Gender disparities in access to economic resources directly affect women’s potential for achieving the kind of financial autonomy they need.
In rural areas, where services and job opportunities are even fewer than in urban areas, poverty is also more acute. The situation is worse for women, who are less likely to have access to production factors, technology, information and economic resources, including access to finance.
While financial inclusion is on the rise globally, accelerated by mobile phones and the internet, the gender gap between men and women’s access to financial services persists. Women are still 20.7 percent less likely than men to have access to a bank account in a formal institution, 11.1 percent less likely to have saved at a formal financial institution and 2.3 percent less likely to have borrowed from a formal financial institution. The data shows that men’s financial inclusion has improved more rapidly than women’s; with inclusion standing at 76 percent for men and 64 percent for women.
Furthermore, across Low and Middle-Income Countries (LMICs), women are still 8 percent less likely than men to own a mobile phone, and 20 percent less likely to use the internet on a mobile phone. As mobile banking is growing in Nigeria, not having a mobile phone, especially an internet-enabled one, means that women’s access to digital financial products is limited, and in many cases, non-existent.
Men dominate the financial sector, and traditionally, financial products and services have been designed by men for men. While many of these products and services appear to be gender neutral, the lack of gender tailoring in product design and route to market disregards cultural and religious norms peculiar to the female gender in Nigeria unintentionally putting an additional barrier on the achievement of financial independence for women.
Yet, there is mounting evidence to show that empowering women in the economy, and closing gender gaps are crucial to improving economic growth. During Lamido Sanusi’s tenure as the central bank governor, he established a policy that required 40 percent of the bank’s top management and 30 percent of board directors to be women – which lasted from 2009 to 2014. The expectation from developments like this is improved conditions for Nigerian women, particularly those looking to access more opportunities. But perhaps numbers do not equal influence as the financial inclusion gender gap increased from 7.3 percent to 20.7 percent; a 13.4 percent gender gap increase over three years.
While representation might be important, gender progress for the women at the bottom of the pyramid goes beyond having a few women in power. The gender gap in Nigeria continues to represent a significant issue that needs to be resolved if we are to achieve sustainable economic development and the targets set in our National Financial Inclusion Strategy (NFIS). Already, a recent report by the Central Bank and the Enhancing Financial Innovation & Access (EFInA) has reiterated that the country is not on track to hit the 2020 target of 80 percent adult population.
There is so much work to do to achieve gender equality, especially when it comes to access to financial services. It begs the question – what must be done to speed up the process and progress of achieving gender equality?
Understanding the needs of excluded women.
Put simply, understanding the needs of low-income women is critical to both women’s empowerment and poverty reduction.
In the last decade, there has been a lot of talk about financial inclusion and gender equality. The global commitment to achieve universal financial inclusion has helped expand the range of financial service providers – with banks, FinTechs and Telcos providing a variety of financial products and services.
However, there is a need to do more to understand better the needs of different user groups and how financial services can be made available to them in a way that facilitates adoption.
This calls for paradigm shifts and approaches that put user groups at the centre of financial inclusion. According to the G20 Insights platform, greater women’s financial inclusion requires a more gender-inclusive financial system that addresses the specific challenges they face.
One of these challenges is the availability of tailored services that cater specifically to female customers. For instance, certain segments of women, particularly in the North West and North East geo-political zones have high exclusion rates. These areas face particularly difficult safety and security situations that make investing in data gathering and research for better provision of financial services more expensive and unprofitable to financial service providers.
However, without these insights, it will be difficult to make products that work optimally for women. For instance, women are often excluded from accessing credit through formal financial institutions because they are unable to meet the loan requirements, which often requires collateral. Despite legal reform, land ownership is still predominantly patriarchal, and women are disadvantaged in accessing traditional loans because they cannot independently enter into contracts due to adverse cultural practices.
Another major challenge centres around the distribution channels leveraged by some of the newly introduced financial products that can benefit female customers- as is evidenced by the limited uptake of these products. This makes it necessary to consider distribution methods that better meet the needs of female customers. For instance, the CBN recently acknowledged that due to cultural sensibilities, the low number of female distribution agents in parts of the country, especially Northern Nigeria, may affect onboarding female customers because of the religious or cultural practices that make them more hesitant to interact with male agents.
These are some of the challenges currently faced, which is why it is important to ask – how can financial service providers ensure that financial products reach rural low-income women in Nigeria?
Addressing the gender gap and advancing the financial inclusion of women
The CBN has committed to supporting the achievement of a diversified vibrant economy – one where women at all levels are able to participate fully, aided by access to the requisite financial services. This is the crux of the National Financial Inclusion Strategy (NFIS). The plan is to have an inclusive and diversified economy significantly better off than it is today. Nigeria tabled a revised NFIS in 2018. The ambitious plan identified the need to address gender gaps in financial inclusion but strategy is dependent on application for success – and this is where the real work has to be done. This premise has informed a few initiatives such as the ‘Making Finance Work for Women: Digital Financial Inclusion’ roundtable discussion aimed at addressing the challenge of closing the financial inclusion gender gap.
We cannot overestimate the impact of addressing the causes of low-income women’s financial exclusion and the value proposition of financial inclusion for this segment of the society.
Imagine you are a woman in Ayetoro village in Ogun State, Southwestern Nigeria, and you are part of the village Ajo society. The Ajo society holds you accountable for saving every week and provides a network that you can draw on in cases of an emergency, and you need additional funds. Would opening an account at a bank or buying a phone to set up a mobile money account add value to your life? How are the services provided – and the ways in which these services are provided and marketed adding value? Would that value be big enough for you to drop out of the Ajo society that is serving you well?
What next?
No single approach can tackle the interrelated causes and effects that create the scenarios that result in exclusion. It is a task for both the government and the private sector. Each has a role to play – the private sector in harnessing technology and adapting to consumer needs, the government in creating an enabling environment for greater financial inclusion.
Different groups and different geographies will require different emphases. For example, informal finance has proven to be a useful tool for many who are excluded from formal financial services, and a great first step in financial literacy. The private sector and government can act together to improve and/or formalise informal financial services like the Ajo society which continue to play a key role in meeting financial needs and serve as a channel to reach many women at the bottom of the pyramid. Tailored approaches should reflect the needs and realities of women.
Innovative use of technology to provide better products that reflect the realities of women will play a significant role in advancing low-cost financial inclusion. It makes the provision of financial services viable and affordable for users. Financial literacy is also key. For many women, a lack of understanding and awareness about the types of services available, their benefits and how to use these services can impede use.
At the Bank of Industry (BOI), there is a conscious focus on supporting women entrepreneurs across all economic levels. With a dedicated Gender Desk, the Bank continuously develops tailored lending and non-financial solutions. The Bank is also very focused on leveraging technology to promote financial inclusion especially at the bottom of the pyramid.
Using the Government Enterprise and Empowerment Programme (GEEP) as a reference, the Bank focused on encouraging women into financial services through the provision of micro-credit that was affordable and within reach. This was done through partnerships with financial institutions and mobile money operators to ensure last mile delivery especially within the rural areas of Nigeria. Our efforts have allowed us to reach over 2 million beneficiaries nationwide with about 54 percent of our beneficiaries being women. Through the intervention, over 1.9 million mobile wallets and at least 500,000 new bank accounts were opened by Nigerians who hitherto had not experienced any financial service. The scale of the intervention makes it the largest government intervention globally.
What this has shown is that with collaboration and technology, bearing in mind the needs of the ultimate beneficiary, the country’s financial inclusion objectives, with emphasis on promoting women entrepreneurs, can be achieved.
While I am optimistic about the future, I am pragmatic about the scale of the work required. But it is work that must be done if we are to build an economy that truly works for women.
• Adeniji is executive director, Microenterprises, Bank of Industry
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