Women on boards [Pt 1]: New report reveals mixed results in gender parity indicators across Egypt’s sectors and industries

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The 2019 annual monitoring report published by the Egypt-based Women on Boards Observatory (WoB) has revealed varying results in the gender parity performance of companies it has observed across many sectors and industries in Egypt.

Focusing on the representation of women on boards in four key sectors, companies listed on the Egyptian stock exchange (EGX) and from the public sector performed worse in their gender parity indicators in 2019 than they did the previous year.

Constrastingly, the banking sector saw the biggest improvements in the percentage of women on boards with almost 15% in 2019, up from 11.4% in 2018.

The percentage of EGX-listed companies with three or more women on their boards fell from 8% in 2018 to 6% in 2019. The number of individual public enterprises with at least 30% women on their boards halved to 5%, while the number of boards with no women at all increased. In 2018, the total percentage of women represented on boards in the public enterprise category was 8.3%, regressing to 6.1% in 2019; and that percentage remained stagnant in the EGX-listed companies being 10.1% in 2019 compared to 10.2% in 2018.

The WoB was established by a consortium of partners led by the American University in Cairo’s (AUC) School of Business with the aim of pushing women’s representation on the boards of companies based in Egypt to 30% by 2030.

Since its inception, the WoB has been releasing annual reports monitoring the number of women on company boards across the country. While its second and latest report for 2019 revealed no progress in the EGX and public enterprise categories, it also highlighted significant improvements in other sectors.

The most dramatic improvement was a 200% increase of individual boards made up of at least 30% women, increasing to 9% of companies in the banking sector from 2018’s 3%. The number of boards that had no women also decreased by 36% from the previous year, with less than a third of all banking sector companies having no women on their boards.

However, much work still needs to be done to improve women’s representation in Egypt’s executive positions. Efforts on the government’s part in recent years are attempting to rectify this shortfall by 2030. In 2017, the government endorsed the National Strategy for the Empowerment of Egyptian Women 2030 that (among other areas) aims to increase the number of women in senior management positions in public institutions as well as companies in the public and private sectors to 30% by 2030. The WoB monitoring report predicts that annually, a total of 113 qualified women are needed to join boards in Egypt to achieve the 2030 target.

In 2019, the country’s Financial Regulatory Authority (FRA) issued two decrees obliging companies listed in the EGX and operating in the non-banking financial sector to include information on the number of women serving on their boards of directors when they are listing and delisting their securities.

Between March 4 and 9, the Egyptian capital hosted the 2020 edition of the Women Economic Forum (WEF), the first time the annual event has been held in an Arab country. WoB were one of the notable organizations invited to host a panel at the event. Also in attendance was Gielan El Messiry, Deputy Country Representative of UN Women, the United Nations entity dedicated to gender equality and the empowerment of women.

UN Women, through a project funded by the Swedish International Development Cooperation Agency (SIDA), provided a grant to support the work of the WoB observatory during 2019. El Messiry spoke to Business Forward on the sidelines of the forum to discuss why UN Women decided to support the creation of the report.

“Women’s economic empowerment is a core focus area of UN Women. We have various interventions that support women’s economic empowerment and financial inclusion,” she said. “Specifically, with regards to the Women on Boards Observatory,” El Messiry said that UN Women want to focus on two areas, the first “being able to track progress with regards to specific indicators using data is very important. The other area is around the importance of having gender parity on corporate boards and the business case for women’s economic empowerment.

El Messiry claimed that two of the current major obstacles to women moving up in their organizations is “occupational segregation where women are concentrated either at the bottom of the hierarchy with lower paid jobs or concentrated in specific sectors that make them more prone to being laid off.”

“There are also issues with regards to unconscious biases about what it takes to move ahead in the workplace and to assume leadership positions in the workplace,” she added.

El Messiry revealed that efforts to address gender disparities will not just improve gender equality for its own sake, but will also bring economic benefits. “The business case has been proven. There has been various researches and evidence that points to the benefits of gender diversity and women’s participation, particularly in terms of better decision-making, transparency [and] economic growth.”

Research published in 2018 by Catalyst Inc., a global nonprofit organization that helps to increase women’s representation in the workplace, revealed the benefits of having gender-balanced boards, which included better financial performance and an environment more conducive to innovation as a result of gender diversity. On the flipside, the research further showed that companies with fewer women on their boards had “more than average governance-related controversies,” while more more gender-diverse boards have “lower volatility, better performance and invest more in research and development.”

Additionally, a 2015 report by the McKinsey Global Institute, the research arm of the American management consulting firm, McKinsey & Company, revealed that improving gender equality could potentially add $12 trillion to the world’s gross domestic product.

“Whether studies like Catalyst or studies from McKinsey, all these researches and data have shown the benefits of women’s participation, not only for the women themselves by having role models and being able to aspire to greater positions, but also for the companies themselves,” El Messiry said.

Mohamed Omran, the chairman of the Financial Regulatory Authority (FRA), was also in attendance at the forum to speak at length about the efforts being taken by the authority to improve women’s representation in Egyptian companies.

Speaking to Business Forward on the sidelines of the WEF, Omran said “the mandate of the FRA is to regulate, supervise and promote and develop the listed companies in the [EGX] stock exchange, all capital market activities, insurance, mortgage finance, leasing, manufacturing, microfinance and the entire non-bank financial sector.”

On why the FRA decided to issue decrees to encourage more women’s participation in the boards of the companies that the authority regulates, Omran said “we believe that having women’s representation on boards will have an impact on the better governance of these companies. Will have a better impact on economic performance. Will have a better impact on the way they are managing their business. There is sufficient evidence for this in the literature.”

Because of this, the FRA is currently working on a short-term goal to have companies have at least one woman on their boards by the end of 2020. “The plan later on,” he added, would be “to ask the listed companies to have at least one-fourth or one-third of the board” consist of women.

“Besides the economic and business value, this has a positive impact on stock prices listed in the financial stock markets. Companies with women on their boards are more transparent than companies with no women. More importantly, when [one-third of boards are women], the performance is even better. This is why we take it as a first step with one woman [on boards by the end of 2020] but we are thinking after that to make it at least one-third.”

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