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A catalyst towards

a sustainable

economic construct

Dinao Lerutla

Managing Partner at Maia Capital Partners

When I think of women’s involvement in private equity, I try to contextualise it within the macro-economic conditions that we live in, and what relevance it has in the overall objective of achieving inclusive prosperity. Also, what should we measure to track the impact and progress that is brought about by the increased participation of women in the private equity industry? What has been very exciting and uplifting to note is the linkage between the rising number of women in private equity and the overall positive economic outcomes: increased access to quality basic services, the improvement of gender inclusion in other sectors of the economy, and the potential to help solve more economic challenges in South Africa and the rest of the continent.

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Various studies indicate a strong link between poverty, unemployment, and the livelihoods of women and children, who are most affected by the unequal and poor economic growth. South Africa has yielded low to no growth for more than 10 years. During the same period, unemployment increased from 24% to 34%, and women were the most affected, with the percentage of unemployed women increasing from 27% to 35,7%. Female youth unemployment is even more disturbing currently at 69% from an estimated 51,6% c.10 years ago. Add to this the gender pay gap, and it becomes clearer why South Africa’s income inequality is more pronounced in women.

 

Against this economic background, the dynamics of gender in the economy and in households have shifted significantly. South Africa’s population is now approximately 50.8% women, and the number of female-led households has also increased during this time, currently at 42%. South Africa’s economic and social context shows that some of the potential solutions that we consider must put increased priority on empowering women, investing in women, and investing in infrastructure services that enable women to participate in the economy.

 

This points towards gender-lens investing and impact investing as some of the pathways through which the country’s challenges can be attended to. Among various themes of investments pursued in the private equity industry, impact investing and gender-lens investing have been some of the areas that are increasingly being championed by women.

 

The themes are conceptualised with an intentional strategy to direct capital to investments that can bring a positive structural shift in the economy, including energy, social infrastructure (healthcare, housing, education), women SMEs and women in tech (venture capital). We know that, for example, housing is the single largest asset that most households will accumulate over their lives and, therefore, comprises an important part of a household’s wealth. Investing in healthcare can enable an economy to increase its growth by an additional 0.4% per year, and increase the pool of labour. Affordable debt is one of the key levers that can be used to uplift the lower income households, by providing access to affordable finance to enable households to access housing, healthcare and education, among others. Enabling financial inclusion for women-led business increases the likelihood of women participating in the economy, leading to an associated 2-4% increase in GDP. We’ve started witnessing the positive impact of these investments in the economy, and the role that private capital can play to scale up more of these types of investments that generate a good return and also enable the economy to grow in a more inclusive manner.

 

Some of the best experiences for me in private equity have been to witness the rise of women into senior levels within larger private equity firms, the emergence of new fund managers led by women, women fund managers building pan-African collaborations, and the building of a sub-Saharan presence of women in private equity. The investment philosophies of some of the managers and businesses are also distinctive and help to address areas that have the potential to transform the construct of our economy towards a sustainable one. The support by institutional investors towards private equity has also started to slant towards preference for funds that have gender diversity, which is very positive for the industry. This overall drive by women that are entrusted to make investment decisions, and by investors that see the imperative for gender-lens investing and impact investing, is helping to propel a much more tangible possibility of a sustained structural transformation of South Africa. I am confident that as more women rise in private equity, we can be the catalysts for South Africa to realise a sustainable and positive economic shift.

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