Author: Sally Yacoub

Kicking off a series of blog contributions throughout this year to complement the European Microfinance Award 2022 on 'Financial Inclusion that Works for Women’, Sally Yacoub, a Gender and Financial Inclusion Advisor – and consultant who is supporting the EMA team in designing this year’s Award – discusses the demand and supply-side barriers women face, and why new approaches to financial inclusion must be systemic. In the context of International Women’s Day, it’s important to recognise the progress that’s been made – and the enormity of the work still to be done.

Over the coming months, we’ll be publishing more in this series - from the Secretariat, e-MFP’s members, and other experts in the field. Watch this space!

As International Women's Day comes around once more, the stubbornness of the gender financial inclusion gap lingers in my mind. Despite progress in women’s financial inclusion, the gender gap in account ownership has remained persistent - at 9% since 2011. I cannot help but think about Albert Einstein’s quote that “insanity is doing the same thing over and over and expecting different results”. As a collective global community, we need to do things differently; think differently and intervene differently.

Thinking through the barriers to women’s financial inclusion, the persistence of the gender financial inclusion gap is not surprising. Financial services are introduced in contexts and ecosystems that have their own dynamics - which grants privileges for some and presents obstacles for others. Those barriers are often intricately interwoven. When it comes to financial inclusion, women face a broad range of barriers. Despite obvious differences in individual circumstances and needs, many women - particularly low-income women in developing contexts – share common features. They often work in small-sized informal businesses with limited income, profit, and growth prospects. They lag when it comes to educational levels and opportunities, have lower financial and digital literacy, and suffer from limited mobility and lack of asset ownership. Because they so often have dual productive and reproductive responsibilities, women are chronically time-poor and time-sensitive - which makes them proficient detectors of timewasters. Women are inherent savers and tend to save small amounts, but also make frequent withdrawals to meet the endless household expenses. They are also avid information-seekers, requiring detailed information for decision-making processes, including ones related to financial services. Women often have more limited, more fragmented, and less formal social networks compared to men. Contrary to stereotypes of women being merely ‘risk-averse’, women in fact assess risks differently to men; they may be described as ‘calculated risk takers’, who often strive to balance monetary and non-monetary risks and rewards and how these impact their personal and business lives.

But these characteristics are broad, and women of course are not monolithic. Women are diverse, and men and women are not just two big and separate groups. One’s identity is multi-faceted; this includes gender, but also age, education, income, physical and mental ability, sexual orientation, among many others. So, different segments of women have very different experiences, aspirations, challenges, and needs - including when it comes to financial services. For example, financial inclusion-related barriers faced by a high-income and well-educated, urban office worker would be diametrically different from those of a poor, semi-literate farmer. This axiom should be taken at heart in analyzing women segments and in designing, providing, monitoring financial products and services which cater to their diverse demand-side realities, needs, and aspirations.

Looking at the supply side (how financial service providers serve women), there is similarly a wide array of barriers, including a lack of business case for women’s financial inclusion and poor understanding of the needs and aspirations of different segments of women, along with the implications on financial services. Consequently, financial services – including requirements, features, and product terms – are often not tailored to those segments. Moreover, service delivery, including the quality of service, as well as physical location and working hours of financial service providers, are too often misaligned with the realities of women’s lives. Even marketing and communication regarding financial products and services often fail to speak to women.

Many of those demand and supply barriers are anchored in social norms. These can have a direct impact on women’s economic empowerment and control over resources and on their mobility and social capital – to name just a few. Social norms also impact financial service providers’ perceptions of women and the perceived value (or not) of serving them. These often lead to gender-blind policies and operations that fail to meet women’s needs.

How can we go about women’s financial inclusion differently?

To advance women’s financial inclusion, there is a critical need for an intentional and systemic approach to address these compounded impediments at the different levels of the ecosystem. From a financial service provider’s point of view, this requires integrating a ‘gender lens’ in all that they are and do. Gender mainstreaming should no longer be a marginal approach or a box-ticking, lip-service item in an action plan, but rather an integral part of providers’ strategy and DNA. To achieve that, a holistic approach is crucial. This means that gender should be mainstreamed both institutionally (within financial service providers) and in their operations (in all aspects of their work with clients).

Institutionally, organisations should aspire to a lot more than offering maternity and paternity leaves and setting sexual harassment policies – although these are important. Rather, gender should be interlaced in organizational strategies and in all aspects of their planning, budgeting, and decision making. It should become an integral part of their performance and impact measurement systems which are essential for assessing their gendered impact, as a basis for steering and decision making. And gender should be systematically integrated in all aspects of human resources management, from recruitment to talent development to pay equity to performance measurement.

Operationally, gender mainstreaming in the life cycle of all products and services should become the norm. In contrast to strictly having ‘women-specific’ products, all products and services should be based on an in-depth analysis of the gendered context and of different segments of women and men. This has been proven to result in better products and services for both men and women. Product and services design - including requirements, features, and terms - and marketing ought to be tailored to the diverse segments of women. This also entails processes - throughout the customer journey - and delivery channels that consider and meet the realities and needs of this important segment.

Beyond FSPs, other stakeholders also have a key role to play. Partnerships between a broad range of stakeholders - including ones that have not traditionally been active in the financial inclusion space - are instrumental in addressing the gender financial inclusion gap. Regulators and policy makers are key in promoting gender-centric policies, regulations, and framework conditions. Research institutions and think tanks can help further explore the underlying causes of exclusion, identify effective intervention strategies, and build an evidence-based business case for women’s financial inclusion.

Going forward, there is an urgent need to further untangle the link between social norms and financial services and to devise strategies to address gendered barriers in that regard. This approach – addressing root causes rather than treating symptoms - will be the only way to effectively promote a ‘gender transformative’ approach - one which aims to address the underlying causes of inequality and exclusion and to change how systems currently operate in a way that disadvantages women. This will in no way be an easy task, and will require intentional and concerted efforts, including research and experimenting with different strategies and approaches.

It is opportune that International Women’s Day should fall just days before the launch of the European Microfinance Award 2022. I was delighted when I first heard that this Award would focus on financial inclusion and women. When the e-MFP team and I began the process of thinking through what this difficult and nebulous topic needed to include this year, I was gratified to find that we were already thinking alike. We must go beyond traditional outreach measures, beyond only products that are marketed to women, and beyond lip-service solutions. The sector – and this Award process – must look for deep understanding of the barriers women face – in their lives and in their workplaces – and how to build a financial sector that responds to their needs and aspirations alike.

The process of designing this upcoming Award - now entitled ‘Financial Inclusion that Works for Women’ - has really done that. As the application guidelines will explain, the Award seeks to “highlight organisations working in financial inclusion that aim to understand and meet women’s challenges and aspirations, in order to go beyond traditional gender outreach strategies”. This is, I believe, a very strong start – and I look forward very much to seeing what applicants are doing to innovate in this vital field of work.


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Comments (1)

Getaneh Gobezie

Dear colleagues at E-MFP,

I really appreciate this article on women's financial inclusion. My observation for the last couple of decades is that ''gender'' issue is one of the most important agenda, but little discussed in the industry, inspite of the significant implications going forward. We have deliberated on this agenda in our recent assessment of the Food-system agenda of the European Union in Africa. We have just submitted our draft report, raising important issues, related especially to resilience and empowerment of women facing patriarchal risks. …

Focused on delivery of credit (with the assumption that the poor in urban as well as rural areas are potential ‘’entrepreneurs’’), and with no effort on mainstreaming gender in loan analysis (e.g the implication of new loan-financed business on women’s time), financial service providers attach little attention to other services like insurance and saving mobilization, which could deliver valued services for clients leading vulnerable livelihoods, supporting resilience (Collins, et al, 2009). Service outreach remains very low. The World Bank’s FINDEX 2018 data reported that only 18% of adults reported being able to raise emergency funds  (ability to come up with an amount equal to 1/20 of gross national income (GNI) per capita within the next month) from savings; others would turn to family and friends or sell their assets (IFAD, 2019). Vulnerability of smallholders (many of whom only get paid once or twice a year and therefore need to stretch their earnings across the year) is one key reason why side-selling of agricultural products continues to be a big challenge for effectiveness of contract farming.

Suitably designed saving services can also promote empowerment of women by facilitating the opportunity to exercise full ‘’control’’ of their income. Some even argue that for such women, the opportunity for flexible saving services is as important as (or even more important than) the access to credit for income generation. Indeed, this would have a significant impact on women’s bargaining power within the household, incentive to work more, and on insuring household food security, as women would more likely invest most of their income on children and household food security and general wellbeing. In fact, there are strong evidences that food and nutrition security impact could be further enhanced through ‘’credit with education’’ programmes, utilizing the regular (weekly/monthly) meetings of microfinance groups as cost-effective awareness creation platforms. A World Bank study (Christiensen and Alderman, 2001) suggests that malnutrition among children in Ethiopia can be reduced by more than 43% simply by educating mothers on nutrition.

I look forward to hear more.

Regards, Getaneh (mail: getanehg2002@yahoo.com)

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