Want 26pc GDP rise? Close gender labour gap

Research shows that diversity in the boardroom brings in dividends, with companies that have more women delivering a 36 per cent better return on equity.

African investors should review top leadership mix in all organisations. This view is shared by Marcia Ashong and Tamsin Jones, co-founders of The Boardroom Africa.

Boards play a pivotal role in the decisions that shape shareholder value, from setting strategy to monitoring risks, planning succession, and growing business.

Strong boards are the key to building the strong companies required to catapult Africa’s growth, but the growth potential of the region’s private sector will remain unfulfilled unless more women are offered a seat at the table.

The benefits of gender-diverse workplaces are well-established.

A 2015 report by McKinsey, a US-based global management consultancy, estimated that closing the gender labour gap could add as much as $28 trillion, or 26 per cent, to annual global GDP by 2025.

In Africa’s private sector, that type of boost is vital to meet the needs of the youngest, fastest-growing population on earth. In 2015, MSCI, the world’s leading equity index provider, found that companies with more women on their boards have delivered 36 per cent better return on equity than peers lacking gender diversity. Besides, diverse groups have been found to make better decisions.

But despite research showing the dividends of diversity, few investors in Africa champion women in the boardroom.

Instead, when a woman rises to the top of the traditionally all-male corporate ladder in Africa, it’s front-page news because women’s progress in business leadership continues to be achingly slow.

Company boards, which are essential to good governance and to accelerating corporate social responsibility programmes, must assume the role of pushing gender issues to the forefront.

According to an African Development Bank study of the 307 largest companies on the continent, around a third of them have no women on their boards, while another third has only one.

In total, only 12.7 per cent of company directors are women. With an average of 17 per cent women directors, the countries of southern Africa and East Africa are doing better, while the three North African countries are struggling to reach 7.5 per cent.

In the largest economy of the Ecowas bloc, Côte d’Ivoire, only 5.1 per cent of directors are women.

Meanwhile, countries with the highest percentage of women as board members are Kenya (19.8 per cent), Ghana (17.7 per cent), South Africa (17.4 per cent), Botswana (16.9 per cent) and Zambia (16.9 per cent) respectively.

Special mention goes to Kenya-based East African Breweries, with a board that’s 45.5 per cent women, followed by South Africa’s Impala Platinum Holdings at 38.5 per cent and Woolworths Holdings at 30.8 per cent.

On the downside, the country with the lowest percentage of women on boards is Côte d’Ivoire (5.1 per cent), followed by Morocco (5.9 per cent), Tunisia (7.9 per cent) and Egypt (8.2 per cent). Uganda hangs around the continent’s average of 12.7 per cent.

Women Matter Africa, another report by McKinsey, further highlights the financial benefits for companies having women on their boards.

“The earnings before interest and taxes margin of those with at least a quarter share of women on their boards was on average 20 per cent higher than the industry average.”

But women are underrepresented on all rungs of the corporate ladder, notes the McKinsey report, which says only five per cent of professional women make it to top management in companies in Africa.

Having worked with women leaders, I find them well-structured and organised.

In countries like Norway, there is a gender quota policy requiring firms to increase the percentage of women on their boards to at least 40 per cent with the risk of deregistration for not complying.

At 40.1 per cent, Norway has the world’s highest percentage of women on company boards. The global average is 15 per cent.

In a disruptive age, women can be critical to unlocking new global markets as women’s purchasing power swells.

The writer is EABC director and Brand Africa trustee