Closing the Financial Inclusion Gender Gap

The gender gap challenge persists in most countries even as overall financial inclusion increases. While inclusion is growing for everyone, women tend to lag men by seven percentage points globally when it comes to having access to financial products.
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Research suggests that women might be better money managers than men. Recent studies, for example, have found that women investors have more patience for long-term returns and exhibit greater self-control, which leads them to less impulsive, risky decisions.

In the context of family finances in the developing world, these characteristics translate into something that Caitlin Sanford from Bankable Frontier Associates calls "playing defensive". At a recent gathering promoted by the non-profit Women's World Banking on the role of women in financial inclusion, Sanford recalled the story of an East African family that she met during a year-long research project. When the family ran into legal trouble over their makeshift home-brewery business, the woman made sure her husband was taken into custody, not her. The rationale: He simply wouldn't have been able to mobilize their family and friends network in order to raise the required bail money as she did.

Given the central role women play in the family finances in many developing countries, there is some good news in the recently released Global Findex data: The traditional financial access gender gap has narrowed in some countries. In Kenya and Cote d'Ivoire, for example, where technology innovations are driving broader financial inclusion success, there is virtually no difference in access to the new mobile money accounts between women and men. In Tanzania, the access gap by household income is now nearly twice as big as the gap between men and women, suggesting that poverty is a bigger barrier than gender.

Amid the good news, though, the gender gap challenge persists in most countries even as overall financial inclusion increases. While inclusion is growing for everyone, women tend to lag men by seven percentage points globally when it comes to having access to financial products; in emerging markets, the difference is nine percentage points on average and can be as high as 18 percentage points in South Asia. Women's access to a mobile financial account, which is a key driver of inclusion in many developing nations, is affected by the fact that far fewer women own a mobile phone than do men. This is particularly the case in South Asia, where women are 38 percent less likely to own a mobile phone than men. In some countries like Bangladesh, for example, this number can reach staggering 56 percent, according to a study by InterMedia.

Closing the gender gap is difficult because the root causes go way beyond access. Powerful social and cultural traditions continue to work against progress despite technology innovations and business models advancements. More than just achieving basic equality, increasing women's access to financial services is crucial for economic development and improving household welfare. Because women often occupy a central role in family finances in developing countries, the benefits from closing the gender gap will likely accrue to their children and others in the household as well.

Overcoming the many challenges around the financial gender gap requires action across the board, by financial service providers, governments, and other stakeholders, for example:

  • Employing more women as mobile money agents. Today, men predominate in many countries as agents. But women are often reluctant to interact with male agents because of fears over security and harassment.
  • Developing services that are aligned with women's needs. Understanding the unique role of women in family finance, as well as community entrepreneurs, is important to developing the kinds of financial services that will encourage women to both open and use a financial account.
  • Making more advanced mobile technology available. Many languages have scripts that are difficult to render or use on the kind of feature phones that are common in many emerging markets. There are an increasing number of inexpensive smartphones on the market that would allow user interfaces to be built in those languages and encourage the development of innovative financial applications.
  • Making it easier for women to obtain identification documents needed to open financial accounts. In many cases, women simply don't have the national identity documents that are required to open formal financial accounts under "know-your-customer" verification rules. Governments can devote resources proactively to this effort, removing bureaucratic barriers to inclusion.
  • Increasing educational opportunities for women, particularly basic literacy. Women lag men in literacy rates in many developing countries - sometimes significantly - and literacy is a basic prerequisite to using financial services delivered via feature mobile devices.

Sometimes the simple formalization and reinforcement of modern legal process already in place can make a huge difference in overcoming age-old gender biases. Consider the story related by Rosa Wang from Opportunity International about an incident in Malawi. There, traditional rural custom dictates that when a man dies, his brother, not his wife, assumes control of the family's assets, presumably on historical assumptions that minimum scale was required to maintain viability of agricultural activities. But when a man came to a branch of the Opportunity International Bank in Malawi and demanded the savings of his recently widowed sister-in-law, the branch manager politely declined and asked him to leave. The next day, dozens of women lined up at the branch waiting to open account under their own names.

Closing the gender gap may not be simple. But it can be done, if we focus on taking actions like these.

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