Harnessing the ‘girl effect’ in our economy

2010-08-09 00:00

“GIRL effect” where art thou? This is a question we ask as we open Women’s Month. I was introduced to the “girl effect” campaign at the World Economic Forum meeting in Tanzania in May. I wondered how it works in our country.

The girl effect has a significant influence in value creation within any economy. The economy is fuelled by the girl effect especially at the consumer end of the value chain where most of the value is generated.

Let’s use numbers to illustrate this effect. Take for example a household product that is sold for R100 which is usually bought by women. When you trace the value chain of benefits you find that the raw materials cost R20, and the additional work done to get the product to the market cost R30 which leaves a profit of R50 for the company. So who benefits from the R100 coming from the pockets of women or through their influence?

In our typical economic structure the raw materials might be imported from China or other industrialised countries, which are usually very male oriented so there is not much value accruing to females.

When you look at the value-added work done on the raw materials, females may be employed to do the work but the salaries they get are lower than their male counterparts. The profits that get generated from the products accrue to managers and ultimately the shareholders of the company.

So the question is, since women’s representation is small in companies and their salaries lower than men, how much value is captured by them in the management bonus pool, and the same question applies to shareholding value capture? If we had to track the cash that ends up in women’s pockets from the R100 they spent on the product, would it be more or less than R20 in total? Extrapolating such an approach to the greater economy you find that value capture by women is really poor.

To take this further we need to ask, “How much of the value that is captured by women is circulated back in productive ways in order to create more value?” Research done by Chris Fortson shows that “when women and girls earn income, they reinvest 90% of it into their families, as compared with only 30% to 40% for a man.”

These reinvestment patterns have a ripple effect on the economy. This effect has worked in Bangladesh through the Grameen Bank and now the Grameen Telecoms. Generally, when more value is captured by women there is a high likelihood that they would circulate it to create more value rather than hoarding it. Value circulation is important in the wealth-creation process just like the circulation of blood in the body is critical for the optimal functioning of the body.

The practical strategies for value capture involve awareness, negotiation and legal lockdown. Without awareness one cannot calculate the value that they create. Women need to be aware of the impact and influence they have in the different parts of the value chain of businesses they are part of. This needs to be reduced to some kind of tangible measurement, which may be difficult but not impossible. This awareness exercise allows room for negotiation. Negotiation skills enable women to capture value. Psychologically the fairness bias which is mostly valued by women can be used against women to the advantage of men who may not have generated the value but are able to capture most of it.

Women need to learn when the fairness principle should be used and when to let it go when “man-ipulation” takes place by males. We see this when it comes to business deals, salary negotiations, even in households in the distribution of responsibilities.

Once the negotiation for equitable value capture is concluded it needs to be sealed tightly by a legally enforceable agreement. This is often an ignored part of value capture.

Written contracts are sacrosanct. Even though some parties might violate them, they provide a basis of understanding between parties. People’s memories are fallable and variable to suit their self-interest. Putting something in writing has tremendous psychological power in getting people to honour their commitments.

The girl effect is a powerful wave that is swelling up in impact. We need to respect our girls at home to give them room to develop their potential. We need to honour women’s contribution to the different areas of the economy because our economic and environmental sustainability is strengthened by women who ensure that value is created, captures and circulated in a meaningful manner.

• Vuyo Jack is co-founder of economic empowerment rating and research agency, Empowerdex.

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