Women of Afro-Descendance: Untapped Talent and Market for the Private Sector
For almost thirty years, the International Day of Afro-Caribbean, Afro-Latin and Diaspora Women has been celebrated annually in recognition of a social and cultural legacy. However, their contribution to the economy also deserves some attention. Black women have been overlooked as a source of diverse talent and their needs as entrepreneurs have been too often ignored.
Despite the business case for diversity, which correlates higher diversity in corporate decision-making positions with better financial results, the presence of women of afro-descendance is negligible. Today, black women are in the corporate lower ranks. In Brazil, for example, only 0.4% of executive directors are black women. Black women accounted in the same proportion of board directors in listed companies in Colombia.
But black women are the fastest growing population in higher education institutions in Brazil, where they account for 29.3% of the total student population. Black populations, particularly black women, continue to face discrimination in accessing job opportunities and rising within companies, a well-documented fact.
Black founders also face funding challenges. By some estimates, women and afro-descendant founders were granted less than 2% of all venture capital funds, according to a 2020 report by Scott Galloway.
A study of the venture capital ecosystem in Brazil, where referrals are necessary to get funding, found that 76% of agents interviewed had never received or rarely received a proposal from a black founder. This shows that black start-ups and their associated innovation potential is restricted by their lack of access to traditionally white networks.
In addition, black women entrepreneurs in Brazil are 50% more likely to be denied a loan than their white counterparts. While this prevents black women from growing their businesses, financial institutions are missing a market that, if well understood and addressed, is profitable. IDB Invest, along with other multilateral institutions financial institutions, has already demonstrated the potential of the women’s market. Not only do women exhibit better repayment rates than men but they also tend to have more than one product or service with the same financial institution.
Discrimination stems from racial prejudice and structural barriers that prevent them from advancing in the economy. The private sector can contribute to break this cycle by:
- Promoting black leadership and female leadership in companies
The IDB Group launched an online, self-paced course that helps women to develop their leadership skills. This MOOC helps women to build their individual personal development plan, strengthen their intrapersonal and communication skills and enhance their leadership competencies. These are skills required to thrive in the corporate world.
Another tool, released earlier this year by IDB Invest, is designed for companies seeking to increase the number of women in leadership positions and to create a more nurturing environment for women’s career advancement. It offers step-by-step guidelines on how to implement a women’s leadership program within an organization, as well as practical advice on other actions that an organization can take to support gender equality in the workplace.
- Adopting a proactive approach to deal sourcing
Investment funds, whether venture capital or private equity, can actively seek investment opportunities beyond their classic networks. Look for black investment networks, participate in events dedicated to expand networks for black entrepreneurs and connect with accelerators that support specifically black start-ups (check BlackRocks StartUps!)
- Understanding the demand for credit by black women entrepreneurs
Once a financial institution understands women’s behavior in the demand for financial services, they can build a value proposition. That was the case of Davivienda in Colombia and Konfío in México. Thanks to the support of IDB Invest, they were able to better understand the opportunity of women-led SMEs and build a value proposition that addressed their specific needs. It is time to do the same with people of afro-descendance in the region.
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