Gender-smart investing is more than a buzzword, it is a strategic and economic development necessity. As global development efforts focus on building more inclusive economies, the need to channel investment towards women-led businesses and gender-diverse enterprises has never been greater. Yet, despite overwhelming evidence of the benefits of investing in female-led initiatives, female entrepreneurs continue to receive a fraction of global investment capital. Addressing this imbalance is more than a matter of equity, it is a pathway to real economic growth, innovation, and social progress within societies.
According to expert panellists at the African Venture Philosophy Alliance (AVPA) event on Gender Smart Investing, women-led businesses make up approximately 40% of SMEs in Africa, yet they receive less than 10% of commercial financing. According to UNICEF’s Vure Fund (2024), only 4% of global investment capital went to women-founded companies last year. These statistics highlight a systemic issue: women entrepreneurs are often overlooked by investors, despite evidence showing that gender-inclusive businesses deliver higher returns and greater social impact.
Many may mistake this conversation as being solely about fairness or equality, but it is so much more than that because research shows that gender smart investing can drive economic development. When female entrepreneurs and business leaders have access to capital, they reinvest up to 80% of their earnings back into their communities, compared to only 35% for men. Therefore, when women are given equity, they are more likely to lift their communities out of poverty, drive development and create systematic, lasting impact. Gender diverse teams which have women in all levels, including management, drive stronger financial performance and better risk management. Women-led businesses often create more jobs, particularly for other women, leading to widespread economic benefits. In essence, gender-smart investing fuels sustainable economic development, helping entire communities thrive.
Studies have also shown that within teams, women are more likely to be early adopters of innovations. They are often the first to take calculated risks with innovative solutions instead of just doing it the same old way. In sectors such as agriculture and mobility, women entrepreneurs have demonstrated a faster uptake of climate-smart solutions, such as drought-resistant seeds and renewable energy technologies. For example, in the e-mobility space, Wahu Mobility in Ghana has seen remarkable success by integrating gender-smart strategies, offering comprehensive health and insurance benefits to female riders while manufacturing over 200 e-bikes per month. Similarly, in food systems, female farmers are more likely to embrace new agricultural technologies that increase productivity and resilience. Despite initial scepticism from male counterparts, women’s leadership in adopting and scaling these solutions creates ripple effects throughout communities, driving both economic growth and social transformation.
In Africa, women face numerous barriers that hinder their ability to start and scale successful businesses, despite their significant contributions to the economy, as often women are the drivers of the informal economy and hold an important role in money circulation. Whilst access to capital remains the biggest challenge, there are others with unique contexts. In some countries, discriminatory policies still require male guarantors for women to secure loans, where women must obtain consent from a husband, father, or male relative to access credit, further restricting financial independence. This policy, still in place in parts of Francophone West Africa and North Africa, severely limits women’s financial independence and economic mobility. For example, in the Democratic Republic of Congo (DRC), until recent legal reforms, married women needed their husband's authorisation to open a bank account or take out a loan. Similarly, in Sudan, banking regulations have historically required women to present a male co-signer when applying for business credit, reducing their ability to build financial autonomy. These restrictions not only undermine women’s entrepreneurial potential but also weaken broader economic growth, as studies show that closing the gender gap in financial inclusion could add billions to Africa’s GDP. While some countries have reformed these laws, the pace of change remains slow, making gender-smart financing models critical in bridging this gap. Additionally, cultural expectations and family responsibilities place a disproportionate burden on women, making it harder to balance business growth with household duties.
Beyond development finance institutions (DFIs) and philanthropy, the private sector and diaspora investors have a crucial role to play. Diaspora communities contribute significantly to African economies through remittances, but their impact can be amplified through venture capital, angel investing, and impact-driven initiatives. By directing investments towards women-led enterprises, they can help close the gender finance gap while generating strong financial and social returns.
At Pharo Foundation, we believe that investing with a gendered lens is a smart thing to do. By unlocking the potential of women-led enterprises, we can drive sustainable development, economic empowerment, and lasting social change across Africa. We hope to see this case come to life in Ethiopia, where we have invested in a venture led by the incredible businesswoman Bethel Tsegaye, the CEO of Pharo Ventures and Country Director of Pharo Foundation Ethiopia. After commissioning a specialty oil factory in Ethiopia last year, Bethel hopes to empower local smallholder farmers in the area by providing them with essential inputs to be able to produce crops with higher yields and better quality. The facility will then process their seed into high-quality specialty oils. By sourcing seeds like organic sesame, flaxseed, and black cumin from these dedicated farmers, we ensure traceability and sustainability is built into our value chain. By supporting these farmers to keep or, in some cases, convert to organic farming methods, we maintain soil health and reduce dependency on chemical agricultural inputs, which, over long periods, degrade soil health. In a region marked by conflict, access is a challenge, and businesses face immense hurdles. Yet, Pharo Ventures has risen to the occasion by building a factory that brings hope and stability, which is a huge win for the farmers and local community employed at the factory.
After completing her studies and working in the UK, Bethel returned to Ethiopia and entered the impact investment space by joining Mercy Corps Ethiopia. There, she launched an Innovation and Investment Fund focused on early-stage companies. This experience opened her eyes to the significant challenges early-stage businesses, particularly those led by women, face in accessing finance. Bethel continued her career in impact investing, working with various funds that invested in start-ups across the region. She also co-founded several businesses in different sectors. The journey of being both an investor and an entrepreneur in East Africa is fraught with challenges, especially for female-led businesses. These challenges range from accessing capital to balancing career and family life. With over a decade of experience investing in numerous ventures, Bethel always dreamed of finding an investor with the right mix of risk appetite and patience to build companies capable of transforming value chains. Pharo Ventures presented exactly that opportunity