Financial inclusion is advancing but men are carrying the torch. More people own financial accounts today but women still walk 9 steps behind men in developing countries¹. ‘Still’ because the gap in account ownership has remained unchanged since 2011.

Argentina, Georgia, Indonesia, Lao People’s Democratic Republic, Mongolia and the Philippines are the only countries where the gap is reversed. But, except for the Philippines, men in these countries are still more likely than women to have an active account. Similarly, in India, the gender gap has declined from 20% to 6% but 71% of those accounts owned by women are dormant.

Owning something doesn’t automatically translate into using it. Having something at hand doesn’t imply grasping it. While mobile money is enabling women’s access to the formal financial system, international observers are cautious to raise a glass to digital finance’s ability to empower women.

At the end of the day, has digital finance afforded empowerment opportunities to women or is it just a set of false promises?

This is what we’ve asked during the Lab Debate ‘Golden or Rotten Egg? Questioning Digital Finance’s Ability to Empower Women’ at the last edition of the European Development Days in Brussels, Belgium.

An opinion poll we conducted to test the waters showed that 60% of participants were unsure of what to respond. The rest were evenly split between believers and skeptics. To ‘unscramble their brain’, we invited four experts to take either the pro or the con side, independently from how they liked the digital-finance egg in real life.

Zooming into women at the center and zooming out into women as part of society, the pro and the con teams alternated at the microphone to convince the audience of their arguments.
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CON
Grace Majara: “Account ownership per se doesn’t transform into empowerment as it doesn’t address certain barriers, particularly systemic barriers, preventing or limiting women’s access to financial services. Inequality between men and women, providers not setting sex-specific targets and therefore producing gender-neutral products that mostly favor men, and women sometimes having restricted control and access to productive assets, even something as simple as a mobile phone. Gender-related social and cultural norms are entrenched and constrain women, even if a product is tailored to them. Access to a mobile or a SIM doesn’t automatically translate into usage, and requiring a minimum deposit balance remains a problem, one that digital financial services won’t solve.”

PRO
Angelika Mendes-Lowney: “We haven’t seen scale we had expected because of the specific needs and barriers women have, which have been studied only in the past 40 years. At the top of the list of women’s needs are security, confidentiality and convenience. Women are natural savers but the places they use (ex. mattress) aren’t secure. They want to control over how they manage their money and they don’t necessarily want their families to know. Although women are the household’s financial managers, they are the most “time poor” (ex. no time to walk kilometers to the bank). Digital finance can meet these needs. The point is that for digital financial services to work, they need to be designed with women at the center. This could be achieved by having gender diverse leadership teams at MNO [mobile network operator] or provider, a willingness to talk to women to understand their expectations and barriers, and a regulatory environment that allows for innovation within the private sector. In Malawi, for example, Women’s World Banking and UNCDF have succeeded in attracting 500,00 women clients less than five years after rolling out Pafupi, a package of ‘female-friendly’ financial products, and advocating for relaxing KYC [know-your-customer] requirements.”

CON
Torbjörn Fredriksson: “Digital financial services have a huge potential but they haven’t really lived up to their promises. In Kenya yes, women have seen opportunities in terms of work as agents as well as usage. Elsewhere, societies are very much cash-based, entrepreneurs therefore don’t see the value because digital finance remains risky and expensive. In some countries, women face legal barriers even to obtain an ID, which is necessary to comply with KYC requirements. Women are afraid to make mistakes because they are less educated. They have less money and less work opportunities. The risk is that only those who are better educated and better off will use digital financial services, which will increase inequality. Work needs to be done for a broader policy framework that better helps women ripe the benefits.”

PRO
Lelemba Phiri: “In 2014, Zoona was recognized as one of the top 10 companies best positioned to empower women and reduce poverty. Taking women’s entrepreneurship, to be empowered women need to have access to resources and control over them. In sub-Saharan Africa, the top reason not to start a business is the lack of access to finance and women are less likely to borrow from family and friends because they care about maintaining good relationships. Zoona maintains good relationships with community leaders while allowing women to save, transfer and borrow. Some women didn’t want to become agents because they felt that they weren’t educated enough. Considering that women learn differently, Zoona organized peer learning for their female agents. In addition, Zoona helps them build their marketing skills and invests in campaigns that support female agents. Zoona has now created jobs for over 5,000 women. To give them more control, Zoona provides a reporting tool to track their progress. Women are the strongest performers, in fact 60% of the top performing Zoona agents in Malawi are women.
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What’s your side now, golden or rotten, pro or con? You can find more at this link, including the podcast.

In reality, all four speakers were believers in the potential of digital finance to empower women, provided that specific barriers and needs women have are understood and considered. Surprisingly or not, participants didn’t think the same. Asked to vote again at the end, the majority chose the rotten-egg position.

Taking the heart (or the egg) of the discussion, have we prioritized the right barriers to women’s financial inclusion? The 2016 Gallup World Poll data show that regions in which mobile phone penetration is higher for women have the lowest rates of women’s financial inclusion. This contradicts the widespread assumption that access to a mobile phone is a key enabler for women’s access to and usage of digital financial services.

Financial inclusion cannot be separated from contexts of discrimination and exclusion to which women are often exposed in social, economic, cultural and political life.

Inequalities like access to financial resources, gender responsive infrastructure, land ownership rights and formal participation to the labor market are firmly rooted in historical, social and economic structures, and in the structural inequality in power relations between males and females. Sex-related inequalities crosscut all sectors and impact women’s literacy and digital literacy levels as well as providers’ perceptions around this market.

But this shouldn’t be an excuse to discard what digital finance has achieved so far, which would be like throwing out the baby with the bathwater. In Kenya, a 2016 study reported that since 2008, 194,000 households were lifted out of extreme poverty as a result of access to M-Pesa mobile money services, female-headed households seeing far greater increases in consumption than male-headed households. According to the same study, M-Pesa helped an estimated 185,000 women move from farming to business occupations. One could argue that what M-Pesa has done in Kenya is not replicable nor comparable. Well, Zoona is doing a great job too in Malawi and Zambia, hiring women agents and helping them move at full speed. Pafupi Savings in Malawi is another success story.

Eventually, what really matters for all sectors is to not forget or, worse, ignore the socio-cultural contexts women live in, and the actors that can influence these.

This is why at UNCDF, we are convinced that putting women at the center, through human-centered design methods, shouldn’t exclude considering what and who is around them. We encourage prosumption by actively engaging women customers and agents in product design, testing iteratively with them. We work with policymakers and regulators at various levels to remove the structural inequalities that prevent women from advancing at the same pace as men. We partner with innovators to disrupt legacy systems. We also engage with local communities and leaders to ensure that existing habits and traditions are respected. We sit with all of them to reduce the technical and practical difficulties of collecting and analyzing sex-disaggregated data. This is what we call an ecosystem approach.

Maybe this is not enough, but we are well positioned to understand what should be improved and how much of the potential attributed to digital finance will turn into reality for everyone equally and in the light of the Sustainable Development Goals.

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1- The global gender gap in account ownership is 7 percentage points.