Examining Key Financial Inclusion Barriers in the LAC Region through ConsumerCentriX's Ecosystem-Centric Engagements
Author:
Laura Trueba, Head of Latin America and the Caribbean
Date:
June 28th, 2024
Area Covered:
Latin America and the Caribbean
Topics:
Financial Inclusion • Women’s Financial Inclusion • Gender-Inclusive Finance• Financial Regulation • Digital Financial Services
In the past two years, ConsumerCentriX (CCX) has undertaken important projects aimed at addressing barriers to financial inclusion in the Latin America and Caribbean (LAC) region. Drawing upon years of experience and more recent engagements, which included collaboration with Multilateral Development Banks (MDB), regulators and financial service providers (FSPs), CCX has an ecosystem-centric understanding of the financial inclusion landscape in the region. This approach has allowed us to identify and address the major challenges hindering greater financial inclusion in the region. To shed light on these major challenges, this blog will highlight some significant barriers.
Among the interventions that have empowered CCX to gain this valuable understanding include the Supply-side Sex-disaggregated Data Survey, commissioned by IDB Invest, reaching 13 LAC countries. This survey covered over 240 financial service providers in the region to understand their strategies for the women’s market, including mapping their financial and non-financial product offerings and their use of sex-disaggregated data. This resulted in a publication, “Women Rising“, highlighting, among many other insights, the untapped revenue potential in the women’s market, ranging from $1.87 billion in Mexico to $283 million in Guatemala.
Regarding the state of financial inclusion of women micro, small and medium businesses (WMSME), CCX has been recruited by IDB Invest to support the successful implementation of the Women Entrepreneur Finance Code (We-Fi Code) in the Dominican Republic. This will involve enhancing the capacity of the Asociación de Bancos Múltiples (ABA) as the local Aggregator and Coordinator, as well as FSPs, to fulfil the commitments of the Code.
On the regulatory side, CCX collaborated with the Alliance for Financial Inclusion (AFI) to develop a Gender-Inclusive Finance (GIF) Roadmap for AFI 11 member countries in the LAC region. This initiative aimed to systematically review practical policy actions to enhance women’s financial inclusion and reduce gender gaps. CCX also worked with AFI to conduct case studies of 13 countries, including eight from the LAC region, to understand the role regulators play in closing the financial inclusion gender gap.
To conduct these case studies, an Analytical Framework for Inclusive Finance with a Gender Perspective was developed in partnership with AFI that comprises four key spheres that impact the state of financial inclusion in a country, such as 1) FSP’s actions towards women’s financial inclusion, 2) Policies, Regulations, and Government Engagement, 3) ICT and ID Infrastructure, and 4) the Broader Environment of Women’s Economic Participation, Inclusion, and Entrepreneurship.
Unveiling Financial Inclusion Disparities Between Rapidly Progressing and Slower Progressing Countries
- Delving into the regulatory landscape
Following our assessments and employing the AFI Framework for Inclusive Finance with a Gender Perspective as the analytical cornerstone, a significant disparity is observed between countries with limited financial inclusion and those that have made substantial progress. This disparity primarily revolves around the availability of financial infrastructure, the network of banking agents, their outreach, and utilization, which must also include mobile money/digital solutions services. Some developed regulations lack a digital financial services component, particularly concerning the interoperability of mobile banking, primarily within banking agents.
Interoperability, Open Banking, and National Financial Inclusion Policy in Perú
The Central Reserve Bank of Perú (BCRP) has been working on increasing interoperability to promote digital payments and financial technology and further drive financial inclusion. As of 2021, 44% of women and 55% of men reported making or receiving a digital payment to Global Findex, which is high for the region. To support the prevalence of digital payments, the BCRP has worked to strengthen retail interoperability, especially since the COVID-19 Pandemic. Today, over 100,000 retailers across the country are compatible with e-money. The BCRP has stated that payment providers must be interoperable, setting an implementation schedule for interoperability. The BCRP also runs the payment switch for interbank transfers, checks, ATMs, and mobile money, all integrated under the real-time gross settlement system.
Furthermore, we have observed that alongside mobile interoperability, there is a crucial need to ensure adequate regulation of mobile and digital financial services. Such regulation should permit electronic wallets for retail payments, facilitate the opening of e-wallets without mandatory linkage to a bank account, and enable digital customer identification (e-KYC) for individuals to open e-wallets or basic bank accounts remotely.
E-Wallets in El Salvador
E-wallets in El Salvador are driving financial inclusion, with uptake that is outpacing that of traditional bank accounts. In 2015, the country passed the Law to Facilitate Financial Inclusion; while the law spans many areas including tiered KYC, arguably its most important provision is the regulation of e-wallet providers and savings accounts with simplified requirements. The law imposes disclosure requirements, consumer protection standards, provides transaction limits for agent banking, and authorizes banks to issue their own mobile money services.
By paving the way for e-money and its use in the country, the law resulted in explosive growth of the MNO Millcom’s Tigo Money. Today, over 1 million Tigo Money accounts exist in El Salvador, representing about 20 percent of the adult population, which is immense compared to the 29% of women and 45% of men who own a bank account according to Findex 2021.[1]
More recently, in 2021, El Salvador’s government passed the Bitcoin Law and the roll-out of Chivo, a government-owned e-wallet for cryptocurrency and dollars. As of 2021, 3 million Salvadorians have downloaded the app and created an account, amounting to 46% of the population, 52 percent of which are women.
- Delving into the financial service provider landscape
According to the IDB Invest Supply-side Sex-disaggregated Data Research Survey, most FSPs in the region focus on the women’s market but still consider it part of their corporate social responsibility strategy. There is a clear knowledge gap on the business case and profitability of serving the women’s market, attributed to a lack of capacity to collect, use and analyze sex-disaggregated data. Moreover, without this data, FSPs are unable to develop holistic women’s market strategies, which are crucial for designing and marketing offers and products aimed at women clients.
While 75% of commercial banks in the region reported collecting sex-disaggregated data, over half (52%) continue to use manual reporting processes, which raises concerns about data quality, and most still have not established key performance indicators (KPIs). Furthermore, FSPs with advanced market strategies generally do not leverage the available data to evaluate return on investment or profitability.
As a result, they overlook clear business expansion opportunities, given their lack of emphasis on profitability as a reason for targeting the women’s market. By not thoroughly analyzing their existing data, FSPs may be missing a crucial business strategy for enhancing their focus on women.
Addressing financial inclusion barriers in the LAC region is crucial for socio-economic development. This requires collaborative efforts from regulators, FSPs, public entities, civil society organizations, and development partners. By continuing to innovate and adapt, CCX is paving the way for a more financially inclusive future.
Empowering Women Entrepreneurs in Sub-Saharan Africa through the Africa Women Rising Initiative
Author:
Benedikt Wahler, partner
Date:
June 26th, 2024
Area Covered:
Africa, Sub-Saharan Africa
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
For the last four years, ConsumerCentriX, in collaboration with the International Project Consult (IPC) and the African Management Institute, has supported the implementation of the Africa Women Rising Initiative (AWRI), funded by the European Investment Bank (EIB). In mid-June, Benedikt Wahler and Dörte Weidig, partners at ConsumerCentriX and IPC, respectively, delivered a “Knowledge Lab” session in Luxembourg to the EIB community to share the large-scale impacts and lessons from this work.
This initiative aims to empower women economically in Sub-Saharan Africa by increasing their access to finance and capacity-building resources, particularly for women entrepreneurs, owners, and leaders in micro, small, and medium enterprises (MSMEs), in alignment with the 2X Challenge criteria.
AWRI Pilots and Builds a Foundation for Mobilizing Large-Scale Gender Finance
As part of the broader “SheInvest” initiative, through which the EIB is mobilizing EUR 2 billion of funding for gender-responsive investments in Africa, AWRI was launched in April 2020. This occurred just as Africa was experiencing the first wave of the COVID-19 pandemic to complement these funds with technical assistance (TA) from the consortium partners.
From the ConsumerCentriX team and our professional network, we contributed the Team Lead, interim team lead, and several senior experts on key factors for the success of gender-inclusive finance: unsecured and cashflow-based lending, market research, strategy and value proposition design, as well as facilitating the work of cross-functional teams to pilot new approaches. Our data team also helped ensure the recommendations reflected a sound basis of analysis and insights.
ConsumerCentriX Managing Director Benedikt Wahler, who stepped up from key expert to interim Team Lead during a medical leave, feels that “AWRI really showed once more the full breadth of expertise we were able to mobilize and the deep bench of colleagues to make one more multi-year, multi-country, and multi-institution TA a success.” It was another instance of a close and successful collaboration with IPC, alongside current joint activities on “Youth-in-Business” and the upcoming Central Asia WE Finance Code.
Thanks to AWRI, nine financial intermediaries (FIs) across four countries – Uganda, Rwanda, Senegal, and Côte d’Ivoire – received customized assistance based on a thorough assessment of their needs, the realities of their clients, and their local market context. In addition to four commercial banks (Bank of Kigali, Ecobank Group, Housing Finance Bank, Atlantic Business International), four microfinance institutions (Pride Microfinance, Centenary Bank, Baobab Senegal, Baobab Côte d’Ivoire), and one development bank (Development Bank of Rwanda) were supported on gender finance.
Before this work started, ConsumerCentriX pioneered a data-driven approach to identifying the right countries for gender finance interventions like AWRI. Using a proprietary benchmarking tool that considers four main dimensions of women’s economic, social, and financial inclusion, we screened and scored 45 economies in Sub-Saharan Africa.
The implementation focused on two main components: “Banking on Change” and “Market Maker.” “Banking on Change” targeted the supply side by enhancing the capability of financial institutions to meet the needs of women entrepreneurs with gender-intelligent products and services, while “Market Maker” focused on the demand side, strengthening women entrepreneurs’ financial and business skills and their networks.
Through the Market Maker initiative, AWRI significantly enhanced women entrepreneurs’ financial literacy and business management skills. Training programs reached 1,087 women, covering essential topics such as financial literacy, record-keeping, customer service, and soft skills. Forty per cent of the participating businesswomen subsequently obtained loans. This initiative also developed 11 non-financial services (NFS) modules tailored to the needs of women entrepreneurs, further supporting their business growth and sustainability. The impact of these efforts was evident, with many women reporting improved business practices and enhanced financial management skills.
The AWRI’s Banking on Change component focused on strengthening the capabilities of partner financial institutions (PFIs) to better serve women entrepreneurs. This included conducting comprehensive institutional diagnostics and capacity needs assessments, followed by tailored technical assistance packages delivered by a team of international and local experts. At two institutions, unsecured loan products and the respective credit processes were developed for the first time. Two others deployed their first-ever savings products tailored to businesswomen, leading to strong growth in their funding base.
Even though most improved solutions were still in the early stages of roll-out, the results were strongly positive. The number and volume of loans grew faster for women than men at all institutions. The portfolios now include 35,400 more women borrowers and EUR 67 million. Compared to the pre-AWRI baseline, our team helped advance the frontiers of inclusion: 16,000 women borrowers who otherwise would not have been expected to receive loans and EUR 40 million in loan volume. All of this was achieved while not merely preserving but even expanding the better repayment performance of women borrowers.
Why Gender Finance is the Right Approach for Impact and Commercial Success
The 2X Collaborative, of which EIB is a founding member, documents the growing momentum among the community of development finance institutions and related stakeholders that a dedicated focus on women (also known as a Gender Lens) delivers better impact. The evidence collected over the past decade by programs like the IFC’s “Banking on Women” or the Financial Alliance for Women from pioneering banks, MFIs, and fintechs around the world makes it clear that there is also a strong strategic and business case for targeting women and women SMEs as clients. At ConsumerCentriX, this reality and our expertise on what that should mean in practice drive around two-thirds of our work.
For those who care about impact, the case for being intentional in focusing on women should be straightforward: though women and men are diverse among themselves, on the criteria that matter for their ability to access and use conventional financial services, women score lower on average.
In the regional context of AWRI in Sub-Saharan Africa, women entrepreneurs face numerous challenges in operating and growing their businesses: less revenue and often smaller businesses in low-margin sectors, lower levels of secondary education and less professional experience in the formal sector, less likely to have mentors, and more limited access to capacity building, supportive networks, and market information. They are also often far less able to post the kind of assets required as collateral to obtain loans.
To truly deliver on the ambition of building an inclusive financial system that can power sustainable and broad-based economic growth, solutions ought to be benchmarked against the realities of such women – in other words, be “gender-intelligent.” To genuinely aim for reaching the marginalized parts among women and other groups, those experiencing the highest levels of such challenges should set the tone, thereby aiming for solutions that stand a chance of being “gender-transformative,” i.e., over time, wearing down these challenges rather than just working around them. The reality of supposedly fair “gender-neutral” approaches is that they are bound to fall short of most women and even a good portion of male users of financial services. They are designed for a type of client who is just not representative of the population at large – let alone those at the frontier of the financial system. (see charts below)
In the AWRI program – as in most of our work – we were tasked with working with for-profit financial service providers. There is now a strong basis of evidence that women and women’s businesses constitute a clear business opportunity. But business bankers tend to ask why they’d need to become “gender-intelligent” in their work. Is not a business and a leasing contract a leasing contract, whoever sits on the client side of the relationship?
For the ConsumerCentriX team, the answer is clear: to actually seize that opportunity, bank executives do well to look closer and remind themselves that what sets MSMEs apart is not that they’re smaller than big firms. It’s the human(s) at the heart of these businesses. The owners and managers whose ambitions, outlook, and idiosyncrasies shape what the business will end up doing – and this is why gender patterns matter. In the space of finance, such patterns emerge 1) from the legal, family, and socio-cultural circumstances in which women have to operate, 2) the mentality and attitudes they bring to financial questions, and 3) the way in which their cashflows are (much more strongly) exposed to lifecycle events like marriage, childbirth, divorce, or care for elderly parents. (see below)
Notably, the success stories featured at events like the Financial Alliance for Women’s Annual Summit come from institutions that have taken such insights into action. This year’s edition in London included two Champions, Access Bank Group from Nigeria and Kenya Commercial Bank, who referred to business banking solutions that emerged from their work with our own Anna Gincherman and Benedikt Wahler.
As Benedikt summed it up: “With the now concluded AWRI program, our team is proud to have laid excellent foundations for seeing more such pioneering examples scale up in Africa.”
Clemence Mukashema's Journey from Running a Small Hardware Shop to Owning a Manufacturing Factory
Date:
March 20th, 2024
Area Covered:
Africa • Rwanda
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs)
Globally, women entrepreneurs encounter numerous barriers when seeking access to finance, ranging from discriminatory lending practices to limited collateral options. In many societies, well-established gender biases and cultural norms perpetuate inequalities, thus significantly limiting women’s economic opportunities. Despite demonstrating better payment rates on loans, women often find themselves overlooked or subjected to unfavourable terms by financial institutions. However, investing in women as entrepreneurs presents a unique opportunity for financial institutions. Women-led businesses have shown resilience and a propensity for growth, contributing significantly to economic development and job creation, representing over 52% of the total MSMEs in the country. Moreover, studies have consistently demonstrated that women tend to reinvest a higher portion of their earnings into their families and communities, thus amplifying the positive impact of financial inclusion.
While conducting a research study about women’s micro, small, and medium businesses in Rwanda, ConsumerCentriX spoke to Clemence Mukasimana, a BPR Bank client who runs a small manufacturing factory producing construction and plumbing materials.
At 40, Clemence is a testament to the indomitable spirit of entrepreneurship. Married and a mother of two, Clemence’s journey is marked by resilience, determination, and a commitment to rewriting the narrative for women in business.
Clemence’s venture into entrepreneurship was fueled by her background in business administration and years of experience as a financial accountant. In 2016, she founded a small hardware shop with a vision of it serving as not only a means of livelihood but also a platform for empowerment and change. Her business acumen and unwavering dedication saw her enterprise flourish. Today, she stands at the helm of a mini-factory, churning out high-quality construction materials like gutters and door frames, catering to Rwanda’s flourishing construction sector and harnessing an annual turnover of over 1 billion RFW.
But Clemence’s journey wasn’t devoid of challenges. Motivated to escape the mistreatment she faced in her former job and inspired by a friend’s entrepreneurial passion, she utilized a less common business strategy. “I adopted a growth mindset,” she reflects, ” and switched from selling products I bought for my hardware shop to producing them myself. This drastically increased my profits.”
However, she realized her vision required more than just determination—she needed access to financial services. Clemence’s journey underscores financial institutions’ crucial role in empowering aspiring entrepreneurs, specifically women. With initial capital from her savings, support from her family and a crucial loan from BPR Bank, she moved towards fulfilling her entrepreneurial dreams. “The first bank I contacted had very high-interest rates, so I went to BPR Bank”, she recalls. Discovering BPR Bank with its lower rates was a game-changer for her.”
Despite her success in accessing finance, Clemence acknowledges the challenges concerning business development services. She emphasizes the importance of holistic support, including international trade fairs, business forums and training programs, to nurture the entrepreneurial ecosystem.
Beyond her business pursuits, Clemence remains steadfast in securing both her family’s future and saving for her children’s education. Looking ahead, Clemence plans to expand her business and relocate to Rwanda’s industrial hub: the Kigali Special Economic Zone. Her journey highlights how entrepreneurship can be transformative, underscoring the crucial role of access to finance in unleashing limitless potential.
Blog: Unlocking the Women's Market: Comprehensive Strategies for Financial Institutions to Engage the Lucrative Women's Market
Author:
Laura Trueba, Head of Latin America
Date:
February 22nd, 2024
Area Covered:
Latin America, Caribbean
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
Significant progress has been made in women’s financial inclusion across Latin America and the Caribbean, with the gender gap for account ownership declining by two percentage points between 2017 and 2021, according to the 2021 World Bank Global Findex report. However, many women, specifically female entrepreneurs, remain underserved or excluded from formal financial systems. To better understand the state of women’s financial inclusion and how financial institutions can expand access, IDB Invest partnered with ConsumerCentriX on a new research study entitled “Women Entrepreneurs on the Rise: A study on the growing financial power of the female market in Latin America and the Caribbean and what this means for financial institutions” The report is the result of a study conducted in over 13 countries in the LAC region with the participation of over 240 financial institutions that assessed the availability of financial offers and strategies that such institutions use to serve women and how they collect and utilize sex-disaggregated data. This blog summarises critical insights from the study, focusing on the state of women’s banking as a significant business differentiator and its potential to strengthen the competitive positioning of financial institutions in the region.
Findings from the research study indicate that women represent a significant portion of financial institutions’ customer base. The research illustrates that female-owned businesses constitute nearly 50% of retail and business customers in the region. Additionally, the research demonstrated that there have been higher growth rates of women’s market portfolios, with individual banks reporting substantial compound annual growth rates (CAGRs), surpassing those of the total portfolio. Such findings reinforce the message that neglecting the expanding financial influence of the women’s market and its diverse customer segments could weaken overall institutional positioning.
The findings also indicate that the degree of ambition and progress regarding leveraging female-owned businesses varies from country to country, depending on the types of financial institutions. Of the banks with products that appeal to the female market, the majority view them through the lens of corporate social responsibility (CSR) or as part of their environmental, social, and governance (ESG) initiatives rather than recognizing them as mainstream growth opportunities. This highlights a prevalent perspective in which women’s market propositions are often considered ancillary to broader social and developmental goals within the banking sector.
Unlike the region’s microfinance institutions, development banks, and cooperatives, which generally share the aforementioned perspective, the fintech sector emerges as a distinct and proactive player. In contrast to most traditional financial institutions in Latin America, who often lack dedicated strategies, fintech companies lead the way with a more driven approach, underscoring the imperative for traditional financial institutions to reassess their strategies.
Findings from the research study also highlight the importance of prioritizing the women’s market for business purposes, revealing a noteworthy trend in loan repayment and deposit behavior. The study found that female retail and business customers consistently demonstrated higher loan repayment rates than their male counterparts, as illustrated by a substantial difference in the 90-day non-performing loan (NPL) ratios. For instance, the average 90-day NPL ratio for female retail customers in commercial banks is a commendable 2.7%, well below men’s 4% average. Previous studies have identified a strong correlation between lower NPL ratios and increased bank profitability.
The increasing interest from financial institutions in the region to serve the women’s market is also evident. The study indicated that approximately one-third of financial institutions currently have a strategy to serve the women’s market, and over 40% are developing one. It also demonstrated that an increasing number of financial institutions are incorporating non-financial services into their women-focused propositions and more robustly collecting sex-disaggregated data, particularly regarding retail portfolios. This continued strategic focus on women, along with improved collection and use of gender data, is likely helping to reduce the gender gap over time by informing more inclusive approaches that have already shown women can be profitable customers.
Despite the growing interest in serving the female market among financial institutions in the region, these institutions have yet to capture this significant market potential. Some key strategies for them to do so and to ultimately advance women’s financial inclusion in the LAC region include:
- Comprehensive women’s market propositions: Financial institutions can develop comprehensive women’s market propositions that involve products tailored to women’s needs and priorities. For instance, institutions like Banco Visión in Paraguay have developed offerings beyond single products to address women’s diverse needs through preferential rates, minimum requirements tailored to female entrepreneurs, partner discounts at women-owned businesses, and insurance partnerships explicitly designed for women.
- Common WSME definition: As discussed in the report, the lack of a universal definition of women-owned/led SMEs across countries and institutions makes it difficult for financial providers to identify and serve this vital segment. A standardized approach would help address this challenge.
- Enhanced gender data: As previously mentioned, most institutions track sex-disaggregated data. However, improving quality, automating the collection, and ensuring data is gathered regarding a wide range of financial services beyond just credit would give providers deeper insights to develop more impactful women-focused strategies and measure their effectiveness over time.
- Integrating gender data into Key Performance Indicators (KPIs): Only half of the surveyed institutions currently incorporate gender performance metrics into management indicators, as noted. Regular tracking and reporting on progress towards gender-focused KPIs could help hold management accountable for women’s market strategy.
Generating a Gender-Inclusive Finance Roadmap for Latin America and the Caribbean.
Author:
ConsumerCentriX Project Team
Date:
November 22nd, 2023
Area Covered:
Latin America • Caribbean
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
ConsumerCentriX (CCX), in partnership with the Alliance for Financial Inclusion (AFI), is working to develop a gender-inclusive finance (GIF) roadmap for AFI member countries in the Latin America and Caribbean (LAC) region. The project seeks to address the lack of systematic review of practical policy actions that AFI members in the LAC region can undertake to increase women’s financial inclusion and reduce their gender gaps.
With extensive experience from working with AFI on two projects, part of the AFI Gender Inclusive Finance Workstream, the CCX team, led by Partner Anna Gincherman, will undertake three primary tasks, including:
- Assessing the state of financial inclusion in the LAC region, highlight the significant milestones, targets, and drivers for women’s financial inclusion
- Identifying key barriers and opportunities to women’s financial inclusion in the LAC region
- Identifying main areas of focus for regulators and implementation initiatives in the LAC region based on the best practices and the region’s own unique needs
Through extensive secondary and primary research, the CCX team will develop a GIF landscape report for the LAC region covering the main barriers and opportunities for women’s financial inclusion, with recommendations and an implementation plan based on the key findings from the research.
AFI Policy Toolkit • Blog: A guide to designing Gender-Sensitive Rapid Response and Crisis Recovery Policies
Author:
Benedikt Wahler, Partner
Date:
October 10th, 2023
Area Covered:
Global
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Crisis Response • Resilience Building • Research
Are financial inclusion and the promotion of gender equity “fair weather topics”? How should policymakers set their priorities when a fast-moving crisis fraught with uncertainty and large downside risks requires their full attention, as the COVID-19 pandemic did?
“Actually, weaving a focus on women and their financial inclusion into the design of crisis response is likely to be a force multiplier rather than a distraction”. This is how ConsumerCentriX (CCX) Partner Benedikt Wahler summarizes the team’s research on behalf of the Alliance for Financial Inclusion (AFI), a network of central banks and other financial regulatory institutions from 76 developing countries. Home to the majority of the un- and underbanked, such questions matter a lot to the welfare of these member countries.
The global pandemic confronted policymakers with large-scale and fast-moving disruption. In turn, it also provides a wealth of experiences that this assignment of CCX sought to extract and assess. Over the summer of 2023, AFI shared these in a Special Report “Closing the Financial Inclusion Gender Gap During the Crisis and Afterwards”.
These insights draw upon deep-dive research, interviews with decision-makers and stakeholders, and a survey of more than a third of AFI members facilitated by the Gender Inclusive Finance (GIF) Team at AFI led by Helen Walbey and undertaken by the CCX team as the pandemic evolved over the course of 2021 and 2022. A set of five country case studies draws attention to how large emerging markets like Egypt and small ones like Paraguay or Fiji have been able to effectively respond to this massive crisis with the focus provided by a gender lens and financial inclusion policy.
These experiences should serve as inspiration and provide policymakers with a sense of possibility. But what should executives at central banks or regulatory agencies actually be doing during the next crisis – or even now?
To help provide such guidance, AFI published the “Gender-Sensitive Rapid Response and Crisis Recovery Policies” policy toolkit – a comprehensive guide for policymakers, practitioners, and development partners on designing and implementing gender-sensitive rapid response and crisis recovery policies.
Globally, 740 million women are excluded from financial sector services, and their inclusion could add approximately USD 12 trillion to the global domestic product. This is a vast untapped market for the financial sector. Taking evidence from the experiences of AFI members as expressed in the Special Report, gender-inclusive finance policies can reverse the previously widening gender inequality or access gaps. Besides the additional economic impact, benchmarking policymaking against the realities and constraints of women can strengthen economic stability and growth through improved women’s access to formal financial services, leading to positive outcomes for families and communities. And actually, this approach ends up working better also for many men. This strength of gender-inclusive finance at the center of the policy toolkit is highlighted by what outcomes various shades of gender-inclusive financial policy are likely to deliver – as illustrated in the toolkit here.
Gender-neutral policy designs are often benchmarked by the realities of men, and as a result, they only work for a minority of relatively privileged women. They do not consider the needs and constraints of the average female. The resulting policies or financial offers do not even work well for many men. Gender-intelligent or gender-intentional solutions start by setting the average woman and her constraints as a guideline, and they stand a good chance of adequately serving a majority of women. Gender-transformational policy design explicitly explores the intersectionality of challenges faced by the minority of excluded and marginalized women, and such policy solutions may often require more fundamental interventions.
In disruptions like the COVID-19 pandemic, rapid response and crisis recovery policies that are charged by the power of gender-sensitive design are needed – the AFI Policy toolkit offers three main tools for developing these. The first toolkit explores the role of stakeholders in crisis response. Stakeholders such as donors, ministries and civil society organizations are likely to have networks related to vulnerable groups, and they can help communicate and mobilize interest for interventions in terms of crisis. The second toolkit offers a benchmarking tool for policymakers’ country’s context for gender-inclusive finance. The Excel-based tool developed by ConsumerCentriX allows policymakers to assess the context and baseline necessary for embedding crisis response, recovery and broader financial inclusion policies for AFI members and other stakeholders. The third toolkit explores gender-inclusive crisis response strategies that can be employed depending on the crisis response phase the country is on. These include:
- Fast-paced “fire fighting”
- Enabling recovery
- Building back better for resilience.
Overall, the toolkit provides a valuable resource that enables practitioners at central banks and financial sector regulators, as well as their peers at government ministries to design gender-inclusive financial policies that address barriers to financial inclusion for the majority of vulnerable segments, including women while also allowing them to collect wider sets of data and inputs for improving existing policies and putting in place strategies for future crisis response.
Learn more: AFI Policy Toolkit “Gender-Sensitive Rapid Response and Crisis Recovery Policies
The Role Regulators Play in Closing the Financial Inclusion Gender Gap
Author:
ConsumerCentriX Project Team
Date:
September 26th, 2023
Area Covered:
Global
Topics:
Financial Inclusion • Gender Equality • Covid19 • Gender Gap
Through the Financial Inclusion Gender Gap Project, ConsumerCentriX contributed to developing 13 case studies from AFI’s membership countries to provide a deeper understanding of women’s financial inclusion status in each, along with key barriers and enablers.
The case studies are one of the key project deliverables designed to help national financial regulators and policymakers identify highly specific and concrete actions to advance gender-inclusive finance in AFI’s member countries.
Learn more from CCX-supported case studies published for the project:
SOLOMON ISLANDS CASE STUDY
Most Solomon Islanders transact in cash and women especially prefer to save at home, with 53 percent of women reporting that they save in a “secret place at home”. For the past decade, the Solomon Islands government and the Central Bank of Solomon Islands have prioritized financially including the unbanked, specifically identifying women, rural individuals, and informal workers as target groups.
© 2023 (August), Alliance for Financial Inclusion. All rights reserved.
HONDURAS CASE STUDY
By 2017, the country had achieved a 2.7 times growth in women’s account ownership and 41 percent of women owned a bank account. However, vast swaths of women remain unbanked or underserved by financial services, many of them being unemployed or lower-income working in the informal economy. This case study offers an overview of the current state of women’s financial inclusion in Honduras.
© 2023 (April), Alliance for Financial Inclusion. All rights reserved.
GHANA CASE STUDY
The improvement can be credited to the financial regulators’ significant investment in digital financial services and mobile banking. Although Ghanaian women are eager to use digital services, they are still marginalized by the formal financial system, and lack tailored products that fit their specific financial and business needs.
© 2023 (May), Alliance for Financial Inclusion. All rights reserved.
UGANDA CASE STUDY
Outside that realm, women still utilize informal financial services like village savings and loan associations and rotating savings and credit associations. There is an opportunity for improved coordination and collaboration of the ecosystem players under the new national financial inclusion strategy and an explicit focus on women’s access and usage.
© 2023 (May), Alliance for Financial Inclusion. All rights reserved.
MEXICO CASE STUDY
As the second-largest economy and population in Latin America, Mexico has the resources and institutions to tackle gender financial inclusion thanks to its national financial inclusion approach. Mexico’s Central Bank, Comisión Nacional Bancaria y de Valores has implemented several regulations and initiatives to create an enabling environment for women’s financial inclusion through both digital and non-digital services.
© 2023 (August), Alliance for Financial Inclusion. All rights reserved.
EGYPT CASE STUDY
The Central Bank of Egypt (CBE) led several initiatives that contributed to advancing women’s financial inclusion, reflecting a growth of 210 percent in women’s transaction account ownership. The Egyptian government and CBE are taking steady steps towards more gender equity, economic empowerment, and financial inclusion, in pursuit of an inclusive society.
© 2023 (June), Alliance for Financial Inclusion. All rights reserved.
PAKISTAN CASE STUDY
Pakistani women are not only severely disadvantaged in terms of education, economic opportunities, and entrepreneurship, but also restricted by the country’s conservative legal framework. These factors directly impact women’s access and use of financial services and will be essential to address to further close financial inclusion gender gaps.
© 2023 (July), Alliance for Financial Inclusion. All rights reserved.
Closing the Financial Inclusion Gender Gap During the Crisis and Afterward: Experiences and Lessons Learnt from AFI Members
Author:
ConsumerCentriX Project Team
Date:
September 26th, 2023
Area Covered:
Global
Topics:
Financial Inclusion • Gender Equality • Covid19 • Gender Gap
ConsumerCentriX supported the Alliance for Financial Inclusion (AFI) in conducting five case studies from AFI’s member countries to understand the nexus of women’s financial inclusion and crisis response under the “Closing the Financial Inclusion Gender Gap During the Crisis and Afterward” project.
The case studies share experiences and lessons that AFI’s member countries learned from their crisis response and recovery policies from the COVID-19 pandemic while focusing on gender-inclusive finance. Evidence from the case studies shows how AFI members protected and promoted women’s financial inclusion and effectively applied it as part of a crisis response during the pandemic. Lessons learnt from AFI members such as Paraguay, Egypt, Fiji, Bangladesh, and Zimbabwe indicate that focusing on gender- inclusive finance helps set the right priorities, mobilise the most impactful stakeholders, identify key operational challenges, and target beneficiaries with a significant multiplier effect. Enabled by the opportunities of digital finance that can be ramped up fast even for developing countries that have seen limited adoption, gender-inclusive finance gets crisis relief and stimulus to where it is needed most and ensures economic life can continue.
Learn more from CCX-supported case studies published for the project:
FIJI CASE STUDY
As an island nation in the Pacific Ocean, Fiji saw strong disruptions to its key economic activities caused by the COVID-19 pandemic, which disrupted travel for tourism and overseas work. Together with the challenges of climate change, Fiji understands it faces a need to revise and diversify its growth strategy for resilience.
© 2023 (May), Alliance for Financial Inclusion. All rights reserved.
BANGLADESH CASE STUDY
From being one of the poorest nations at the time of its independence, Bangladesh has advanced its human and economic development. Being one of the most populous countries, this success and its ability to contain the pandemic’s disruptions matter particularly. Increasing women’s financial inclusion can be the key to unlocking better performance.
© 2023 (March), Alliance for Financial Inclusion. All rights reserved.
EGYPT CASE STUDY
Strongly affected by the COVID-19 Pandemic, Egypt has been able to implement economic recovery measures, ease restrictions, and rebound in important economic sectors, such as agriculture, tourism, manufacturing, and communications.
© 2023 (June), Alliance for Financial Inclusion. All rights reserved.
PARAGUAY CASE STUDY
The World Bank considered it as one of the South American countries best positioned to cope with the COVID-19 pandemic in terms of fiscal and monetary policy thanks to its stable and disciplined macroeconomic policies with low internal and external debt and low inflation. However, as a key agricultural exporter, the country remains vulnerable to international price volatility and climate change-related challenges.
© 2023 (March), Alliance for Financial Inclusion. All rights reserved.
ZIMBABWE CASE STUDY
A landlocked country rich in natural resources which support both agriculture and tourism, Zimbabwe is progressively working towards securing a stable investment climate.
© 2023 (April), Alliance for Financial Inclusion. All rights reserved.
Assessing the Business Opportunity of Women's Market for Financial Services in Uzbekistan
Author:
ConsumerCentriX Project Team
Date:
September 26th, 2023
Area Covered:
Uzbekistan • Central Asia
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Research
Uzbekistan has recently witnessed significant economic growth and development, creating new opportunities for financial services providers. One emerging and untapped area is the women’s market for financial services.
To delve into this potential business opportunity, the International Finance Cooperation hired ConsumerCentriX to conduct a comprehensive market research study to assess the viability and dynamics of catering financial and non-financial products and services specifically to women in Uzbekistan. The study aims to provide a 360° understanding of the women’s market for financial and additional non-financial services examining demand-side needs and preferences, supply-side readiness, and the conducive state of the underlying enabling environment.
The research was conducted over six months and involved a mix of qualitative and quantitative methodologies using principles of Human-Centered Design (HCD). Through surveys, focus group discussions and in-depth interviews, the CCX team assessed the demand side of the women’s market and offered distinct insights on women both as individuals and as entrepreneurs. The sample size was strategically chosen to ensure representation from urban and rural areas (retail segment) and women SMEs at different stages of business growth (business segment), all the while covering women from different socio-economic backgrounds, age groups and occupations.
Several Key Insights:
- The majority of women entrepreneurs pointed out access to finance as a significant obstacle to their current operations, and while most claim banks to be their first choice when it comes to borrowing, the actual integration of women entrepreneurs into the formal sector remains low.
- For investments planned in the near future, most women’s businesses intend to finance their activities from sources perceived as more suitable and approachable than FIs.
- Current formal lending options are often regarded as too expensive to finance and too risky to lose collateral – that they often do not even have.
- Often facing time and mobility constraints, women as individuals unanimously expressed a strong need for more convenient and speedy service, including digital (mobile) options. These women also expressed a robust interest in working with FIs to plan a more secure financial future – and for the financial stability of their families, their children’s education is considered the key investment.
- With a strong preference for keeping their savings in cash, most women seem to have not yet been convinced of the benefits of savings with financial institutions. Similarly, only a small minority have borrowed from formal sources while informal means play a significant role.
- Current market offers mostly provide banking as a commodity, leaving an opportunity to provide more value for women as individuals and as entrepreneurs. The few dedicated products for women still reflect a program-driven focus on loans rather than a broader value proposition.
- Aside from these specialized loan products, there are no other types of specialized products for women that involve deposits and savings, insurance, or payments and money transfer arrangements, or women-specific bundles of such services.
- The non-financial services also have a narrow functional focus. At the same time, Uzbekistan is rapidly becoming a focus for digital financial services providers.
The Uzbek enabling environment presents a mixed picture of strong socio-cultural limitations as well as the substantially supportive digital driver, which is strengthening female financial inclusion. While the country’s legal and regulatory framework and the existing support systems are currently more neutral drivers, both areas offer the potential to significantly move the needle for women navigating their way through the Uzbek financial sector.
Learn more from the report: Market Research to Assess the Business Opportunity of Women’s Markets for Financial Services in Uzbekistan.
Why the Government and the Private Sector Must Work Together to Expand Access to Digital Financial Services in Guatemala
Author:
John Dorrett, Digital Finance Team, USAID
Note:
This article was originally published on www.marketlinks.org
Date:
July 5th, 2023
Area Covered:
Latin America
Topics:
Financial Inclusion • Women’s Financial Inclusion • Micro, Small and Medium Enterprises (MSMEs) • Financial Regulation • Crisis Response • Resilience Building • Research
Countries in Latin America and the Caribbean are revolutionizing access to banking services and empowering millions of previously unbanked individuals. According to the latest data from the World Bank Findex, 73 percent of people in the region (excluding high-income countries) own a financial account—and the proliferation of digital financial services and financial technology (fintech) played an essential role in this growth. A recent study by the Inter-American Development bank asserts that the size of the fintech industry in Latin America and the Caribbean more than doubled in size in the past three years. According to the same report, the COVID-19 pandemic led to the rapid integration of digital technology across all sectors, including the increased adoption of digital payments platforms.
While the expansion of digital financial services has increased access to financial products, the benefits have not been universal. The World Bank Findex finds that financial inclusion in Guatemala lags behind its neighbors with only 37 percent of the population having an active financial account versus 49 percent in Mexico and 48 percent in Belize. Likewise, Guatemala has not seen a parallel growth in digital financial services; 65 percent of people in the region have made or received a digital payment, while only 26 percent of people have done the same in Guatemala. A recent USAID blog explores how digital finance can deepen financial access and usage among underserved communities in Guatemala. There are two contributing factors to this phenomenon: (1) financial service providers, which include traditional banks, do not see low-income and marginalized populations as bankable, and (2) low-income and marginalized populations, especially women, who do not think financial service providers address their needs or create products with them in mind.
In February 2023, USAID, ConsumerCentriX, and Digital Frontiers, a USAID program run by DAI, co-hosted a workshop to identify gaps and opportunities in the access and use of digital financial services by low-income and marginalized populations, with a particular focus on women. The event brought together more than 50 representatives from the financial sector, including both public and private institutions. As a signal of local government buy-in, a senior representative from the Ministry of Economy opened the event, which also featured a breadth of representatives from regulatory bodies, development organizations, financial services providers, NGOs, and mobile network operators.
The workshop included a review of the latest financial inclusion and digital financial services advancements in Guatemala, an assessment of the enabling environment for further digital financial inclusion, and highlights from customer market research conducted to understand the financial lives and opportunities to offer digital financial services to vulnerable populations. The workshop enabled representatives from the public and private sector to work together to design a digital financial product based on market research findings. Attendees were enthusiastic about this and took into consideration the various elements needed to make a product or service a success—everything from regulation to marketing to the solution itself. This type of partnership is essential for holistic product design and market understanding because it incorporates all facets of the market for a common outcome and fosters deeper collaboration between key sectors of the industry. The benefits of increased collaboration to build inclusive digital financial services in Guatemala are manifold.
This starts with ensuring that everyone is able to easily obtain formal identification, which is managed by the government and typically required for opening a bank account or an online financial services account. According to a 2018 World Bank ID4D survey, 26 percent of the Guatemalan population aged 18+ do not have an identity card. It is up to the public sector to alleviate this simple barrier for access to financial services and products for many Guatemalans.
Second, the public and private sectors can help to increase financial literacy and awareness among the population. Many Guatemalans are still unfamiliar with the array of digital financial services available to them—from mobile money apps to accessing their online bank account—and may be understandably hesitant to adopt them. It is important that financial services be offered in Spanish and the 24 various indigenous languages to correct misconceptions. Government agencies and financial service providers can work together to develop educational campaigns and outreach programs that increase awareness and build trust.
Finally, collaboration between the public and private sectors can help to drive innovation. The private sector is better positioned to move quickly to respond to the unique needs of the Guatemalan market. This can include building new payment systems, digital lending platforms, and other services that increase access to financial services for everyone.
Collaboration between the public and private sectors in financial services can also be mutually beneficial. Increasing access to digital financial services in Guatemala will bring it in line with regional neighbors and enable financial service providers access to left-behind segments of the Guatemalan population. Ultimately, this work removes barriers to entry into the financial system, increases financial literacy, and drives innovation which serves Guatemalans.
Photo Credit: USAID By John Dorrett, Digital Finance Team, USAID