• Bridging financial inclusion gender gap: A policy priority

  • Thelma Ekiyor Nov 22, 2020

    Women today represent a new economic powerhouse. It is estimated that advancing women’s equality can add up to $12 trillion to global GDP by 2025.

    Yet, many financial services providers miss the mark when it comes to serving women because their products and services are only superficially tailored to meet women’s needs. Solutions packaged in “pink” and headed by female staff do not necessarily translate in addressing women’s financial needs . The result is women fundamentally lack financial resilience throughout working life, and consequently during later life.

    Women’s lack of economic progress is not just women losing out; entire societies lose out.

    Creating financial products with women in mind does not mean embracing a set of policies focused only on women. However, it involves targeted interventions explicitly focused on redressing existing gender imbalances in society due to discrimination and social norms. Structural and sociocultural barriers, such as the gender pay gap, or restrictions on girls’ participation in formal education, all have impacted women and girls’ access to economic opportunities and the ability to make choices about their own lives.

    Despite the importance of financial inclusion as an enabler of inclusive growth and the Sustainable Development Goals (SDGs), especially SDG 5 on achieving gender equality and economic empowerment of women, the

    financial inclusion gender gap persists. This gap remains because many financial products do not work for women.

    Women are not a homogenous group. Women’s needs evolve as their socio-economic status changes. For example, in most African contexts, separated, divorced and widowed women have unique needs that differ from single or married women. Women find it more difficult to take breaks from their careers and re-enter the workplace. Single-parent families headed by women experience twice the rate of poverty of single-parent families headed by men.

    Important questions for financial service providers are: Does the average pension take into account the gender pay gaps, career interruptions and lifespan of these women? Are there credit products packaged in ways which take into account the life trajectory of women and the financial risks women experience at different life stages?

    Such important gender lenses are important to tailor financial services to women’s needs and can help address the inequalities, imbalances and inconsistencies that undermine women’s financial security.

    Bridging the gap through a gender lens

    The persistent gender gap in financial inclusion has placed women prominently on the agenda of policymakers in developing and emerging economies.

    It follows that addressing women’s financial resilience requires a holistic and coordinated approach across policymakers and regulators, financial service providers, developmental organisations and other relevant stakeholders to positively impact women’s economic empowerment and support the fight against poverty.

    Building the awareness of policymakers and other stakeholders concerning the financial needs of women in different market segments is the first step in an ongoing process to achieve gender-inclusive innovation and policy developments which put the female customer into focus.

    The Central Bank of Nigeria (CBN) recently launched the framework for advancing women’s financial inclusion in Nigeria . This framework serves as a blueprint for driving women’s economic empowerment through a gender-inclusive business environment and seeks to provide financial products and services designed specifically for women.

    The CBN’s framework is a step in the right direction to untangle the gender bias that constrains women’s uptake and use of financial services. However, these policies become more valuable when they are properly implemented.

    In Zambia, for example, the Bank of Zambia’s Female and Male Operated Enterprises (FAMOS) check tool is an excellent example of gender-inclusive innovation in practice. The FAMOS gender self-assessment tool encourages different organisations, including financial institutions and government departments, to systematically assess the extent to which they target and serve women entrepreneurs, their needs and their potential. The BoZ staff and those from commercial banks were trained on how to implement the self-assessment tool.

    As a result, these financial institutions confirmed that it helped them to consider financial access for women from a different perspective. For instance, it was clear that to provide women the same opportunity for inclusion, know-your-customer (KYC) procedures for opening and operating accounts needed to be relaxed. This was one of the priorities identified by BoZ to simplify the requisite rules. Similarly, in Nigeria, the CBN reiterated its commitment to advance greater financial inclusion across the country through the implementation of a zero balance account opening in banks.

    The case of Zambia suggests that policymakers and regulators have a crucial role to play in supporting the development of financial systems that advance financial inclusion for women in developing and emerging economies.

    With gender issues rarely on the agenda explicitly in the African policy sphere, it is refreshing to see the CBN formulate a sound policy for advancing women’s financial inclusion.

    There is no doubt that Nigerian policymakers are capable of formulating sound policies, but implementation remains the country’s Achilles heel.

    The successful implementation of the recommendations outlined in the CBN’s framework for women’s financial inclusion will not only serve the cause of women in Nigeria, it will also have a positive spill-over effect for financial inclusion broadly – for both women and men.

    Policy and practice – a catalyst for change

    In addition to well-informed policies, there needs to be a deeper understanding of use cases that keep us aware of the critical need to understand the lives of women and how the current system fails them on many levels.

    SME.NG as a Gender Lens impact investor is committed to facilitating women’s financial inclusion and investing in the profitability and resiliency of women-owned businesses. Specifically, SME.NG’s Ebi Fund is a financial inclusion and access to market fund that supports women entrepreneurs at the bottom-of-the-pyramid to become formalised by providing grants for business registration. It also supports the entry into markets and value chains.

    Financial inclusion has to be more than helping women open bank accounts. Women’s economic empowerment is attainable where women are visible, formalised and have access to a variety of financial services.

    Providing solutions for women based on a clear understanding of their life journeys, and empowering them with information and guidance to make informed decisions that reflect their financial life journeys, will build trust and support sustainability.

    We encourage the policymakers and financial service providers to follow suit in building women’s and society’s trust in the financial system.

    The case is clear that if we want our society to progress, we need women to progress, and achieving a significant shift in financial wellbeing for any particular group cannot be achieved by a single organisation or even a single sector.

    But to achieve the progress we desire as effectively as possible, we need to have a clear, shared view of the challenges that women and society face, and a holistic, collaborative and coordinated approach combining policy and practice to address them.

    By supporting women to reach their economic potential, we all achieve our economic potential. Taking action today, together, will benefit our society and our economy tomorrow.

    * Ekiyor is managing partner & co-founder, SME.NG and chairperson/founder, Afrigrants.

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