Gender Lens Investing: A key tool for women’s financial literacy

Off the back of Financial Literacy Month, we should take stock of the strides women in finance have made and pose solutions to the challenges we still face. Like Gender Lens Investing (GLI).

Financial illiteracy is an issue that affects more than half of South Africans. Past economic exclusion, unequal education systems and recent aggressive credit marketing have left many without essential financial knowledge. This knowledge deficit keeps wealth distribution uneven and maintains a status quo where the top 0.1% owns a quarter of the country’s wealth.

Low financial literacy means many struggle to manage debt, can’t save or invest enough for the future and remain vulnerable to money scams. Worryingly, research by the Association for Savings and Investments in South Africa tells us that a mere 6% of working South Africans will likely retire comfortably and almost 90% could work part-time to make ends meet when in retirement.

Gender also affects levels of financial knowledge and well-being. Women in South Africa earn up to 35% less than men. Despite entrepreneurship support, women own about two of every five formal businesses. According to 2023 research from Debt Busters, women between 30 and 40 have the most debt and many are in financial distress. Women are grappling with lower salaries, rising child and elder care costs, as well as the reality of being paid less if they choose to have kids.

However, not all is lost. There are strategies like GLI that can be used to bring balance to the unequal financial footing on which women find themselves. But its success will require putting our money where our mouths are and recognising what the world loses when women are left out of the economy.

What is Gender Lens Investing?

GLI is a powerful catalyst for women’s financial literacy. It means making investments that centre the benefits of gender diversity within an organisation. Financial inclusion is promoted by giving women more access to financial concepts, tools, and decision-making roles.

With GLI, mentorship programmes are created to empower women to learn and seize opportunities. This concept uses the power of investment to break down barriers and create an equitable financial landscape for women to thrive.

For GLI to work, tailored education is needed so we realign the goals of investment decisions so gender-diverse outcomes are prioritised.

GLI doesn’t just provide capital, it addresses the root causes of financial exclusion for women. It encourages companies to offer financial services and products tailored to women’s needs, such as childcare, savings plans or flexible loan options.

How would GLI drive social change?

By focusing on women in the financial system, GLI challenges traditional investment norms and societal biases. It demonstrates the economic potential of women as entrepreneurs and investors, therefore paving the way for greater inclusion in the financial sector.

Overall, GLI strives for a more inclusive environment where women have the tools, resources and confidence to participate fully. This can trigger a ripple effect that leads to greater financial security, wealth creation and economic empowerment for women.

Excluding women starves the world of innovation, perspectives and resources

Boston Consulting Group research reveals a compelling truth: for every $1 invested, women-led businesses generate 78c in revenue compared to only 31c for male-led counterparts.

Further research by First Round and the Kauffman Foundation stresses that GLI isn’t just about inclusion – it’s a financial imperative. Centuries of excluding women from funding and financial leadership have deprived businesses, economies and the world of the innovation, resourcefulness, and diverse perspectives. By embracing GLI, we unlock a future of greater profitability and impactful growth.

GLI transcends financial inclusion. It empowers women with knowledge, resources and a seat at the decision-making table. It unlocks a future where women are not just financially literate, but also architects of a more equitable and prosperous world.

* Mvandaba is a CA (SA), entrepreneur and CEO of Kwandiso Consulting.