My mother is an English professor at a college in Kathmandu. Her father wanted her to study engineering but she had inferiority complex in mathematics and she eventually did not pursue it; rather went far off from mathematics to study and teach English. This story is quite hard to believe for me because at present she often trades in capital market which needs understanding of various ratios and calculations to be made, to say the least. It is uncanny how she is even making good returns on her investments. Disregarding her trades, by only investing in IPO over a year her investment worth Rs. 31,000 is now worth over Rs. 93,000 and over three years her investment worth Rs. 74,000 is now worth whopping Rs. 302,000. This story inspired me to write this essay.

Empowerment through necessity rather than privilege

Globally, women began being involved in other than their household chores after Second World War. Labor men at factories needed to replace the dead soldiers at war providing opportunity to women to work at factories as dire necessity rather than an aspect of privilege. Even opportunities for women to be trained to fly military aircraft so male pilots could be released for combat duty overseas flourished during that era. Female pilots would also fly an aircraft at a designated area and return by bus during war times in the shortage of men. Inadvertently, as time progressed, women got opportunities, empowered themselves to act freely, exercise their rights and fulfill their potential, letting next generation benefit from it.

In case of Nepal, one member- male- was bread earner and other members were bread splitters. It hasn’t been long that increasing inflation, market competition and receding real wages has necessitated two members- male and female both- to be bread earners so as to sustain a family. Many workers could only make ends meet by becoming two-earners rather than one-earner families, even borrowing money to finance their spending and ‘let them eat credit’, phrase coined by economist Raghuram Rajan in his popular book Fault Lines. In this disguise of economic problems, an opportunity flourished for women to get a workplace as dire necessity rather than an aspect of privilege, analogous to the case of Second World War.

Women in economic development

The women labor force in household still do not make a dent in GDP, supposedly because household work is difficult to calculate as contribution to GDP and it is left off as a matter of convenience, as pointed out by Nobel laureate Richard Stone. Their ‘real’ contribution in GDP began when they did productive works in addition to the household chores. Gross World Product growth that was limited to 3% up to 1950s began growing at higher rate of more than 4% each decade henceforth. It is estimated that if women’s unpaid work were assigned a monetary value, it would constitute between 10 per cent and 39 per cent of GDP.

As the world has agreed to common goals of Sustainable Development Goals by 2030, role of women is vital. Among other goals, Goal 5 to achieve gender equality, Goal 8 to promote decent work and economic growth and Goal 10 to reduce inequality are vital areas where focus and special attention on women is needed so that the goals are achieved without having to rename the goals again in 2030 as was done in 2015 with Millennium Development Goals.

In case of migrant labor, women constitute approximately half of the 258 million migrants who live and work outside their countries of birth outnumbering men except in Africa and Asia. Despite gender inequalities in the labor market and gender wage gaps, women migrant workers were responsible for sending half of the estimated $601 billion in remittances worldwide in 2016.

In the field of employment, women are still underrepresented. Globally, over 2.7 billion women are legally restricted from having the same choice of jobs as men. Of 189 economies assessed in 2018, 104 economies still have laws preventing women from working in specific jobs, 59 economies have no laws on sexual harassment in the workplace, and in 18 economies husbands can legally prevent their wives from working. Also at the top, only 6.2% of Fortune 500 CEOs are women.

Empowering women with ample opportunities has shown that the overall performance drastically improves. It is estimated that companies with three or more women in senior management functions score higher in all dimensions of organizational performance. According to a report by Morgan Stanley, companies with greater gender diversity in senior management have higher returns on equity, higher valuations, better stock performance and higher payouts of dividends. Women’s economic empowerment boosts productivity, increases economic diversification and income equality in addition to other positive development outcomes. It is estimated that increasing the female employment rates in OECD countries to match that of Sweden GDP could be boosted by over USD 6 trillion.

Performance of women and their contribution in economic wellbeing of themselves as well as their families is admirable, though greatly in shadow.

Capital Market’s role

By definition, capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold. Capital markets channelize the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Thus capital markets flourish in the event of availability and accessibility of funds. These financial instruments can be further traded in stock exchanges when the securities get listed- providing greater liquidity for the investors. Thus, capital markets help raise long term funds, provide investment opportunities (even foreign capital flows), and help achieve economic growth through capital formation, identify economic conditions of a country and provide employment opportunities.

In case of Nepal, Nepal Stock Exchange (NEPSE) serves as a mediator for investors and helps raise capital for businesses and Securities Exchange Board of Nepal (SEBON) serves as regulator of the securities market. NEPSE opened its trading floor on January 13, 1994 while SEBON was established by the Government of Nepal on June 7, 1993. Globally however, there is little consensus among scholars as to when corporate stock was first traded. Some see the key event as the Dutch East India Company's founding in 1602, while others point to earlier developments (Bruges, Antwerp in 1531 and in Lyon in 1548) as development of securities exchanges. This fact can be used to point out that capital market maturity of Nepal compared to global market is still in its infancy. However, having benefitted from learning from the mistakes of global capital market and following the pathways of it has obviously advantaged Nepal to keep up with the emerging ideas and the technologies required.

Women Empowerment and Capital Market

Having understood the role of women in economic development and the role of capital market in previous sections, we can now draw inference on their common areas, its present status and where these two can collaborate together for each other’s benefit. Though there could be more areas of inter-relational aspect but following three areas are covered:

1. As Investors/ traders

Total market capitalization of listed shares stood at Rs. 1970 billion as on 7 September 2020. According to annual report of NEPSE, during the fiscal year 2075/76, turnover of Rs. 110.07 billion was realized which was Rs. 121.30 billion in previous year. Similarly, there were 387.51 million number of shares traded in fiscal year 2075/76, which was increase of 31.89 percent compared to previous year. Also, number of transactions decreased by 1.84 percent to 1,422,791 during the fiscal year 2075/76.Similarly, 22 companies issued IPOs worth Rs. 25,503.25 million and 3 companies issued FPOs worth Rs. 2,956.39 million during fiscal year 2075/76. These pose huge opportunities of investment in capital market in Nepal both as investor or trader and for women to prosper.

In the highest ever applications in initial public offerings made for Reliance Insurance, only 589,464 applications were made (including 1955 invalid applicants and institutional investors), which make up only 1.96% of population of Nepal assuming all applicants as individuals. Also, broker wise client details published by NEPSE as on 27 August 2020 shows that 2,87,854 active clients (0.96% of population) among which 64,616 were online user clients. This shows huge amount of population outside the purview of primary as well as secondary capital market.

However, women, specifically, due to lack of investable funds with themselves, lack the prospect to act as trader or investor. For inclusivity enhancement, SEBON amended Securities Issuance and Allotment Guidelines, 2074 in 2017 and ensured through section 30 that every investor to be allocated 10 units- meaning that having Rs. 1,000 can make any small investor an owner of IPO offering companies. Though this amendment has provided opportunities for women with few funds to capture the possibility of being shareholder of companies and gain returns on investment, it has not helped those specific groups- mainly due to lack of knowledge and exposure to capital market. This made greater number of women from getting returns as high as 75% bonus dividend (by National Microfinance Laghubitta Bittiya Sanstha Limited) and 770% cash divided (by Unilever Nepal Limited) in fiscal year 2075/76 out of reach. This also barred many women from getting benefit like my mother did from IPO investments.

Capital market that is still in its infancy poses huge opportunities to have their savings mobilized, provide good returns on investment as well as provide capital gains on smart trading of undervalued shares. A study by Warwick Business School analyzed 2,800 investors and concluded that not only did the female investors outperform the FTSE 100 over the last three years but they also outshone their male counterparts. While annual returns on investments for men were on average a marginal 0.14 per cent above the performance of the FTSE 100, annual returns on the investment portfolios held by women were 1.94 per cent above it. This means returns for women investing outperformed men by 1.8 percent. Other researches on women investors have shown that their investments have a positive impact on society than their male counterparts and they are aversive to invest on speculative transactions compared to men. Such investments let the market to be driven towards sustainable and adequately backed companies.

Women’s control on assets is an important aspect which helps them to be empowered investors. Women globally held 30% of all wealth controlled by individuals or families in 2015, up from 28% in 2010 and by 2020 they are expected to control 72 trillion USD, 32% of all wealth, up from 51 trillion USD in 2015. However, in Nepal wealth control by women is only limited to owning lands and buildings by women for tax concessions rather than ‘actual control’. Women farmers globally have significantly less access to, control over, and ownership of land and other productive assets compared to their male counterparts accounting for only 12.8 per cent of agricultural landholders in the world. Even incomes of women are handled by men. Only when women have control on their assets/ income which is one of the major indicators of empowerment will they be able to invest or trade on their own will which is yet another indicator of empowerment.

However, the discussion easily points out that women have capacity to be a good investor/ trader and with adequate control on assets and income there lies huge opportunities in the capital market for them to prosper and begin a self-reinforcing virtuous cycle of empowerment through capital market and investment in capital market as a result of empowerment.

1. As employees

Though paid less, women are still less employed. The gender wage gap is estimated worldwide to be 23 percent, meaning that women earn 77 percent of what men earn. According to Nepal Labor Force Survey 2017-18, Nepal had a population of 29 million at the time of the survey of which 53.5 percent were females. The working age population of above 15 years had a share of 71.5 percent (20.7 million) of the total population of which 55.6 percent were females. It however also shows that, for every 100 males in the working age population, there are 125 females, but for every 100 employed males, there are only 59 employed females. Even the market regulator SEBON has 14 female employees out of 61 making almost only 23% labor force. Thus, inadequate opportunities in Nepal have led to migration for jobs. According to Nepal Labor Migration Report 2020, women’s share in labor migration has risen from little over 5 percent over the last decade to 8.5 percent in 2075/76, indicating that their share though low has been on the rise.

However, there is still a prospect for women empowerment through capital markets. There were 215 listed companies according to annual report of NEPSE, in the fiscal year 2075/76. Section 5 of Securities Issuance and Allotment Guidelines, 2074 issued by SEBON allows up to 5% allocation of shares to employees from the shares proposed for public issue. This provision allows the employees of the companies that are already or willing to go public to have ownership on their company. Also, it helps gain knowledge on capital market like dematerializing, opening broker accounts, selling the shares to say the least. Increment of both female employment and publicly listed companies can have direct impact on at least being accessible to capital market and its prospects. This is a very limited approach on being empowered through capital markets, as there are very few publicly listed companies and the employment rate of female is low in Nepal. However, there is a huge scope of empowerment for women in the field of capital markets via being employees by being the owner of public listed company when employment opportunities in the field of financial sector enhances. Further, being employees at banks, insurance, capital markets and brokers enhances the accessibility of information on capital markets.

In Nepal, incomes of women are provided with rebate on taxes of 10% helping them have more disposable income compared to men, implying more capital to invest/ trade. These kinds of policy measures can guide women towards capital market and let not only the selective groups enrich and empower themselves but also women have bigger participative role and equitable share in economic development.

1. As entrepreneurs

Capital market in Nepal is predominantly banks and financial institutions based. Regulators have been trying to motivate as well as conspicuously stress diverse companies to enter capital markets. Debt financing structure is slowly being replaced by equity financing and is just a matter of time that more and more companies will enter capital market and pool capital for required growth of business. In this aspect, women entrepreneurs can establish businesses, and enter capital market by listing their companies for public trading facilitating capital build up necessary for growth of companies. As we have seen the examples of entrepreneurs of Facebook, Google, OYO and more recently Zoom Video communications, they have been able to expand the business, capture market by letting themselves float in the market. The entrepreneurs and promoters have gained great deal of value by starting the businesses and eventually ending up in capital markets. Women can materialize this still gigantic gap which is for anybody who risks taking. Data show that women in United States are adding new businesses at 1.5 times the national average. Globally women have grown their wealth independently as entrepreneurs by 44%.

Given the opportunity, some data has shown that women have thriven with their entrepreneurial skills but some data shows that their growth prospect is bleak in case of inadequate opportunities and under suppressed surrounding. Women’s early stage entrepreneurial activity is half or less than half of that of men’s in 40% of the economies.

Harnessing women’s entrepreneurial skills and letting the capital market capture is still a long way to go even in the global market. But it poses one of the best opportunities for women to excel and can hit ‘positive circuit’ any day.

Conclusion and way forward

As Thomas Edison has popularly said “if we did all the things we are capable of doing, we would literally astound ourselves”, it can be firmly believed that women can tap the potential of empowering themselves and have multiplier effects on families, communities, and economies as a whole if they did all the things that they are capable of doing. ‘Investing with a gender lens’, which includes investing directly in women as well as investing to reshape systems and structures to help women succeed, is part of a broader shift in the understanding of how every stakeholder can protect and generate long-term value.

It is necessary that we learn from global initiatives to avail women to be empowered via capital markets. PaxEllevate Global Women’s Index Fund is a mutual fund that promotes women in leadership and selects companies for investment according to the representation of women in senior management roles, board diversity and company’s commitment to UN Women’s Empowerment Principles (WEP). UN has been promoting 7 principles of Women’s Empowerment so as to emphasize the business case for corporate action to promote gender equality and women empowerment. Letting the capital market invest in equitable gender roles helps the disadvantaged status of women to be empowered and lead.

Thirty Percent Coalition seeks to attain 30 percent female representation across public company boards. Ensuring such provisions can empower existing women in capable positions to gain better opportunities and aspiring women to see light at the end of the tunnel. And as capital market and women empowerment can reinforce each other, this helps women gain more access towards capital market. Capital market reforms with such measures can actually empower disadvantaged women and provide hope for other aspirants.

Global Commercial Microfinance Consortium II established by Deutsche bank supports female run social businesses in developing countries with a fund of USD 100 million. These kinds of initiatives can enhance entrepreneurial skills in women and can eventually grab the untapped potential of capital markets to establish themselves and grow their business further.

But at present, for Nepal, financial inclusion is a matter to be addressed first so that it paves a pathway to women empowerment. While 65 per cent of men report having an account at a formal financial institution, only 58 per cent of women do worldwide. This number is probably far worse in Nepal. Without adequate exposure to financial sector, women cannot fully understand about capital markets and how it can empower them. Gaining access to being investors/ traders, better employment opportunities and honing their entrepreneurial skills pave way for women to understand more on capital markets and its possible role to expose women to better opportunities.

Women can freely and effectively participate in capital market as traders/ investors when their wealth and income ownership improves. Also, financial inclusion and trainings will significantly improve the idle women's capacity in capital market field, thereby empowering women through the instruments of capital market.

Better job opportunities to women, specifically in the field of finance, are going to help women get closer to understanding capital markets and use them to their advantage. Since, education is a prerequisite for better job opportunities, emphasis on girls and women's' education is thus an essential priority. In 2015, 48.05 percent of women older than 15 did not have any form of education. Of the total population aged 15 and older, 36.15 percent did not have any education. This rate increases with age as 91.61 percent of women in the age group from 60 to 64 did not have any form of education. Recent reports show the likewise. These data need improved figures down the line so that the butterfly effect eventually improves the women participation in capital market and eventually their empowerment.

Promotion of entrepreneurial skills is necessary with the facilitation by organizations like Federation of Woman Entrepreneurs Association of Nepal (FWEAN) - a member organization of FNCCI- which should take the lead. A sense of ownership in any small and medium cottage industries that women engage in will help improve the business. As the businesses grow they can pool the funds via capital markets, thereby empowering women even in the paucity of funds.

Data have also shown that when provided the opportunity, women learn, enact and make powerful impact on their surroundings through capital market means, but the main issue for this to happen is the suppressed environment that has not let the women capture their potential. They have the potential to fly like a butterfly but are restrained in their own cocoon as a caterpillar.

- Awasthi is student of Institute of Advance Communication, Education and Research, Kathmandu, MPhil. (Best article in Capital Markets Related Essay Competition Organised by Employee Union of Securities Board of Nepal)

*****

---

---