Personal Finance

How education can boost financial inclusion of women


As we celebrated International Women’s Day, I could not help pondering how women in today’s hyper-connected world still face financial exclusion. Appallingly, estimates indicate that 2.3 billion working-age women do not have an account at a formal financial institution.

It is also high on the policy agenda, with a wide range of supply-side initiatives designed to improve access, and increasing recognition of the importance of tackling demand-side barriers to financial inclusion.

In particular, there has been a significant appreciation of the role of financial education in improving levels of financial inclusion around the world.

It is widely accepted that better and relevant financial inclusion initiatives can foster reduced gender inequalities.

Women who have access to bank accounts, savings mechanisms, and other financial services may be better able to control their earnings and undertake personal and productive expenditures.

Numerous studies posit that improved access to financial services for women could also prove to be the key to unlocking the potential for women-owned and women-managed micro and small enterprises to grow.

Financial inclusion for women also helps in reducing the exposure of poor and rural households to income shocks, improving growth, and promoting more sustainable and equitable development.

The creation of a vibrant and globally competitive economic sector hinges on financial inclusion. It is through this that Kenya anticipates creating jobs, promoting a culture of savings and financing its investment needs.

Rated highly on mobile penetration, Kenya has the opportunity to enhance not only access and utilisation, but also build the capability of the consumers for enhanced protection and sound financial behaviour.

Reaching individuals and groups that are historically underserved remains the biggest challenge.

A large number of women and youth have low levels of education and skills with many still facing cultural obstacles that hinder them from accessing finance.

Working closely with the Women in Business Network, we at CPF believe that we have the opportunity to make a strong contribution to communities in our country by promoting financial literacy among women engaged in the enterprise, strengthening financial and operational growth for women-led groups as well as the provision of financial enterprise skills training.

One of the central levers in our strategy is focused on ensuring women have more access to and use of digital financial services, such as mobile bank accounts and digital payment systems, so that they can make their own decisions about spending, saving, taking financial risks, and building their financial futures.

Explicitly, the core objective of this work is to close the persistent gender gap in financial inclusion, with a focus on low-income women.

World Bank Global data confirms that while account ownership has increased overall, gender gaps are not narrowing and remain unchanged over the past six years.

Although we have seen good progress in financial inclusion, women remain less likely than men to have an account.

In developing economies, such as ours, the gender gap is nine percentage points on average, which has remained virtually unchanged since 2011. This doesn’t mean that women aren’t making gains. We have seen progress in the absolute number of banked women.

I believe that mobile money can reduce gender inequality in financial inclusion. We’ve seen that where there is high mobile ownership, such as in sub-Saharan African economics, the gender differences are narrower.

For example, in Kenya, men are 18 percentage points more likely than women to have a traditional bank account — but more women than men have only a mobile money account.

While more deliberate efforts are needed to close the gender gap and realise the potential gains of financial inclusion, educating women actively engaged in enterprise on how they can formalise their business remains crucial to narrowing the gender gap.

As a first pathway to accelerating the closure of the gender gap, we see promise in digitising social safety net programmes to increase the value of digital financial services for women — especially poor women — and to encourage more women into adopting and using digital financial services.

We hypothesise that digitising a predictable income stream for women is a way to rapidly close the gender gap in digital financial inclusion, and a potentially powerful platform to catalyse the economic empowerment of women.