Advancing Financial Inclusion for Women in Africa

Financial inclusion is seen as a major driver of economic development in Africa. However, access to financial services by individuals and enterprises is still limited across the continent. Gender plays a particularly important role, as women are much more financially excluded than men. The various challenges differ from country to country. In some countries women have only limited access to credit or insurance products, while in other countries women have more difficulties opening a savings account or face access barriers to any financial product. These diverse constraints offer many opportunities for improving women’s financial inclusion and are often linked to reaching overall development goals. In the past, financial institutions have undertaken efforts that primarily focus on women but with limited broader regional or national outreach. In order to reach a wide range of financial institutions and have an impact on the supply side, while improving women’s access to financial services on the demand side, framework conditions need to be adjusted. This issue has been recognized by African policy makers and regulatory authorities such as the central bank governors of Zambia, South Africa and Mozambique. 

A woman smiles in Uganda
A woman smiles in Uganda. Photo by Oddvvar Paulsen.

What can these and other stakeholders do to facilitate women’s access to finance? To answer this question a set of policy recommendations for Africa was developed during a round table discussion under the umbrella of the partnership Making Finance Work for Africa (MFW4A), an initiative for African governments, the private sector, and partners supporting financial sector development across the continent. This process was strongly supported by New Faces New Voices, a pan-African network of women in finance, and other stakeholders including the East Africa Community (EAC), Bank of Zambia, microfinance institutions, commercial banks, development partners and international experts. These financial sector policy recommendations were summarized and published in the Policy Brief: Advancing African Women’s Financial Inclusion, which is directed at African governments, central banks, regulatory and supervisory authorities and other stakeholders involved in the policy-making and advocacy process (networks, associations and other civil society organizations as well as donor agencies).

What are the recommendations? One is to ‘Build the awareness of policy makers and other stakeholders with regard to the financial needs of women in different market segments, bringing women leaders into policy dialogue’. 

This recommendation is the first step in an ongoing process to achieve policy change. As a way to encourage the adoption of effective policy measures, it is recommended that stakeholders identify and endorse policy champions for fostering women’s financial inclusion. For example, in Zambia, the central bank governor, as a high-level representative, supported the implementation of a self-check tool for the commercial banks in the country. This tool encouraged the banks to check whether their financial products and services address women’s needs in the same way as those of men. As a result, some banks adjusted their products to better meet the financial needs of women.

Another recommendation is to ‘modify and adjust legal, regulatory and supervisory frameworks, removing impediments and allowing space for innovation to allow greater financial inclusion for African women; inform and build awareness where discriminatory legal provisions have been removed’.

Two long-standing issues regarding the promotion of women’s financial inclusion in Africa are the removal of discriminatory legal provisions that assign women the legal status of minors and prohibit them from owning property, and needed changes to strengthen women’s (land) ownership rights. In Rwanda, for example, modifications in 1999 to the marital and succession law gave women more property rights. In 2005, the non-discrimination principle and rejection of customs that exclude women from land ownership was introduced. It is assumed that both of these changes in the law were necessary preconditions that led to the narrowing of the gender gap with regards to access to credit in Rwanda.

It is also very important to build awareness of changes in laws where reforms have taken place. According to the World Bank’s Gender and Law library, legal barriers were removed in almost all 38 Sub-Saharan and North African countries surveyed. Experiences of the stakeholders show that customary laws very often predominate and that often individuals are not aware of changes in law. Awareness raising campaigns like radio shows could be used to explain changes. These could focus on men as intermediaries, as they often hold decision-making positions (especially in rural areas), and they could also target women to explain the changes and their rights. 

In terms of innovation, regulators are asked to balance prudential regulation with openness to innovation, such as new products and delivery channels which need to undergo a thorough assessment of risks and benefits. For example, legal and regulatory frameworks for mobile and agent banking allow non-bank participation and new models of transactions for loans, disbursement, repayments, savings, payments, transfers and (micro)insurance. Kenyan regulators, for example, have been able to develop suitable regulation for mobile banking and, in terms of innovation, have permitted a pilot savings product combined with a loan product tailored to poor women and delivered through a mobile channel. In the long run, such efforts would have to be linked with a regulated deposit-taking institution. This is challenging, as it requires the creation of a regulated deposit-taking institution with mobile products that is able to take deposits within the Kenyan regulatory framework.

Other recommendations focus strongly on the financial sector, such as investing in more extensive gender-disaggregated data collection in order to better understand where framework conditions need to be changed. This could be implemented as part of the reporting structure between financial institutions and central banks. In addition, measures that are not usually gender-specific, like the reduction of the minimum loan amount covered by credit reference bureaus, favor women as they access smaller loans to a greater extent than men. In this context, a good (re-)payment history helps to overcome constraints related to collateral.   

As all these examples show, policy makers and regulators have a crucial role to play in supporting the development of financial systems that advance financial inclusion for women in Africa. With gender issues rarely on the agenda explicitly in the African policy sphere, there is room for much greater focus on women’s financial inclusion on a whole range of policy issues. Successful adaptation of the recommendations outlined here into national policy will not only serve the cause of women in Africa, but it will also have a positive spill-over effect for financial inclusion more broadly as well – for both women and men.   


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