This piece is part of a special series on Gender-Smart Investing, following the world's first ever Gender-Smart Investing Summit in 2018.

It was written by Sharron McPherson, co-founder of Women in Infrastructure Development & Energy (WINDE) and director of the Centre for Disruptive Technologies. For more like this, see our future of work newsfeed.

For the past 20 years, I have been involved in investing differently in women and youth across 14 markets in Sub-Saharan Africa. I helped to launch one of the first infrastructure funds and started one of the first ever women-focused funds in Africa.

Today I’m co-founder of one of Africa’s largest infrastructure investment groups — Women in Infrastructure Development & Energy (WINDE). I am also the Director of the Centre for Disruptive Technologies and Adjunct Professor at the University of Cape Town’s Graduate School of Business, where I teach project finance.

The point is that I spend a great deal of time investing and advising. It’s what I do. But what I enjoy most is teaching and spending time with amazing young Africans who have ideas that can change the world.

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However, I am convinced that we will need radically different approaches to both funding and education (for adults and children) if we are truly going to fund a viable and sustainable future.

After decades of being a change agent within the existing financial system, I believe today that we need to hit pause and to ask ourselves whether the economic principles and structure of the financial industry still serve society’s interests. Whilst I remain a member of this financial community — with degrees in economics and finance — I am no longer convinced that the approaches my colleagues and I have been developing since Bretton Woods remain relevant.

The new economy is being driven by advancing technologies, population growth and urbanisation, climate change, globalisation, terrorism and pandemics. Within it, we have the emergence of radical life extension, the possibility of curing disease, the changing notion of work and the emergence of a 21st learning community that is challenging the way that we teach and learn.

But where are the real breakthroughs in funding this future? How can we use outdated economic theories that have resulted in a handful of individuals bagging over 80% of the wealth on our planet? Are we so lazy and addicted to notions of “growth” that we have become blind to the realities of what we are creating, doggedly adhering to theories and policies that make no sense?

Our current financial tools have failed to create a just, equitable and sustainable world

The emperor has no clothes, and perhaps it takes a woman in Africa to say so. Youth in Africa and the emerging world are railing against the financing machine in ways that will help to shape it into something that truly values different forms of capital — and not just financial capital.

Today, we have the possibility of embracing a new, deeper and more inclusive understanding of capital’s place and purpose in our lives and in the future of this planet. Now is the time to ask ourselves what is the rightful role of financial capital, which is part of a global financial system that, in turn, defines how other forms of capital are defined, created, valued and exchanged.

Is this global financial system creating what we want? Most impact investors would indicate some degree of dissatisfaction with the system — precisely why we embrace the notion of “impact investing”. I’d like to go a step further and say that our current financial tools have failed to create a just, equitable and sustainable world.

The question I’m grappling with is: “Can we successfully modify a system with tools that are at least, in part, responsible for the very challenges that we are seeking to address? Or must we act more radically?”

This question, in turn, led me to reflect on the meaning of “capital”. If we are going to fund the future successfully, we’ll need to go back to basics and challenge some of the underlying notions of capital that we assume work — but don’t.

For example, our current financial system excludes much of the human capital of women as having no value. Taking care of children, ageing parents — and, quite frankly, our men — is unpaid work. Yet, the formal economy would crash and burn if we stopped doing it. Even when we are engaged with the formal economy, women earn a fraction of what men do for the same job. According to the World Economic Forum, it’s going to take over 200 years to fix this wage disparity at our current pace!

We keep giving the usual players our money because we are afraid of trying something new

Yet, we spend extraordinary an amount of money on new policies and programs that are intended to kickstart innovation. We hold workshops and symposia that have as their stated objective to engage with those who for too long we have actively ignored in the quest for unobtainable, unlimited growth.

I often come away from these sessions dismayed that the funders and development finance institutions who have actively contributed to our state of malaise plead mandate constraints when confronted with real opportunities to do something other than business as usual. Who drafts these mandates anyway, and what do they really know about funding the future? The record shows that they actually know very little.

Yet, we keep giving the usual players our money because we are afraid of trying something new. We have grown comfortable in a state of discomfort.

These past decades at the cold-front of trying to invest differently in women and youth in Africa has taught me to make fewer assumptions and to question. It has led me to speculate about the possibility of our needing fewer financial experts and more space to listen to the very people whose lives we are seeking to impact (and then to do something different).

It has engendered in me a growing resentment towards our addiction to “growth” at the cost of well-being. I now look askance at our ongoing attempts to reduce people to the material capable of fitting into financial models that support GDP calculations. And I challenge my students to find new ways to arrive at the real valuation of projects they evaluate.

We no longer have to subscribe to the notion that we are either for profit or non-profit

Finally, my experience in the trenches of investing in Sub-Saharan Africa has taught me to question the purpose of capital. And to trace the process that links capital with my vision of value, a vision which unashamedly embraces both the material and the extra-material.

This approach that has led me to embrace the notion of blended value creation: that all capital whether philanthropic, market or near market – can be used for impact. Investing is not a zero-sum game, and we no longer have to subscribe to the notion that we are either for profit or non-profit.

I believe that this blended value approach will be the basis of the framework for funding the future.

To get there, we must be willing to question and to deconstruct (where necessary) elements of our existing economic, financial and investment frameworks that no longer serve us well. Perhaps they never did, and perhaps we just got stuck on proxies for growth and ROI until they became the only means to the end.

It is difficult to generate sustainable financial return on investment when there is no access to clean water and affordable housing

But GDP is not a means to an end. And it is difficult to generate sustainable financial return on investment when there is no access to clean water and affordable housing. These proxies for measuring real growth and return matter, but they must not be allowed to eclipse the real “why”: to live better.

Let’s spend more time thinking about how we fund a future in which people actually live better. Let’s incorporate the notion of well-being into our funding committee meetings, our negotiations around investment mandates, and our board meetings where we hold our financial stewards accountable.

Let’s stick our necks out to question assumptions and not be afraid to challenge economic principles that clearly do not work. We’ll listen to the experts, but we also want to hear from women and young people who too often are excluded from the meaningful deliberations that shape their future.

This questioning will form the basis of a real framework for funding our collective future. We still have more questions than answers. But I do know that now is the time for us to dive deeper into the notion of blended value creation across all asset classes and to invest in capital as a means of social justice and uplifting communities.

It doesn’t matter which form of corporate entity we use or asset class (philanthropy, non-profits, for profits, DFIs, state owned entities, impact investors etc.). It is the task of our generation to revisit the nature of capital and to create a framework for funding the future that dares to challenge the antithetical ways that capital is currently being deployed in our financial system.

If not us, then who? And if not now, then when? — Sharron McPherson

(Picture credit: Unsplash)