Low Financial Investment among Women

Capital Markets play an important role in the economic growth of an economy. It provides an opportunity for investors to get dividends and capital gains on their investments. Capital markets are a link between financial sector and non-financial sector. In developing economies expanding capital markets is an indicator of economic growth.

In 21st-century role of women in society is changing, they are now competing with men in several areas. Women are emerging as successful entrepreneurs and are taking up complex decision making role in society and business world. Despite the above benefits, women representation in financial systems is very low as investors.

Financial sector investment is one of the areas which is debated for unequal representation even in developed countries. Behavioural economics answers this by stereotype about women’s risk-taking behaviour which is risk-averse.

Data provided by Riskalyze data (online tool to measure risk tolerance) shows that 37 percent of women have a below-average tolerance for risk, 25 percent have an average tolerance, and 38 percent have an above-average tolerance. Results thus contradicts stereotype about women’s investment behaviour.

According to Moxie Future, women are neither adequately understood nor properly catered for by the financial industry. Again some studies indicate that women are very calculative and safe investors.Women want their money to be put to work, not just for financial returns but to bring broader benefits – for society, for the environment and for the world. Fidelity and Wells Fargo studies found that female investors beat the returns earned by male investors on both an absolute and risk-adjusted basis.

Global Situation

Investment by women in capital markets is not a modern phenomenon. According to a research on women investors in early capital markets, there were some women investors holding shares of Bank of England between 1720 -1725, during that time their transactions comprised about comprised 13 percent of the market value of total transactions. In that period women investors’ belonged toan elite group of women.

In Modern society capital market investment has registered tremendous growth. Despite this high growth, financial investment activity among women is still very low which shows low level of financial inclusion. According to Demirguc-Kunt, Klapper & Singer, 2013, financial exclusion of women is a global problem with ‘more than 1.3 billion women in the world operating outside the formal financial system.

A survey from Capital Group confirmed that eight out of 10 women have encountered one or more of following stereotypes about their investing expertise like they lack confidence; they’re less knowledgeable than men, they’re afraid to take risks etc. These stereotypes not only affect women investment confidence but also employers who employ investment consultants.

Investment by Women in Africa

 According to a study by MFW4A, GIZ & New Faces New Voices (2012), In Africa, more than 70 percent of women are financially excluded and women’s access to finance and financial services is consistently behind as compared to their male counterparts.

This financial exclusion which is manifested in the form of low investment activity by women is also due to lack of women in decision making positions in the corporate world. According to the African Development Bank, women hold only 12.7 per cent of board directorships across the continent’s publicly listed companies. Countries such as Kenya, which has the highest number of African women sitting on corporate boards, have made strides due to legislation calling for restriction on single gender representation.


 Women make up approximately 50 per cent of the global population. If this 50 per cent of the population does not invest it will surely affect the expansion of the capital market.  There is a need to educate women on financial matters, developing products attractive to women investors, enhancing awareness among women’s in financial issues.

Again legislations should be enacted to enhance gender representation in decision making positions. In South Africa Black Economic Empowerment Act was revised in June 2016 to require public companies listed on the Johannesburg Stock Exchange to submit annual compliance reports to the BEE Commission on the promotion of gender diversity at board level.

The writer is a Kigali based economist and the Programme Leader Business and Economics at Mount Kenya University Rwanda




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