From its origins in microcredit programs in the 1980s and 1990s, the financial inclusion movement has consistently identified women as a key target segment. The focus on women has been driven by three main factors. First, women are usually responsible for managing day-to-day household finances in most countries where financial inclusion is still a challenge. Second, because of this responsibility, women tend to be highly entrepreneurial in order to make ends meet. Third, women are often considered more creditworthy than men, in part because their responsibility for household finances means they cannot risk losing a credit line by not paying back a loan.
Despite this focus, women are still disproportionately excluded from the formal financial system and make up more than half of the world’s unbanked population. The gender gap is equally apparent for women-owned businesses, which predominately remain in the informal economy, restricting their access to bank accounts and credit from formal financial service providers (FSPs). Even women-owned small and medium enterprises (SMEs) operating in the formal sector face a significant credit gap.
Closing this gap is considered to be an important component of women’s economic empowerment initiatives in the financial inclusion movement. Women’s financial inclusion, including access to banking and other financial services, is vital to increase women’s economic control and opportunities.
The key to closing this gap lies in the approach: rather than a CSR initiative or pilot project, addressing women’s exclusion requires a holistic and intentional approach that is fully integrated into the governance and management structures of the FSP. It means institutionalization through gender mainstreaming: integrating a gender equality perspective at all stages and levels of an FSP’s policies, programs and projects, and putting gender at the center of organizational strategies and in all aspects of planning, budgeting, human resources management (recruitment, staff development, pay equity, performance measurement, etc.) as well as impact measurement systems (including collecting and analyzing sex-disaggregated data).
Gender mainstreaming means that FSPs use a gender assessment tool (GAT) to measure the extent of gender equality and inclusion within the institution and based on the results put in place a Gender Equity and Social Inclusion (GESI) or Gender and Development (GAD) policy, a Gender Action Plan (GAP), and Gender-based Monitoring, Evaluation and Learning (MEAL) Plan. The MEAL plan will be used to track progress on the extent of gender mainstreaming of the institution.
These internal strategies––including women staff representation in decision-making roles, opportunity for advancement, and flexibility––can create a gender-responsive workplace conducive to the equitable and meaningful participation of women. When women staff participate, the FSP can more easily redesign its products and services to meet women’s needs. Approaches such as Gender Action Learning Systems (GALS) and others, as well as training and advocacy can be used to overcome these challenges.
The gender gap in financial services is driven by the interplay of factors on both the demand and supply side. Demand-side factors include social norms that constrain women’s activities and women’s financial inclusion and the limits on the income-generating opportunities that are available to them. Supply-side constraints involve the affordability, accessibility, and availability of financial services.
The next three posts in this series will discuss the factors behind the gap in women’s financial inclusion in detail:
- Gender norms
- Supply side factors
- Limited or inappropriate non-financial services