In this article, we take a deep dive into board gender diversity in Africa in 2023 and what might occur in the coming years. Board gender diversity is the facet of corporate governance that demands an equitable representation of women on corporate boards. Globally, there has been an improvement in board gender diversity from 22% in 2019 to 26% in 2021 and 27% in 2022. Africa has also recorded some progress in female representation on board seats. Research shows that enacting regulations that enhance board gender diversity in some African countries has been instrumental to this growth. Despite these regulations, only 25% of board seats in the continent are occupied by women as of 2022. This article evaluates the deficiency of board gender diversity regulations in African countries, the significant influence of institutional investors and individual shareholders in enhancing board gender diversity in Africa, and the impacts of board gender diversity on a company, the continent, and the world.
Regulations
There has been a significant rise in the percentage of women on board seats in Africa. For example, Kenyan women on board seats increased from 14% in 2012 to 21% in 2017 and 36% in 2021. Also, in Ghana, board gender diversity has increased from 18% in 2015 to 30% in 2021. This increase can be attributed to recent constitutional provisions for board gender diversity and leadership capacity development of women across the continent. However, despite a similar constitutional provision, Morocco has only managed 21% of women’s inclusion as board members. While it would have been perfect to argue that education is the cause of this shortage in women leadership in Morocco, evidence shows that about 60% of female graduates from management studies and about 50% in science and technology in recognised universities. This shows that Moroccan women are highly educated. Yet, they face a level of inequality in labour market opportunities.
In addition to social, economic and political factors, the existing legislations and compulsory gender quota policies are either insufficient to cater to the challenges of board gender diversity in Africa or not adequately implemented. The provisions of the Central Bank of Nigeria Act (2007), the Morocco constitution (law 19.20) (2021), the Constitution of the Republic of Kenya (2010) and other board gender diversity legislations in Africa are subject to qualification, competence, independence, integrity, and other considerations by the management of corporate bodies. Hence, corresponding initiatives and programmes must further build women’s leadership capacity, increase their visibility, build platforms, and provide infrastructures to support them. Also, organisations must understand women’s critical global roles as board members and the extent to which they possess the capacity to build sustainable organisations. Some examples include Karen Lynch, the president and CEO of CVS Health. We also have Shonda Rhimes, a board member of the Kennedy Center, American Film Institute, and Planned Parenthood. Again, Ngozi Okonjo Iweala is the current Director General of the World Trade Organization and a past Twitter Inc. and Standard Chartered PLC board member. Finally, Ibukun Awosika, the former chairman of First Bank of Nigeria and a current Binance Global Advisory Board member.
Stakeholders
Considering the increasing demand for board gender diversity in Africa, institutional investors, individual shareholders and others are yet to meet expectations to increase support for women nominated to board seats and startups that have women on the founding team. Currently, women occupy only 25% of board seats in Africa. According to Dosunmu (2022), Y Combinator has invested in 98 African startups for the past 18 years, among which only 15 have women as part of the founding team, with just 5 having a female CEO. This shows an investment selection lapse in gender diversity. Research has shown that shareholders are less likely to vote for female board candidates because they are more confident in male directors’ leadership abilities and technical skills. Hence, shareholders vote for female directors when a company is financially stable and withdraw support for female directors when a company underperforms financially or is mentioned in the media because of a controversy, even though shareholders cannot attribute these failures to female directors. Google’s Black Founders Fund achieved gender parity in its investment selection in 2 years by committing to funding an equal number of men and women-led startups in Africa.
We acknowledge that board candidate or investment selection criteria can not be based solely on gender parity. However, we suggest that investors and shareholders can significantly influence diversity through voting and informal dialogues.
Impact
Research has established that boards with greater female representation produce greater profitability through higher returns on investment, sales and equity. For example, Catalyst indicates that companies with the most women on their boards had a 66% higher return on investment than those with fewer women. Also, the Credit Suisse Research Institute reports that shares of companies with a market capitalisation of over $10 billion and women on board outperformed comparable businesses with all-male boards by 26% worldwide over six years. The reason for this huge performance is not far-fetched. Women account for 85% of all purchases and drive 70-80% of consumer spending worldwide. Seock and Bailey, in their study on online shopping orientations, discovered that women visited more websites and contrasted different purchase options more thoroughly than men. Women are key consumer decision-makers. Hence their perspective on the board would strengthen consumers’ satisfaction and retention. According to a McKinsey and Company study titled “Why Diversity Matters”, diversity gives room for more innovation and creativity in problem-solving at the management level. This innovative approach reflects in the company’s talent recruitment and retention, customer retention, and enhanced performance, all of which lead to greater profitability.
The International Monetary Fund reports that the least-ranked African countries in board gender diversity, including Ethiopia, Morocco, and Nigeria, could add at least 35% to their economies by bringing more women into the boardroom. According to the World Economic Forum, one in every eight people will be African women by 2050. In that case, the place of African women in delivering a significant boost to global economies becomes indisputable.
Board gender diversity regulations should be supported with related programs that build women’s leadership capacity and provide platforms for more opportunities. Institutional investors should uphold gender parity in the investment selection process, and individual shareholders should support competent female board candidates. Ultimately, including competent women in leadership can unlock a company’s greater financial performance and significantly boost Africa’s economy.
About the Author(s)
Olayide Oyeleke is an associate at The AR Initiative; where Dr Emma Etim is the Head of Research.
