Women’s financial inclusion: Good policy is not enough
Ahmed Dermish, Global Technical Specialist
We need trust, fairness, and to include women in decision-making.
Anyone with a mobile phone understands the potential of digital services at your fingertips.
And yet we also know that digital technologies are not always inclusive or fair. Women, in particular, have not equally benefited from digital technologies in their everyday lives. This is especially the case in financial services in Africa – and especially now in the time of COVID-19.
Improving choices for women
The economic activity of women and girls often goes unrecognized. However, women are actively engaged as economic actors across value chains: as producers, consumers, business owners, or community members who influence markets and policy (UNHLP 2016).
Creating equitable financial and economic systems recognizes women’s role as pillar of the economy and enables them to contribute in even larger ways, to the benefit of everyone — by to saving for the future, taking credit to fund a business, or making school payments. Digital technology can help do this. But it must be applied in a way that is inclusive and fair.
Creating an inclusive financial sector
Many variables impact the creation of an inclusive financial sector. For example, investment in necessary interoperable payment infrastructure, equitable ID systems, and rules that promote access and trust of services. The G7 Partnership for Women’s Digital Financial Inclusion in Africa is an excellent example of how governments, development actors, and services providers are coming together to address each variable, so the outcome is more than the sum of its parts.
UNCDF Policy Accelerator‘s role is to support governments reform their policies and regulations in order to accelerate digital financial inclusion and specifically women’s. There is no simple process to accelerate digital financial inclusion, but it highly depends on two crucial factors:
1. Policies and regulations
Policies and regulations play a critical part in promoting women’s financial inclusion because, they create space for digital financial services that women need, while keeping the system secure. Government policies have an outsized impact on how inclusive markets develop and leverage new technologies. Smart policies and regulations can address the built-in biases that often prevent women from accessing and using financial services.
There are many policies and regulations the impact financial inclusion, and among them several ‘basic’ regulatory enablers that are pre-conditions to large scale digital financial inclusion. Of these ‘basic’ regulatory enablers, making it easier to open an account and designing consumer protection rules to promote trust and fairness are critical to women’s economic empowerment.
Easy account opening
Account opening should be widely accessible, with or without identification. This is made possible if regulations are risk-based and establish thresholds limits that are affordable for women. There is a clear global precedent for risk-based account opening standards. Many markets need to adapt these to the local context.
Trust and fairness
Promoting trust and fairness is equally important but perhaps less clear. Defining ‘trust’ and ‘fairness’ in financial consumer protection regulation can be a murky process. Yet this should not dissuade regulators from doing so. Women are more likely to use new services when their privacy is protected and have recourse when mistreated. Services providers are responsible for building this trust, while governments are responsible for setting standards of practice and holding providers accountable.
2. Women are part of the process
Women need to be in the room when important decisions are made.
Governments should support female policymakers and regulators to develop their skills to design, govern, and adapt rules that promote inclusive financial services. Building the capacity of women in decision making roles is critical but also insufficient. Women’s groups and their representatives should also be consulted in designing and implementing policies that will directly impact them. This is particularly the case for consumer protection regulations, where privacy, transparency, and fairness are addressed directly.
It is also in the interest of governments to strive to understand the unique experiences of different groups of women in their markets so policy reforms are more targeted and meaningful. For example, women in cities will have a different experience than those in rural areas, while female entrepreneurs will likely suffer different limitations than stay-at-home mothers.
The process of empowering women to control their financial lives will not end with a single regulation or access to identification. Government reforms need to sustain the pace of change that is accelerating with the rise of digital services. That’s how today’s reforms will pay off in the long term.
As a member of the G7 Partnership for Women’s Digital Financial Inclusion in Africa, UNCDF is committed to pursuing these avenues of change through its Africa Policy Accelerator project. In collaboration with the Bill and Melinda Gates Foundation and the French Ministry of Finance, the Policy Accelerator supports governments to design (or improve) consumer protection and account access regulations to serve women’s financial needs in Africa. We will do that by, among other activities, helping governments learn more about women’s needs in their local markets through research, while ensuring that women have a seat at the table.