FinDev Blog

What Does Financial Inclusion Mean for Women and Girls Today?

Innovations for closing the gender gap
Woman working as farm laborer. Photo credit: Iman Firmansyah, 2015 CGAP Photo Contest.

Women's World Banking is focused on the tools that all women and girls need to build a brighter future -  appropriate and comprehensive financial services. International Women’s Day gives us the opportunity to reflect on the progress Women's World Banking and others have made and advocate for the innovations that will bring us closer to full financial inclusion for women and girls.

Today nearly one billion women around the world do not have access to formal financial services and, new data provided over the last year has helped us to better understand that number. The good news: according to the World Bank’s latest Global Findex Database, 58 percent of women had a bank account in 2014 versus 47 percent in 2011. The bad news: the gender gap between men and women’s access to financial services in developing economies stands still at nine percentage points. That gap is even wider in some regions, 18 percent in South Asia, and in the Middle East, where men are twice as likely as women to have an account.

Olusoga Fausat, a client of Women's World Banking's partner Diamond Bank, sells goods at her market stall in Lagos, Nigeria. Ms. Fausat opened a special savings account that allows her to safely deposit money and conduct transactions through an agent of the bank who visits her market stall regularly. Credit: Women's World Banking.

Redefining Financial Inclusion for Women

The earliest efforts to bring formal financial services to women began with microcredit—small loans to small entrepreneurs. In recent years, studies show that when a woman controls her own finances, she invests in the health, nutrition, and education of her family—investments that drive inter-generational change with a ripple effect in her community. At the macro level, expanding financial inclusion for women has a profound impact on overall economic growth and community development. This evidence proves that, to achieve full financial inclusion today, women need financial tools that go far beyond loans.

Expanding financial inclusion means ensuring that women have access to savings and insurance as well as the training and education to use these services well. Most importantly, these products must be designed and delivered in ways that fit into women’s lives. Banks will miss a great opportunity if they simply enable more women to access products without regard for how they will (or will not) be used. Let’s look at some examples of how new approaches to financial services, designed for women, are making a meaningful contribution to financial inclusion.

Digital Savings as a Game-Changer

For women, and low-income women in particular, savings accounts can be a game-changer by allowing them to build more financial security for themselves and their families, to grow their businesses, and to cope with emergencies. However, low-income women often face barriers to accessing a safe place to save due to mobility and time constraints as well as low levels of financial literacy. They are forced to save in less reliable ways: at home in a drawer or under a mattress, by buying excess stock for their businesses or through a neighborhood savings club.

Women are far more likely to benefit from their savings accounts if they are trained to use them to their full advantage, and especially if they find their account meets their need for convenience, security, and privacy. The introduction of digital technology can satisfy these criteria through new channels such as mobile phones and retail agents.

In Malawi, Women's World Banking partnered with NBS Bank to develop the Pafupi (meaning “close” in the local dialect, Chichewa) Savings account. It is designed for low-income women who are not using a bank either because it is too far or they don’t think a bank is meant for them. With Pafupi Savings, women can open accounts and make small deposits and withdrawals whenever they want at local shops with NBS Bank agents who transact with the bank using a mobile phone. Tools like Pafupi Savings represent a huge opportunity to close the gender gap in financial inclusion and provide a solution for women that addresses their needs.

Filling the Gap with Insurance

Our research shows that women typically bear the brunt of health-related costs in their families—a burden that often triggers a slide into poverty. Women report that their biggest challenge stems from the gap between public health coverage and the steep incidental costs related to a health episode, such as lost income while seeking treatment or caring for ill family members, transportation to and from the hospital, and meals purchased while away from home.

Women’s World Banking partnered with Jordan’s Microfund for Women (MFW) to design a health insurance product aimed at its women clients. The Caregiver insurance policy provides a cash benefit after hospitalization that women can use for a range of related needs: transportation to the hospital or replacement of lost revenue while their businesses have been closed. Caregiver offers terms that are affordable for low-income Jordanian women, and also profitable for MFW and the local insurance company—all of this in a market that previously had little or no experience with health micro-insurance. The Caregiver policy has been an enormous success: it was expanded from a small pilot program in 2010 to a large-scale rollout to the entire Jordanian market in 2011, and then introduced in Peru, Morocco, Egypt, and Uganda.

Beyond the Microentrepreneur

To focus exclusively on micro-entrepreneurs is to miss a significant underserved market of women who are growing small and medium size enterprises (SMEs). The IFC estimates that approximately 65 percent of women-led SMEs in developing countries are either unserved or underserved financially. According to a recent Goldman Sachs study, closing the SME credit gap can have a tremendous impact to the global economy: if we close this gap by 2020 in just 15 countries, per capita incomes will increase 12 percent by 2030. This means that more women will have access to the financial tools they need to grow their businesses, employ others and strengthen their economic security.

As more and more global companies bring women-owned SMEs into their supply chains, these businesses need access to a full suite of financial services, and banks must overcome the fear that investing in women is “risky.” Digital technology can also play a role—SME owners can save time and money by digitizing salary payments to low-income employees, providing them a first step into the formal financial system.

Women’s World Banking researched global best practices in serving women-led SMEs to provide specific recommendations for banks to develop successful strategies for reaching this segment. We will be working directly with financial institutions in the coming year to test and implement a full suite of financial services for these women and their businesses.

Looking Ahead

As we look forward to the next International Women’s Day, let’s continue to embrace the broadest possible definition of financial inclusion for women—not just access to services, not just credit, but meaningful use of valuable and innovative financial products to build security and prosperity. With this mission in mind, we would be well on our way to closing the gender gap and helping all women and girls reach their full potential.

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