The Hidden Cost of Gender Bias

Hello there, it's been a while but I am glad I get to write you again this Friday.

Welcome to this week’s edition of Zero to One. If this is your first time here, big hugs! My name is Solape and every week, I write about topics dear to me – Africa, her women, social change, building indigenous global brands and strong public systems. Last time, we talked about Combining Tech and Touch. Today, we’re exploring the influence of Gender Bias on Women’s Financial Progress. Before we dive in, hit the subscribe button if you haven’t already.?

We are opening today's newsletter on an unusual note. Please take a moment to watch this short clip-on YouTube. Don't worry, I'll wait for you.

Female pilot mistaken for stewardess by Republican senator | ABC News

Welcome back! Now, can you describe your experience in two words? I bet you screamed Gender Bias! And that is rightly so.?

WHAT IS GENDER BIAS??

Gender bias refers to the tendency to prefer one gender over another, leading to unfair treatment or discrimination.?

According to Jennifer Rothchild in the Blackwell Encyclopedia for Sociology, Gender bias is behaviour that shows favouritism toward one gender over another. Most often, gender bias is the act of favoring men and/or boys over women and/or girls. However, this is not always the case.

RECOGNIZE ANY OF THESE??

• A CEO of a successful company is mentioned, and everyone assumes it's a man. I can’t count how many times I have been a victim of this.

• A woman who works in an airline is automatically assumed to be a stewardess because over 70% of flight attendants are women . Even though?

• Women are emotional and so therefore cannot handle the complexities of running a business.

• Having reservations about disclosing marital status on a job application due to fear that married women face more rejections as it’s assumed that their time may be divided between work and family.

• Women are naturally empathetic. Therefore, they should look towards nurturing roles like teaching or nursing even when they have the capabilities to excel in STEAM or business.

Bias comes in many forms and causes us to form prejudices against others. It also has widespread implications for women (from access to healthcare, education, financial services, political representation, and labour participation).

When it comes to finance, Gender and money are more inextricably linked than we imagine.

From films to advertising, the trope that women are inherently careless spenders is pervasive. From the much-loved 2009 movie- Confessions of a Shopaholic to Carrie’s designer shoe obsession in Sex and the City- men live to make money. While women live to spend it. Men invest and women save.

However, the idea that women are less savvy when it comes to managing their finances is a myth , as research has shown that men are equally as likely to overspend.?

Research also shows women are disproportionately affected by these gender stereotypes, which negatively impact their finances.?

Moreso, Gender biases impact the way financial institutions engage their workers and even customers. This reality affects women in different ways, depending on their lived experiences and the different structural barriers they encounter.?

In today's newsletter, we'll explore the different ways gender bias affects women’s financial progress and how we can all take actionable steps to challenge these assumptions and create an equitable world for all.?

1. SOCIALIZATION:

Socialization doesn’t just play a part in women’s approach to money but also in how they are viewed by staff at financial institutions. Although women’s roles in society have shifted dramatically,?outdated perceptions of gender roles remain present both overtly and subconsciously within African society.?

Such traditional views of gender include the idea that a male in a heterosexual relationship should be the breadwinner of the family, and take care of the finances, even though most women work and manage their finances. This may lead to assumptions about customers that are wrong.?

For example, a couple applies for a loan, but the advisor speaks directly to the male in the relationship rather than addressing the couple as equal partners.

To combat these outdated perceptions and ensure that women are treated equally in financial matters, financial institutions need to provide training to their staff on gender sensitivity and unconscious bias. This can help staff members recognize and challenge their assumptions about gender roles and ensure that they treat all customers with respect and equality.

2. Unequal Access to Education?

Education is key to earning power, yet girls in Nigeria still face severe barriers to learning. Statistics show that Nigeria has the largest number of out-of-school children in the world, 60% of whom (more than 10 million) are girls.

Without basic reading and analytical skills, it's nearly impossible for women to qualify for well-paying jobs or start their businesses.?

Vocational training programs also tend to steer women into traditionally "female" roles like hairdressing or tailoring. Unequal access to education sets Nigerian women back from the very start.

3. GENDER PAY GAP:

Unconscious bias in hiring and pay affects women's opportunities for career progression . It also includes women working in feminized roles with lower income and the majority in unpaid caring and housework.

This "second shift" takes a huge toll, limiting women's ability to dedicate uncompensated overtime hours to advancing their careers or seeking out leadership opportunities and promotions.?

Additionally, the responsibilities of caregiving often force women away from their careers temporarily through things like parental leave. Returning from time away, even if protected legally, can set women back as they may be perceived as less committed, or their skills are seen as outdated due to gaps in work history.?

All of these have financial consequences for women that are rarely accounted for or offset.

4. ACCESS TO CAPITAL:?

Worldwide, women's access to capital is disproportionately low. Women do not enjoy equal opportunities in accessing capital compared to men because of discriminatory models embedded in lending practices.?

Gender-specific barriers to raising capital have led to a $42bn gender finance gap in Africa with over 30% of funding trapped in agriculture. In 2023, female-founded companies in Africa were alloted only 2% of funding on the continent.

Research suggests that when a woman is on the investing team, a female entrepreneur is 70% more likely to be funded than if no women are on the team. And VC firms with at least 10% female investing partners have 1.5% better fund returns and 9.7% more profitable exits.?

Increasing access to capital for women and promoting gender diversity in investment decision-making are crucial steps towards addressing these disparities and unlocking the full potential of female entrepreneurs.?

Efforts to close the gender finance gap and create more inclusive funding environments can lead to positive outcomes for both women entrepreneurs and the broader economy.

5. LACK OF PERSONAL AGENCY:?

?Apart from supply-side constraints to accessing finance such as high interest rates and collateral requirements, women also contribute to the widened gap in accessing financing as they tend to self-select out of the credit market due to a perceived lack of creditworthiness.?

They fail to apply for loans because of such factors as low financial literacy, risk aversion, and fear of failure.

I can personally relate to this. After the launch of HerVest Business Loan in March, much to my surprise, the ratio of male to female loan applications was 6:4. Even when we made it markedly clear that our loans prioritized women and W-SMEs.

Our data show men confidently requesting credit to grow their businesses compared to women.?

KEY TAKEAWAYS:        

Unconscious or not, gender biases leave millions of women on the sidelines of financial inclusion, and millions of dollars in foregone profits for banks on the table.

In addressing gender bias, we need strong networks to support women in their careers and not just with access to finance.?

We also need to educate hiring managers and our teams to identify implicit biases and actively challenge these stereotypical assumptions.

Through gender disaggregated data and lending models, we can reduce the barriers that businesses face - particularly W-SMEs so that they can survive and help propel the economy to recovery.?