Gender Lens Investing in Africa

Access to financing remains a constraint for female entrepreneurs in Africa. This has led to a new investment thesis through Gender Lens Investment (GLI) initiatives. Gender Lens Investing is a strategy incorporating gender-based factors in the investment process to advance gender equality. This approach aims to break barriers and end stereotypes about women as surviving entrepreneurs. Gender Lens Investing is a broad term that defines an investment strategy that promotes gender equality. This strategy may involve investing in women-owned or women-led businesses, investing in businesses that promote gender equity, or investing in businesses that offer products or services that improve the lives of women and girls.

Core to Gender Lens Investing is the gender gap. The gender gap is reflected in the social and economic attainments of women. The GLI investment thesis recognizes this parity and pushes for investment in women for their economic empowerment and the success of their businesses. Gender Lens Investing rises as women-owned businesses globally receive less venture capital compared to their male counterparts. Women entrepreneurs receive less than 9% of venture capital in emerging markets. At the same time, the loan approval rates for women entrepreneurs are approximately 15-20% lower than that of their male counterparts. Globally, there is an unmet demand of approximately USD 285 billion from women-led businesses (The Global Landscape of Gender Lens Investing, 2019).

The funding gap in Africa for female entrepreneurs is also high. In 2022, the funding gap stood at $42B. In 2021, only 3% of all venture capital funding streamed into Africa went to startups with an all-female founding. Similarly, only 1% of venture capital in Africa are women. These statistics show that women entrepreneurs do not access financing as easily nor have the networks to access the funding they need.

Many initiatives in Africa have risen towards gender lens investing. These initiatives are aimed at strengthening the women's entrepreneurship ecosystem in Africa. The drivers of these initiatives invest through:

● government funds such as the Women Development Fund in Kenya,

● development finance institutions such as Global Partnerships,

● private investors such as Root Capital, and

● fund managers such as Novastar Ventures.

Separate from these investors, incubators, and accelerators play a critical role in gender-based investment in Africa. These enablers provide non-financial support such as investment facilitation, networking, and mentorship. These initiatives have improved access to funding for women-owned businesses, advancing gender equality.

It is projected that Africa’s total GDP could rise to $316 billion by 2025 if women's businesses are supported. With a heightened awareness of the funding gap in Africa, we will continue to see gender lens investing initiatives in Africa sprout to support women-owned businesses. This will promote the economic empowerment of women while also improving.

In partnership with Future Females Empowerment Initiatives, we have extensively researched and written five whitepapers on the female-founder financing gap in emerging markets. You can read more on this here.

Look out for part II of the GLI series, where we discuss the role of GLI in bridging gender parity.

Are you building gender-inclusive programs or interested in partnering with us? Reach out at [email protected]!

Authored by : Fiona Waithira