3 Trends in Women’s Financial Inclusion Funding

The United Nations Sustainable Development Goals have put gender equality and women’s empowerment front and center of funder priorities. Given the momentum and the strong link between financial services and women’s empowerment, we expect that many funders will redouble their efforts to increase women’s financial inclusion.

Photo: Moksumul Haque, 2015 CGAP Photo Contest
Photo: Moksumul Haque, 2015 CGAP Photo Contest

There are some promising signs that this is happening. For example, France, the United Kingdom and the Bill & Melinda Gates Foundation in July 2019 pledged over $116 million to support women’s digital financial inclusion in Africa and called for other G7 countries to contribute. As French Minister for the Economy and Finance Bruno Le Maire noted in his statement about the initiative, “Increasing women’s financial inclusion in Africa is essential to empower women and to drive gender equality in the developing world.”

But is such investment happening at scale? To get a better sense of current funding levels for women’s financial inclusion, where the money is going and which types of projects are being funded, we dug into the CGAP Funder Survey, the most comprehensive resource available on international funding for financial inclusion. Below are a few takeaways.

Commitments are growing but represent a small share of funding for financial inclusion

From 2016 to 2018, international funders increased their commitments to women’s financial inclusion by 16 percent. This is slightly higher than the 12 percent overall growth in commitments for financial inclusion and indicates that funders are prioritizing women more so than in the past. However, when looking at the volume of funding, it is clear that gender is still not an explicit priority in most programs. The $2.9 billion that funders committed to gender projects in 2018 is a fraction of the $25.7 billion of funding for projects that were not reported to have a gender focus.

What can we make of the fact that only about 10 percent of financial inclusion programs are identified as having a gender component ? One possible explanation is that funders have not sufficiently prioritized women’s financial inclusion projects, perhaps assuming that projects targeting the general population will inevitably reach women. This assumption is problematic because it is now widely understood that women face disproportionate barriers to accessing and using financial services and require tailored interventions.

Another explanation could be that gender programming is under reported. Some funders are struggling to track gender-sensitive projects because they have not adapted their reporting systems. A reporting system that captures gender projects is essential for more effective funder programming. It enables funders to identify opportunities to provide technical support on gender issues, to generate a cross-sector overview their gender portfolios and to track and report portfolio performance to learn from experience.

Finally, it is possible that there is a lag in the Funder Survey data, given that the data are reported as of December 2018. Over time, we may notice a larger share of commitments for women’s financial inclusion.

Funding is concentrated in five countries

More than half of the commitments for women’s financial inclusion in 2018 went to five key markets: Pakistan, India, Turkey, Egypt and Cambodia . Political and historical factors often influence where funders choose to focus their efforts. This concentration might also be explained by the fact that women are not faring well in these countries. Progress on gender equality in most of these countries has stagnated. For instance, women’s share of account ownership has improved but remains at low levels, except in India and Turkey where women’s account levels have risen considerably.

This concentration of funding raises several questions. Are funders coordinating their efforts in these countries to maximize their collective impact? Does the concentration of funding create risks in these markets (e.g., overheating in credit markets)? In India and Turkey, where levels of women’s financial inclusion are higher than in Pakistan, Egypt and Cambodia, are funders focusing on the most excluded segments of women? And what about other countries? What might encourage donors to focus on countries where women are less empowered and financially included?

Projects seek to address several barriers for female entrepreneurs and women in rural areas

Only 13 out of 256 projects on women’s financial inclusion focused exclusively on women. Most paired women’s financial inclusion with other themes, most commonly small and medium enterprise development and rural and agricultural finance. The vast majority of financially excluded women come from rural areas and lack formal employment, so the focus on these subsegments has the potential to be effective. It also may indicate that funders are accounting for women’s heterogeneity, which is encouraging.

Most funding for women’s financial inclusion aims to address supply-side barriers. Out of the 256 gender-tagged projects, 157 projects focus on financing, accounting for 82 percent of commitments. Ninety-six projects (8 percent of funding) build the capacity of financial services providers, primarily for product development and expansion of delivery channels. Areas such as enabling policy, infrastructure and building women’s capacity are important investments that build ecosystems inclusive of women. However, the number of projects in ecosystem building remains low compared to the number of supply-side projects; funders report 95 projects. This indicates that funders have not sufficiently acknowledged the need to address structural barriers that hold back women.

The Funder Survey data paint an encouraging view of funder’s commitments to women’s financial inclusion, but they also show that funders need to push further.  More funding alone is not sufficient: the quality of gender projects is essential for impact. Robust gender-tagging can help funders improve the quality of their gender projects by ensuring the appropriate tools, approaches and impact evaluations are applied. As FinEquity’s Diana Dezso puts it in a blog post, “Gender should not be an afterthought.” To make financial inclusion more impactful for women, funders should focus on capturing gender-disaggregated data throughout a project's lifecycle and using it to inform programming decisions. With funding for women’s financial inclusion concentrated in five countries, the data should show meaningful progress on outcomes in the coming years. Currently, donors are focused on providing financing, but it will be increasingly important for them to embed knowledge about structural barriers, such as gender norms and unequal power relations, into project designs and increase support for gender-sensitized infrastructure and policies.

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