Sifiso Skenjana: 3 ways financially savvy women can unlock economic growth | Fin24

Sifiso Skenjana: 3 ways financially savvy women can unlock economic growth

Apr 15 2019 05:01
Sifiso Skenjana

It's been an eventful few weeks, particularly if one looks through the lens of recognising the world's women, and the role they continue to play in global sociopolitical outcomes.

The Sudanese woman dubbed Kandaka – 'Nubian Queen' – became a resistance symbol as protests intensified, calling for Sudanese president Omar al-Bashir to step down after ruling for almost 30 years since leading a coup d'etat in June 1989.

On April 2 this year, the continent commemorated the life of another resistance icon, Mama Winnie Madikizela-Mandela. And in the last week, we saw the country celebrating the honorary doctorates of Dr. Vuyo Mahlati and Dr. Judy Dlamini.

A World Economic Forum report found that equal opportunity for women participation in the global economy could add up to $28trn to global GDP by 2025. This is roughly one third of global GDP in 2018 – some $84.8trn.

Economically speaking, here are three unexpected areas where women are consistently high performers.

Loan repayment queens

Not only do women have the least access to financing facilities, often they have more onerous credit terms than their male counterparts.

Research, however, suggests that banks need to rethink their credit scoring and product development when it comes to their female clients. Several studies have found that gender targeting reduces loan default ratios in general.

That is, women are better borrowers than men.

So, for financial institutions who have credit products, it is a no-brainer on which client will result in lower provisions for delinquent debt.

A Department of Trade and Industry report studied credit bureau data and found that 36% of women had loan default judgements against them compared to 64% of men; and 45% of women had defaulted on their loans compared to 55% of men.

These findings not only suggest that women should have better access to credit finance, but also that they should have credit scoring tailored for their lending and repayment behaviour.

Superior investment performance

The 'Women and Money' Fidelity 2017 survey asked participants which gender was better at investing its money. A mere 9% of survey respondents thought that women were better investors than men.

In sifting through more than 8 million investment accounts, however, Fidelity discovered that women not only saved 0.4 percent more than men, their investments earn more annually by also 0.4 percent.

The key drivers here were that men were likely to trade more than women, incurring trading fees and increasing the chance of a losing trade.

In the short term, the difference may appear small; but the study further found that women tended to hold on to their investments for longer, reaping the benefits of compound interest. By extrapolation, all things being equal, this meant that over a 30-year period, the returns women would make on their investments would outperform those of their male counterparts by roughly five times.

Outstanding managers

The Gallup State of the American Manager Report, which was done over 40 years, in 195 countries and analysing over 2.5 million manager-led teams, found that women were, on average, better managers than men.

They found that work groups managed by women had higher engagement levels and subsequently higher performance scoring.

Globally, the C-suite narrative has been "trying" to have more gender representation at all levels, but when the rubber hits the road, it appears Fortune 500 companies failed to come to the party, where in 2017, the number of women CEOs dropped by 12% from the previous year.

In Germany, however, the opposite holds true; the country in 2015 passed a law requiring a minimum of 30% female representation in management roles. Germany joined Norway, Spain, France and Iceland, who all set their minimums at 40%. In Germany, failure to report gender statistics could result in a fine of up to €10m, or 5% of annual revenue.

Locally, a Grant Thornton report found that 29% of senior roles were occupied by women and that 20% of businesses do not have women in senior positions at all.

Reams of economic literature both theoretically and empirically discusses the economic loss to countries that are slow to open up their industries to equal participation and opportunities for women.

It is tragic that research needed to be done at all to prove it, but now that it is proven, it should be neither optional nor negotiable that we give our economy the opportunity to fully realise the value that women bring to the economy and all its participants.

sifiso skenjana  |  gender equality  |  gender


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