The Business Case for Investing in Women: Highlights from Research Evidence

“The first business case for investing in women in the global south is that the pandemic stricken global economy could make $330 billion more in turnover yearly.”

Photo by Leighann Blackwood on Unsplash


Basil Abia

Date Published

February 14, 2022



The business case for investing in women is irrefutable. While it is now a moral duty to keep imploring governments and businesses to enable pathways for the economic and financial inclusion of women en masse, it makes complete common sense by all ramifications to invest in women.

The numbers

It is very important to keep reiterating the need to invest in women in as many forms as plausible especially with the widening economic gap between men and women mostly exacerbated by the pandemic. It is also important to point out that how finance is distributed can have incredibly transformative effects on women for better socio-economic outcomes. 

According to the International Finance Corporation (IFC), approximately 80% of women-owned businesses in low-income countries with credit needs are either unserved or underserved. This in turn means that there is a $1.7 trillion financing gap in that regard and a consequence of this is the global economy failing to materialize a $330 billion turnover annually. Thus, the first business case for investing in women in the global south is that the pandemic stricken global economy could make $330 billion more in turnover yearly.

Below are highlights from empirical research globally delineating the business cases for increased investments in women-led businesses, business offerings, and development initiatives:

Research evidence from the U.S state of California clarifies that companies, corporations, and startups with gender-diverse boards outperform those without. Diverse perspectives from diverse lived experiences that lead the insights and organizational execution of corporations in high-level industries do way better than those without such diversity in their leadership and the numbers lay credence to this evidence-based insight. 

For example, investment researchers at Modern Index Strategy MSCI, global leaders in equity indexes have found that companies and corporations with the highest percentage of female directors tend to have higher performance (i.e., return on equity), have a higher average valuation, and are more innovative. Furthermore, they highlight empirically that corporations and companies in the MSCI World Index with strong female leadership generated a Return on Equity (ROE) of 10.1 percent per year, compared to 7.4 percent for those without. 

In parts of sub-Saharan Africa like the Democratic Republic of Congo (DRC) where banking penetration rates are low even by the sub-region's standards and where there is a dearth of access to financial services, digital banking solutions with a women-centric approach that includes a higher representation of women mobile banking agents has produced higher returns. According to research evidence from the IFC, in the DRC where a similar women-centric intervention was implemented, female agents were more successful than male agents on average, recording 13% more transactions per month and a 16% higher net profit on their overall businesses. 

For Nigeria, an African financial technology powerhouse with similar poor financial inclusion numbers, it makes perfect business sense for fintech startups in the country to create similar gender-smart solutions that have a women-centric approach in order to get higher business returns and achieve better financial inclusion outcomes. With 41% of micro-businesses in Nigeria owned by women according to statistics collated by PricewaterhouseCoopers (PwC), it establishes a market fact on which gender-smart solutions proposed by Nigerian fintech startups prove right. 

When one of Lebanon’s oldest banks, the BLC Bank, partnered with the IFC to launch the Women Empowerment (WE) Initiative, a set of banking business offerings that included gender intelligence training for BLC Bank’s staff and non-financial service offerings for its female customers, the rates of non-performing loans decreased and the number of women SME borrowers increased by 82 percent and loans grew by 121 percent. This evidence compiled by the IFC empirically proves a long-held assumption right, that a more equitable distribution of bank credit to women leads to higher returns for banks and other financial institutions.

Common sense

The business case for closing the financing gaps between men and women is that it leads to better financial returns for businesses and development outcomes like financial inclusion for regions with a high disparity in that regard. It is as simple as that and there is an abundance of case studies with well-executed empirical investigations to prove this a fact. Companies, corporations, start-ups, and governments in Nigeria and the global south can and must unlock new pathways for progress, profits, and innovation by investing more in women because it makes adept business sense and because it is the morally upright thing to do.

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Disclaimer: This information in this article is NOT investment advice. It is intended for information and entertainment purposes only.

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