FINANCIAL INCLUSION: LOOKING BEYOND BANK ACCOUNT OWNERSHIP
What is financial inclusion? What do we mean when we use this phrase? And how do we measure the gendered inequalities which make this such a feminist issue?
These are some of the questions I will be raising at this year’s Power Shift conference, where I will be moderating a panel discussion on boosting women’s access to capital.
The discourse around financial inclusion leans heavily on statistics relating to bank account ownership, specifically the World Bank’s Findex data which shows that two billion people around the world still don’t have an account at a formal financial institution or with a mobile money provider – with women making up the majority of this ‘unbanked’ population.
But does ‘being banked’ automatically translate to financial inclusion for women?
There is no question that having a bank account is a crucial first step towards financial empowerment for women. It can open up safe and convenient ways to save money, pay bills and exert greater control over household spending. Digital payments, in particular, can free women from spending valuable time and effort travelling to pay school fees or medical bills.
But financial inclusion goes beyond bank account ownership. Women need access to a much wider range of financial services if they are to be truly empowered. This includes products like credit and loans, which are pivotal to enabling women entrepreneurs to scale their enterprises, drive growth and create jobs. Research shows that women-owned businesses make up 30% of registered entities worldwide, yet only 10% of women entrepreneurs have the capital needed to grow their businesses.
Insurance is another vital service. Consider, for example, a farmer whose crops are hit by drought. Without financial protection, she has no way to fortify her livelihood against such risks.
Relying on measures of bank account ownership can also be misleading, since ownership doesn’t automatically translate to usage. For the first time last year, the World Bank included additional information in its Findex report about bank account usage. The results are fascinating. They show that, across developing economies, 110 million adults with an account still store their savings outside of the formal financial system, relying on a semiformal savings structures or individuals. And 570 million women who have an account still pay utility bills in cash, with 250 million paying school fees this way too. Clearly, a bank account can’t pull women out of poverty or give them greater control over their own lives if it is lying dormant.
In order to bring women fully into the formal financial fold, we need to address two challenges: extending women’s access to a full remit of financial services; and boosting their financial capabilities so that they have the skills, knowledge and confidence to reap the rewards of using those services.
The first challenge involves working with financial institutions. We need to present a business case to banks, proving that women are a viable market with specific needs. At the Cherie Blair Foundation for Women, we are currently working with the Kenya Commercial Bank in Rwanda to roll out a range of products which offer women access to savings and credit at much lower interest rates than are currently available through savings cooperatives and microfinance institutions – 19.75% compared to 24-36%. The collaboration started after we organised field trips for bank staff to meet women customers in rural areas so they could see for themselves that these women had pertinent questions about personal finance and that their need is real.
The second challenge involves working with women themselves. In Nigeria, we are supporting 500 women owners of small enterprises. These women all have bank accounts and have enjoyed varying degrees of business success, but many have struggled with basic financial skills. They didn’t know how to read financial statements, forecast sales or do cash flow projections, and they had no idea of which loan products might suit their needs. Our ‘Road to Growth’ training course deconstructed and demystified these issues, giving women the tools they need to become more confident and capable economic actors. One woman told us the experience was ‘like taking my business to the cleaners’. We also connected the women directly to representatives from Diamond Bank, giving them the opportunity to put their learnings into practice by enquiring about specific loan procedures and collateral requirements.
When it comes to financial inclusion, bank account ownership is the first step – not the bottom line. Alongside ‘being banked’, women must also have the means and the confidence to participate in the formal financial system in a meaningful and life-changing way.