> Posted by Rosita Najmi, Financial Inclusion Practice, World Bank
“Congratulations,” the young man said, as I entered a favela in Rio. Puzzled, I raised my eyebrows and shrugged my shoulders. “He was congratulating you because you’re a woman.” said the young woman accompanying me on a UNDP assignment. My eyebrows migrated even further north. With a smile, she clarified, “Today is International Day of the Woman.” As we walked on, I turned and yelled over my shoulder with a wave, “Obrigada.”
While I’m passionate about a lot of things, since 2001, I’ve been thinking more about the concept of universal, financial citizenship and the role of women in poverty reduction. I’m sure my colleagues at the World Bank would each have a diversity of views on this topic. However, I think we would all agree upon certain core ingredients, such as (i) access to a suite of quality products and services (including savings, credit, insurance, remittances, payments and beyond), (ii) regulations that ensure consumer protection and transparency, and (iii) individual financial identities and histories that benefit from financial education and security. While this might easily resonate with someone who believes in the larger concept of democratizing development, at this point, you might be asking what “universal” means. That’s where the women (and other vulnerable populations like persons with disabilities, rural populations, and indigenous people) come in.
I have been blessed to have witnessed a number of incredible women who realized the rights and opportunities of financial citizenship. While many of them probably no longer remember my name, I will never forget the lessons learned from their stories. A mother and third wife in Benin employed access to credit to create an opportunity of self-employment and also patiently and diligently applied her meager savings towards a financial independence that allowed her and her children to flee a life faced with domestic violence. A grandmother, who was illiterate in letters, but fluent in numbers, explained how insurance could help her neighbors manage the shocks of cold winters and potential loss of cattle in Kazakhstan. My introduction to innovative delivery channels and “mobile transactions” was during an informal moment floating along the Mekong Delta, where a female entrepreneur took her products and services to her clients, who were doing laundry and dishes in the river. A Central Banker in the South Pacific told me privately in a whisper that she opened a savings account to celebrate the birth of her first child. A slum dweller in Jakarta applied her access to finance towards financing clean water and nutritious breakfasts for her young family. Finally, from my own mother and older sisters, I learned about the role of finance for female survivors of conflict and disaster.
What I learned from the stories of how these women applied their access to finance was that one-size-fits-all approaches are not sufficient for us to reach the goal of banking the remaining 2.7B adults who continue to lack access to formal financial services. Further, in addition to individual courage and drive, these women benefitted from programs led by local and international nongovernmental organizations that catalyzed either supply or demand-side interventions. Here are a few thoughts on how access to finance for women and other more vulnerable populations might be facilitated.
- Full Financial Citizenship: The ability to manage consumption and shocks at the household level, increase productivity of an enterprise, and advance a venture from small to medium and beyond requires access to a full suite of products and services that includes and is not limited to credit, savings, insurance, payments, investment, pensions, and remittances. Credit alone is not sufficient. Products are needed to both support risk management and enable asset accumulation.
- Legal and Institutional Restrictions and Related Application: Some assessments do not look beyond a country’s constitution and general legal regulatory environment that influences access to capital. Most do not venture into enforcement either. Often barriers to access are in eligibility requirements, such as a signature from a male family member. The policies set by the Ministry of Finance, Central Bank, Superintendence, etc could be reviewed for limitations on proof of eligibility, credit histories, asset registry, and beyond. The same could be true of other populations like persons with disabilities and indigenous populations. By evaluating not only the laws but also financial and other legal regulations related to know your client (KYC) requirements and asset registries, we can take steps towards making the access challenge more gender neutral.
- Delivery Channels: By integrating technology into delivery channels, financial service providers can reduce costs and thereby manage to offer more affordable rates. Innovative design can afford ease of use, save time, and extend access to those in rural areas.
- Product Development: Access to capital varies across regions. Even where access does exist, it does not always include appropriate products that respond to unique challenges and opportunities faced by women. Further, developing institutional capacity to improve product design improves access for other vulnerable populations, including persons with disabilities, rural clients, and indigenous populations—improving access for all. Building the capacity of institutions around product development could result in products and services that are both poverty and gender-smart.
Nevertheless, the solution for exclusion does not rely only on the supply side. It is a combination of supply and demand-side interventions. For example, sometimes due to a lack of financial education or business experience, women hold a limited self-perception of eligibility or chances of success, and as a result, use informal financial services. Further, we are learning how women entrepreneurs might apply their profits differently than men. One study (Murray and Barkallil 2006) reported that rather than reinvesting profits, women entrepreneurs in Morocco are more likely to spend their income on family and household needs, save cash for emergencies, or both.
Like many other development challenges such as climate change, financial exclusion is not gender neutral in its consequences or opportunities. Universal access to finance will afford opportunities to women and girls, such as opportunities to finance education, create employment, and consider leaving a situation that involves domestic violence. Research has demonstrated it affects their decision-making authority and even leadership positions in the nuclear family, community, and beyond. Further, we might consider how consumer protection and financial literacy for women could result in other human development spillover effects. Perhaps as consumer protection and financial literacy increases, women might begin to learn about and demand enforcement of other rights to which they are entitled, including human, labor, property, and political rights–many of which are interrelated.
As we all celebrate International Women’s Day this year, let us think of these possibilities and congratulate the women who have already applied the dignity of financial citizenship towards improving their lives and those around them.
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Image credit: joinfite.org
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