Women Empowerment

Overview of Financial Inclusion for Women

Despite growing global efforts, women’s financial inclusion has made little progress over the past decade. Women continue to face greater financial exclusion and vulnerability than men, with shocks like the COVID-19 pandemic threatening to reverse some of the gains made so far. Closing the gender access gap in bank account ownership, which has not significantly changed in developing economies in the last decade, is necessary—but not enough. With low account usage and inactivity keeping dormancy rates persistently high, it is important to focus on the ways financial services can actually help poor people, especially women, to do three things: generate income, access essential services, and protect basic standards of living. It is through improving access, usage, and outcomes of financial services that women can realize economic empowerment.

The Global Stage

Globally, less than half of women participate in the labor force, compared to three-quarters of men.
In developing regions, up to 95 percent of women’s employment is informal, in jobs that are unprotected by labor laws or do not benefit from social protection.
To make matters worse, the COVID-19 crisis caused unprecedented job losses, hitting women the hardest, further widening gender gaps.
Even before the pandemic, fifty-six per cent of all those without a bank account were women – meaning that nearly a billion women are unbanked.
Results from a study done by UN Women and the World Bank show that between the age of 20 and 34, women are more likely to be poor than men
Although women and men throughout the world have been gaining access to financial services over time, in developing countries the gender gap hovers near 9 percent. In some countries, the gender gap/difference in bank account ownership can be as high as 30%

A Solution Oriented Approach

In our approach to gender equity in financial inclusion, we seek to fully understand the challenges and opportunities that pave the way to advancing women’s financial inclusion and economic empowerment. Our research brings a deeper analysis around the drivers of the gender gap in bank account ownership, focusing on the interplay of social norms that constrain women’s activities and women’s financial inclusion, which are not well understood or tackled by most financial inclusion initiatives. We also aim to explore women’s formal and informal income-generating opportunities that add value to women’s lives and livelihoods, in addition to potential digital solutions for this problem.

Fluid Ice Foundation Research Summaries

Gender Gap in Financial Inclusion

Raj Mehta (Founder & CEO, Fluid Ice Foundation)

On August 18, 1920, the 19th Amendment to the Constitution was finally ratified, enfranchising all American women and declaring for the first time that they, like men, deserve all the rights and responsibilities of being an American citizen. This was a lengthy and brutal journey of nearly 100 years to finally win the right of women’s suffrage in the United States.

Globally, in many societies and cultures, women still face gender inequality and discrimination whether it be in sports, employment, and even in financial inclusion. In terms of the percentages banked, women tend to lag behind, due to unequal gender roles, gender biases, and less economic opportunities. For example, according to the International Labor Organization, the current global labor force participation rate for women is just under 47%, while for men, it is 72%. That’s a difference of 25 percentage points, and this is often a best-case scenario: some regions face a gap of more than 50 percentage points. Consequently, women who want to work experience a larger difficulty in finding a job than men. This problem is prominent in many developing regions – such as Northern Africa and Asia to name a few, where unemployment rates for women exceed 20%, and women are more likely to work in informal employment with relatively very low-pay. This has been proliferated due to the COVID-19 crisis, which has caused unprecedented job losses, especially for women, and has thus further widened gender gaps.

According to the World Bank, globally, 74 percent of women have an account at a financial institution compared with 78 percent of men: lagging behind by 4 percentage points, and in developing economies, they remain 6 percentage points behind than men. Additionally, globally, out of the 1.4 billion adults who do not have bank account, 54 percent are women.

This gender gap could be possibly due to gender roles, inequalities in employment, and legal and cultural barriers. Gender inequality for employed women could mean receiving a low income, and for unemployed women, there would be little to no economic opportunity. It is also harder for women to be an entrepreneur and start a small enterprise, as women are less likely to own property to offer as collateral to seek a startup loan from traditional financial institutions and get the financing they need to grow their businesses, especially in developing countries. According to the World Bank, the need for credit among women-owned MSME’s in emerging markets is estimated to be at $1.7 trillion.

Financial inclusion provides women the ability to generate income, build assets, manage financial risk, and be a part of the global economy. Financial services have to prioritize gender equality as a main focus in an effort to flatten the curve of gender gap. Financial inclusion would give women an equal opportunity to fundamental financial services including credit, loans, insurance, payments, savings, and financial education, to help improve their overall well-being.

There has been some improvement in women’s access to financial services. For example, according to the World Bank, in India, the gender gap in financial inclusion has shrunk from 22% to being nearly insignificant in the last decade alone. FinTech is also playing a key role: in Kenya, mobile money services have enabled women-headed households to increase their savings by more than 20%, allowed approximately 185,000 women to leave farming and develop business or retail activities, and helped reduce extreme poverty among women-headed households by ≈20 percent.

Globally, financial inclusion for women has taken a center stage and worldwide financial service providers are making efforts to incorporate gender equality in their services, and governments are working on public policies, regulations, and initiatives to close the gender gap and promote women empowerment. We all need to understand this issue and support/advocate for women in business, STEM, education, etc. and the global and financial empowerment of women, where we can.