Egyptian Women on company boards: Between Challenges and Growth

Although important, 2020’s growth rate is still far from the observatory’s goal to have 30% of women on corporate boards by 2030

  
A woman wearing a protective face mask to prevent the spread of the coronavirus disease (COVID-19) walks next to a wall painted with colors of the Egypt's flag, after Egypt's government made wearing masks mandatory in public places and public transport, in Cairo, Egypt May 31, 2020. Image used for illustrative purpose

A woman wearing a protective face mask to prevent the spread of the coronavirus disease (COVID-19) walks next to a wall painted with colors of the Egypt's flag, after Egypt's government made wearing masks mandatory in public places and public transport, in Cairo, Egypt May 31, 2020. Image used for illustrative purpose

REUTERS/Amr Abdallah Dalsh

ArabFinance: Women occupied 13% of board seats in Egyptian companies in 2020, a reported 714 seats out of 5,506 total board members, according to the Women on Boards Observatory annual report. These divs mark a growth rate of 23.5% compared to 578 women out of 5,707 total board members a year earlier.

Although important, 2020’s growth rate is still far from the observatory’s goal to have 30% of women on corporate boards by 2030.

Founded in 2017 by the American University in Cairo School of Business, the observatory set this goal within the framework of the National Council for Women (NCW), in line with the National Strategy for the Empowerment of Egyptian Women 2030.

The strategy was announced by President Abdel Fattah el Sisi on March 21st 2017. It was assigned to all organs of the State and the NWC under the umbrella of Egypt’s Vision 2030 and its Sustainable Development Strategy.

In order to achieve the 30% target within the proposed timeline, approximately 95 women need to be added annually to the boards of companies and banks covered in the report, a slightly smaller annual gap compared to 113 women in 2019 estimate, according to the observatory.

The report estimates that 320 women should be added to board seats in companies listed with the Egyptian Exchange (EGX), 50 women in banks, 95 women in public enterprise companies, and 480 women in companies registered with the Financial Regulatory Authority(FRA), to close a total gap of 945 women until 2030.

Looking at achieving this goal, the observatory created its Egyptian Board Ready Women database, which includes current female board members and eligible board-ready women to serve on boards. This initiative was implemented under the leadership of the Ministry of Manpower and the NCW within the framework of the joint program ‘Promoting Productive Employment and Decent Work for Women in Egypt, Jordan, and Palestine’, which is supported by the Swedish International Development Cooperation Agency and jointly implemented by the UN Women and the International Labor Organization. Women can join the database by filling an online form.

FRA companies on top

Looking closely into the female representation on boards in 2020, the highest female representation was recorded in the FRA companies with 14.7% of the total number of board members, up from 11.2% in 2019; followed by the banking sector with 13.7%, down from 14.8%; EXG-listed companies with 11.6%, up from 10.1%; and public enterprise companies with 8.7%, up from 6.1%, says the Observatory’s report.

FRA companies also had the biggest distribution of women on boards among the four mentioned categories. Out of 714 women board members, 456 hold board seats in FRA companies, which represent 63.7% of the total number of women. Meanwhile, the distribution of women on boards of EGX-listed companies, banks, and public enterprise companies marked 25.4%, 5.6%, and 5.3%, respectively. In this calculation.

These numbers reflect the FRA’s efforts to increase the participation of female board members. In September 2019, the Authority issued decrees number 123 and 124 of 2019, which required listed companies and non-banking financial institutions to have at least one woman on their boards by the end of 2020.

On March 31st 2021, the FRA’s Egyptian Institute of Directors approved a 50% discount for its Certified Board Member program to support female applicants. The program is backed by the International Finance Corporation (IFC) and the World Bank Group, and automatically adds women who complete the course to the Egyptian Board Ready Women database.

Zero and 30%

As a result, the percentage of FRA companies with zero women on boards decreased from 58.8% in 2019 to 47.5% in 2020. The percentage of EGX-listed companies with no female representation on boards also decreased from 53.5% to 42.7%, as well as the percentage of banks, from 26.5% to 20.6%, and public enterprise companies, from 72.5% to 71.9%.

Meanwhile, the number of companies with 30% or more women on boards remains generally low. FRA companies remain on the top with 18.7% of its companies having 30% female representation, consisting of 109 FRA companies; followed by the public enterprise sector with 16.7%, consisting of 19 companies. The banking sector ranks third with 9% of banks having 30% female representation on boards, consisting of 3 banks; followed by EGX-listed companies with 8.4% having 30% or more female representation, consisting of 20 companies.

Women for growth

A 2019 report by the IFC revealed important findings on the positive connections between gender-diverse boards and better company performance. According to the report, companies with female board members exhibited a 2% higher return on equity, 4% higher return on assets, and 5% higher return on sales.

In order to increase the number of women on Egypt’s boards, the IFC recommends developing and enforcing higher standards of corporate governance; adopting and promoting voluntary company-wide gender diversity targets; encouraging voluntary public disclosure on company gender diversity; educating children equality to reduce gender bias; partnering with men as agents of change; creating a more conducive work environment for parents.

In addition to that, the IFC believes increasing the visibility of women in leadership and empowering female leaders through training, networking, mentorship, and sponsorship, are essential to achieve a more diverse environment across Egypt’s boards.

Building on the importance of visibility, it is worth highlighting that Egypt scored the most entries in Forbes’ annual ranking of the Middle East’s most powerful women in business, with eight leaders listed out of 50 women in 2021. Egypt is followed by the UAE with seven. In 2020, Egypt had nine entries out of 100 listed businesswoman, while the UAE had 23, as previously reported by Arab Finance.

By Mariana Somensi

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