A report from the International Finance Corporation has provided new evidence about the business benefits of closing the gender gap across the value chain after examining companies in low and middle income countries.
Illustrated through nine in-depth case studies, the study offers quantitative data to show how gender-smart interventions can boost profits and productivity, and create efficiencies for companies, with a special focus on strategies which go beyond a well-documented business case for hiring more women to senior leadership positions.
While much has been written about the positive impacts of gender equality on regional or country-level economic growth, less is known about the impacts at the firm level, a gap the IFC report Investing in Women: New Evidence for the Business Case, aims to fill.
Alexa Roscoe, strategy and innovation officer at IFC, said the report’s findings were drawn from a wide variety of programs and organizations.
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“We wanted to widen the case for robust and diverse gender-smart interventions — so we decided to bring cases together showing women as customers, community partners, entrepreneurs, as well as employees, and also look at businesses from around world, working in different sectors, a variety of large and small scale companies,” she said.
All nine cases studies, released last week, illustrated why businesses should consider gender equality more broadly than just in the boardroom. Any company who ignores the findings is “leaving money on the table,” Roscoe said.
It is estimated that between $12 trillion and $28 trillion could be added to the global economy every year by 2025 if women were to obtain equal access and rights in labor markets. Empowering women has been shown to be good for a business’s balance sheet, and companies with diverse workforces are more likely to outperform their peers.
However, research indicates that full economic equality could take another 170 years to achieve.
IFC, which is the largest development finance institution focused on the private sector in developing countries, works to promote gender parity through a number of channels.
The institution has a ‘Banking on Women’ portfolio which has invested more than $1.3 billion in lending to women-owned small and medium sized enterprises. The IFC’s advisory service also offers technical assistance to women entrepreneurs. A joint team from IFC and the World Bank also works to effect policy and legislative reform to promote gender equality.
Devex interviewed Roscoe for a closer look at the report’s findings about how applying gender strategies to women customers, employees, entrepreneurs and community partners can boost productivity and profit.
Women entrepreneurs can be more effective business partners and provide crucial market information.
While rolling out a network of agents offering digital banking services to low-income customers in Kinshasa in the Democratic Republic of Congo, FINCA — a microfinance institution and IFC client — made the discovery that its female agents conducted 12 percent more transactions a month than their male competitors.
Upon closer analysis, FINCA was able to identify several reasons for their relative success — including that women agents tended to set up further way from commercial centers, and so had less competition, and often offered banking services alongside other services — which FINCA could then use to inform future projects.
The case study there offered FINCA two big lessons, Roscoe said.
“First, taking a gender lens to analysis can often lead to unexpected, non-gender related insights which can feed into the design of recruitment and scale up strategies,” she said.
And second, that women entrepreneurs can be “unique assets” and a “crucial part of strengthening supply and distribution chains,” she added.
The digital banking agent program is part of a joint $37.4 million IFC and The MasterCard Foundation initiative to expand microfinance and advance digital banking services in sub-Saharan Africa.
Targeting women as customers can reap big returns, even in seemingly saturated markets.
“It’s not enough to just target women, you need to segment the market and look at the different needs and preferences within that,”— Alexa Roscoe, strategy and innovation officer at IFC
Studies estimate that women account for up to 80 percent of consumer spending, and yet few products and services are designed to with women’s needs and preferences in mind, according to Roscoe.
Realizing this disparity and the potentially untapped female market, Banco BHD León, or BHDL, in the Dominican Republic worked with IFC’s investment and advisory teams to analyze the market and develop targeted and tailored products and services to meet their needs.
“It’s not enough to just target women, you need to segment the market and look at the different needs and preferences within that,” Roscoe explained.
BHDL identified four groups of women customers to target — small and medium enterprise owners, independent professionals, salaried employees and heads of household — and using human-centered design methodologies created products for them.
For example, the Tarjeta Mujer, or women’s credit card, offers nonfinancial services including insurance coverage for illnesses such as breast and ovarian cancers, as well as plumbing and locksmith services.
The project has been a success, with an internal return on investment figure of 35 percent for BHDL. The business has also seen a 19 percent increase in its consumer loans business, and 26 percent growth in the number of car loans made.
Roscoe said the women-centered approach has led to reputational and financial benefits for the bank.
“BHDL became the first mover in the market and it has certainly paid off — the bank was able to corner the market and is now seen as bank of choice for women in the Dominican Republic,” she said.
Addressing challenging social issues that originate outside of a business can reap social and financial rewards.
Rates of gender-based violence are extremely high in Papua New Guinea — a 2015 study found 68 percent of women had experienced GBV during the last year.
GBV can have wide ranging negative implications including for businesses whose staff are victims, such as reduced productivity, increased absenteeism, additional staff health costs and higher staff turnover. The Overseas Development Institute estimates GBV-related expenses can add between 3 to 9 percent to total payroll expenses, and incur indirect costs of an additional 45 percent.
While tackling social norms is notoriously difficult, and may seem outside of a company’s jurisdiction, Roscoe says there is a strong business case to be made, and such interventions could offer a big potential upside.
“[GBV] may seem to be outside the normal remit of business sphere of operation … but addressing such issues … can be quite effective in helping communities and also supporting the operating and investment environment,” she said.
In response, the Business Coalition for Women, an umbrella group made up of over 50 companies from Papua New Guinea and supported by the IFC, developed and shared practical solutions to help members counter GBV, including practical tools, model human resources policies, implementation guidelines and training for employers, safety trainings for women working in remote places, and public awareness raising campaigns.
Results include reduced rates of absenteeism and turnover for BCFW members, and also reputational advantages, including being perceived as a desirable employer by women.
Employing women for the first time can give companies a competitive edge.
On IFC’s advice, when Meghmani FineChem, an Indian chemical manufacturing company, came to build a new plant in Gujarat, the leadership team decided to actively recruit women into roles they would normally never have occupied. This posed a number of challenges.
“The company had to overcome a lot of social norms, such as the anachronistic sense that the chemical industry was dirty and not appropriate for women and also legal norms including women not being allowed to work at night,” Roscoe explained.
Meghmani persevered, hiring 45 women out of 630 positions, and even this small change has seen results, with managers reporting improvements in work culture and occupational health and safety.
The fact the company was a first actor in the space of employing women also enabled them to stand out and become more a competitive player in the region, Roscoe explained.
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