Guest Blog By Elizabeth Cannon
Investing in women is not just a moral imperative—it’s an economic strategy with substantial returns. Gender-lens investing (GLI) has emerged as a pivotal approach in the global financial landscape, aiming to close gender gaps and promote equality. This investment philosophy recognizes that empowering women can lead to transformative economic and social outcomes. Research shows that GLI initiatives supporting women’s employment and entrepreneurship can have a profound impact on poverty reduction. In fact, the World Bank estimates that increasing women’s participation in the labor force in low-income countries could lift 60 million people out of poverty. By promoting women’s economic inclusion, GLI not only enhances individual livelihoods but also strengthens entire communities and economies.
The Economic Case for Investing in Women
The potential economic impact of closing gender gaps is staggering. McKinsey estimates that narrowing the gender labor gap could add up to $28 trillion to annual global GDP. In regions like Africa, where 60% of the population is under 25 and youth unemployment rates are high, investing in women is particularly crucial. Women in Africa, however, face significant barriers such as unequal land rights, limiting their economic participation and access to financing. Yet, women lead 25% of entrepreneurial ventures in Sub-Saharan Africa and control purchasing decisions for 89% of everyday products, demonstrating their substantial economic influence. Furthermore, companies in low- and middle-income countries with greater gender diversity in their workforce and leadership achieve, on average, a 22% higher return on investment, reinforcing that gender inclusion is not only socially impactful but economically advantageous.
The Power of Education and Health
Investing in women’s education likewise has proven returns. The World Bank estimates that each additional year of schooling for girls can increase their future earnings by up to 20%. Furthermore, education is directly linked to better health outcomes. For instance, increased schooling reduces the chances of contracting HIV by 8.1%, and children of educated mothers are more likely to be healthier. Investing in women’s education and health translates to broader economic benefits for communities, reducing healthcare costs and enhancing overall public health.
Gender-Lens Investing: A Global Trend
Gender-lens investing (GLI) is an investment approach aimed at advancing gender equality and empowerment. It focuses on increasing access to entrepreneurship, leadership opportunities, employment, finance, and products and services that support women. The approach is gaining momentum, with gender-lens investments rising from $1.1 billion in 2017 to $4.8 billion in 2019. Initiatives like the 2X Challenge work to mobilize private-sector investments in developing countries, unlocking gender-smart capital at scale and demonstrating that investing in women is both a strategic and ethical choice. According to the International Finance Corporation (IFC), women-led businesses in low-income countries are 30% more likely to achieve high growth when they receive targeted investment. Yet, only 5% of global venture capital funding goes to women-led startups, highlighting a significant opportunity for further GLI efforts.
Addressing Barriers to Women’s Economic Empowerment
Women in low-income countries often face barriers such as limited access to capital, digital tools, markets, and childcare. Gender-lens investing addresses these barriers by supporting businesses owned or operated by women and promoting equal opportunity. Companies with gender-balanced leadership see a 25% higher valuation compared to those with non-diverse teams. Investing in women-led businesses is not only a matter of social equity, but also a strategic move that yields higher financial returns.
Social and Economic Impact
Gender-lens investing has profound social implications. It improves health outcomes, enhances educational opportunities, and boosts safety for women and marginalized genders. In low-income countries, where social infrastructure may be fragile, these investments can lead to significant improvements in social stability and community cohesion. By aligning with Sustainable Development Goals (SDGs), particularly Goal 5 (Gender Equality) and Goal 10 (Reduced Inequality), gender-lens investing supports international development agendas and contributes to more equitable and sustainable growth.
The Road Ahead
Empowering women through gender-lens investing is more than just addressing social justice issues—it’s about fostering economic growth, enhancing business performance, and contributing to sustainable development. The evidence is clear: investing in women drives significant economic returns and creates a ripple effect that benefits entire communities. As we continue to focus on closing gender gaps and promoting equality, it’s evident that most roads lead to the same conclusion: investing in women is essential for sustainable economic growth and a more equitable world.
For further insights into gender-lens investing and its impact, explore resources such as the 2X Challenge and reports on investing in women for sustainable growth in Africa, or consult studies from organizations like the International Finance Corporation and the Gates Foundation. By integrating gender considerations into investment strategies, stakeholders can enhance their impact and support global efforts towards more equitable development.
About the Author
Having dedicated six months to researching the impact of immigration on healthcare systems in low- and middle-income countries for her dissertation, Elizabeth Cannon became drawn to exploring Gender-Lens Investing in similar contexts. Always motivated by opportunities to create positive social impact, last year she earned a Masters of Public Health from Imperial College London, where she was actively involved in projects with the World Health Organization and various non-profit development initiatives including Greening Communities. Since graduating, she has been working in a Medical Education role in the healthcare industry, coordinating educational programs for doctors and supporting their professional development with the overarching goal of putting patients first.
