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Gender Lens Investing: Closing the $42B Funding Gap for Women Entrepreneurs in Africa
By Margaret Mandeya | Mon Dec 19 2022
USAID and Renew Capital’s SG2X Playbook for fund managers and entrepreneurs
The funding gap for female entrepreneurs in sub-Saharan Africa is $42B. Evidently, the African continent is a long way from achieving gender equality in access to funding. This gap hinders women’s ability to take a greater lead in growing the economy and improving their roles as agents of social change. Thankfully, more investors are turning to gender lens investing, an investment approach that promotes women's empowerment alongside maximizing returns to investors.
Empowerment of women, however, doesn’t stop at funding. It’s also crucial to ensure that the entire structure of a business initiative is gender-smart. This includes having gender-diverse teams, a characteristic that is consistent with high-performing companies. In fact, research shows that teams with lower percentages of women have lower sales and lower profits than teams with a balanced gender mix.
“Achieving gender diversity not only creates more inclusive organizations, but also more effective organizations,” says Mariah Grubb, a senior consultant at Renew Capital.
“Addressing gender biases and opportunity gaps in education and professional development are among the most pressing issues that need to be tackled to fully unlock human potential and drive economic growth on the continent. At the end of the day, gender diversity positively impacts the bottom line. It just makes business sense,”
The gender-smart agenda cuts across all of Renew Capital’s work and has been integrated into the capacity-building programs delivered through the Renew Capital Exchange —- the firm’s on-the-ground hub for pipeline development, ecosystem building and entrepreneur training programs. In 2021, Renew Capital partnered with USAID to create the SME Gender Growth Acceleration (SG2X) Playbook, hosted on the 2X Collaborative website, a global initiative to support gender-focused investors and drive gender-smart investing.
As noted in our 2021-2022 Impact Report, the Gender Smart Exec's Program, and its corresponding playbook are two significant changes to Renew Capital’s last decade of investing in women’s entrepreneurship. The SG2X Playbook builds on the foundation of the Exchange management training programs and provides asset managers and entrepreneurs with a set of practical tools to aid them in building gender-smart, scalable SMEs in sub-Saharan Africa. The playbook has been made into an easy-to-navigate dedicated platform publicly accessible through the 2X Collaborative.
In a survey conducted after the initial launch of the playbook, users highlighted the ease of using the platform. One playbook user told Renew Capital:
“The tools are easy to talk about and drum into people’s minds. In fact, my eyes were opened to the potential of tools already at my disposal...like my calendar.”
The playbook is divided into one portal for fund managers and one for entrepreneurs. For fund managers, the SG2X Playbook highlights gender-smart practices they need to integrate into their work to scale gender-smart SMEs. The playbook was created with the help of a gender lens investing consortium and inspired by our experience as fund managers investing in Africa over the past 10 years. In the portal, fund managers will find helpful resources to better organize their teams and a guide to conduct the investment process, from building a pipeline to closing and managing an SME portfolio.
For entrepreneurs, the playbook is a valuable management resource complete with policy templates, materials and standard operating procedures they can tailor to their business. Also included are instructional videos from the Gender Smart Exec’s Program, a comprehensive management course for founders and executives. The playbook includes a suite of more than 45 practical tools that will aid in the execution of the Gender-Smart Exec’s Program and implementation of the playbook’s guidance.
For entrepreneurs, the playbook is a valuable management resource complete with policy templates, materials and standard operating procedures they can tailor to their business. Also included are instructional videos from the Gender Smart Exec’s Program, a comprehensive management course for founders and executives. The playbook includes a suite of more than 45 practical tools that will aid in the execution of the Gender-Smart Exec’s Program and implementation of the playbook’s guidance.
Addressing the enormous funding gap for women entrepreneurs will continue to require concerted efforts from many stakeholders with an interest in making an impact in this area.
“I am excited to learn more about the management practices of women-owned and led companies,” says Julie Baker, an investor with the Renew Capital Angels network. “By supporting the due diligence and evaluation of women-owned businesses, I hope to learn about the challenges women starting and running companies face.”
Baker adds that investors can contribute to Africa’s economic potential by funding high-growth businesses that maximize impact by empowering women entrepreneurs.
“We have the privilege of helping them be more successful financially, socially and institutionally. And when these women succeed in business, my hope is that they will attract others who might imitate this model, leading to more opportunities for other women.”
Are you a fund manager or a woman entrepreneur? Check out the SME Gender Growth Acceleration (SG2X) Playbook to access gender-smart business resources.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
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