in operations that help women economically, such as female entrepreneurship and access to finance.
These pillars also apply to the Group’s climate and environmental sustainability investments, which will account for at least 50% of the EIB Group’s financing by 2025 and will support €1 trillion of investment in the critical decade to 2030.
A lot still to do
Like many organisations, we still have work to do internally to encourage and elevate our female colleagues. The EIB’s Diversity and Inclusion Strategy sets targets to increase the number of women in senior positions. The goal is to have 33% of management positions filled by women, with 40% of senior executive roles and 50% of executive positions held by women by the end of 2021. At the end of 2020, 29.5% of managers were female, while the figure was 34.7% for senior executives and 42.5% for executives. Importantly, we have achieved gender pay equity.
To close the gap between our goals and reality, though, we need to find more ways to support women. In our investments, that could mean more microfinance or other financial products to help women grow their business. Within the bank, it could mean more mentoring programmes, giving younger women the chance to learn from the success of others.
The pandemic has been particularly difficult for women. They have been on the frontlines as health care workers and teachers, and have lost their jobs in hard-hit industries, like tourism and services. The rapid digitalisation brought about by the pandemic and the growing power of the tech industry, where they are underrepresented, doesn’t bode well for women either. We need concrete plans, training and investment strategies that promote women and make sure their voices are heard: to make sure women don’t fall further behind, but also to ensure humankind achieves greater, more sustainable prosperity.
Amelia Earhart said “the most difficult thing is the decision to act; the rest is merely tenacity.” We need to act, so that women like Tosin Akinmusire, and almost 4 billion others, can use their tenacity to succeed.
Marjut Falkstedt is Secretary-General of the European Investment Bank. Maria Leander is Secretary-General of the European Investment Fund.