Despite decades of data that show gender-diverse teams deliver better results, women continue to lack access to investment capital. In African venture capital, less than 1 percent of the more than $3 billion raised in the past two years has gone to women-only-founded start-ups. Although the gender finance gap is not new and not limited to African markets, the lack of women in leadership positions in finance, specifically those participating in capital allocation decisions, perpetuates the current situation ultimately limiting women entrepreneurs’ access to financing globally.
However, development finance institutions (DFIs) are well positioned to change the status quo by driving the adoption of gender-equitable standards throughout their entire portfolios, which are concentrated on emerging markets—just as they successfully did with the implementation of environmental, social, and corporate governance (ESG) standards over the past 15 years. The U.S. International Development Finance Corporation (DFC), a leader in advancing women’s access to capital through the “2X Challenge,” recently announced it will mobilize $12 billion in funding by 2025 to invest in businesses that advance gender equity as well as establish a dedicated technical assistance program to support clients looking to advance their own gender-equity practices. Although a commendable step, the DFC should go one step further and adopt clear, phased-in standards for gender equity in all of its investments, and in doing so, make gender-equitable investing an accepted compliance step rather than a siloed program that often falls short of delivering rapid change. The “Women on Boards” law in California presents a model. Passed in 2018, it requires all public companies based in the state to have at least one female director on a board, with increasing requirements over time.
