Women are underrepresented in senior roles in the banking sector globally. Despite the fact that a big proportion of women frequently enter the financial sector, they are unable to advance up the corporate ladder.
According to an IMF global research conducted in 2017, only 2% of banking CEOs worldwide are female.
The report was produced with the collaboration of the World Bank’s Africa Gender Innovation Lab (GIL), its Finance, Competitiveness and Innovation (FCI) Global Practice to investigate the gender leadership makeup of women in emerging economies’ financial sectors.
It examined data from four Ethiopian financial institutions, including the Commercial Bank of Ethiopia and the national bank. These four organizations account for 54% of employment and 75% of assets in the Ethiopian banking industry. High-level information was also gathered from 14 other banks.
While there are several studies on gender and financial inclusion in Ethiopia, they do not explore the leadership gender gap in the banking industry. This assessment of the gender gap in the Ethiopian banking industry that draws various data from Ethiopian Banks concludes “Women are significantly underrepresented in leadership positions across Ethiopia’s commercial banking sector, and that the percentage of female staff decreases with each step of seniority.”
The report details:
– Only two of the assessed commercial banks are led by a female CEO, and women account for 11% of senior management positions. (There is only one now among 30 commercial banks in operation)
– Women account for 15% of board seats. Two banks have no women in either their executive team or their board of directors.
– The sole commercial bank that has achieved gender parity among their senior leadership with 55% of board seats and 47% of executive management positions held by women is an institution that was specifically founded to serve female customers.
– There are no women in vice governorship positions or board members of the Central bank.
– Across the sample, women make up 26% of total staff, but only 19% of employees in decision-making roles (junior management and up). Also, women make up 24% of junior but only 8% of senior managers
Various studies suggest that involving women in decision-making roles improves institutional performance and contributes to the financial inclusion of underserved groups.
The publication further explores the reasons for the disparity.
Women either stay in their position longer than their male coworkers or leave the industry altogether. Assessment of the HR recruitment and promotion process in the studied Ethiopian banks identified:
– There are no gender quotas for entry-level recruitment campaigns or other targets guiding the gender composition of its staff.
– The share of female applicants for entry-level positions is well below the percentage of female students in relevant academic disciplines
– The percentage of women selected to proceed to the next round of recruitment campaigns decreased with each step.
– Ethiopian women who embark on a career in banking tend to gravitate towards functional areas that are less likely to lead to senior management positions.
– The percentage of women who were promoted to managerial positions is significantly lower than the number of women hired or promoted to other professional positions.
– While internal promotions remain the primary conduit for advancement, participating banks seem increasingly open to external hiring for managerial positions.
– Internal leadership development programs do not specifically target female staff.
While the above factors give insight into the reason behind the leadership gender gap, they are not strong enough to establish causality. Going forward, much research has to be done to help build an inclusive banking sector in Ethiopia, suggests the study. A more detailed staff survey and analysis of HR data is currently being carried out.
Read the full report here.
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