Supplying What the Market Won’t: Donors and Young Women’s Inclusion

Young women are the most underserved market for financial services. A gradual, structured approach to their financial inclusion, starting with savings and complemented by non-financial support – is key. Commercial financial service providers (FSPs) often have limited ability and interest to invest in these services, especially over the timespan required for the hardest-to-reach segments of young women. However, donors can step in by strategically supporting services the market is not likely to provide but are key to putting young women on the path to financial inclusion. 

As shared in a previous blog, experience shows a range of commercial viability for financial service delivery across different segments of young women. Compared to “independent” segments, “dependent” segments require more social intermediation and financial capability building. Young women at the start of their productive lives prioritize savings over credit as their tool of choice for building useful lump sums. 

But the business case for small savings mobilization is rarely as compelling as for credit – meaning that the private sector is likely to undersupply these services, even though they are critical for young women’s financial inclusion.

Throughout the past twenty years, the Mastercard Foundation has worked to understand how to address market failures and drive economic opportunities for young women across Africa, particularly in rural and low-income peri-urban areas. The Foundation considers young women to be economic agents of change for the African continent; enabling 23 million young women to work by 2030 could add 287 billion USD to Africa’s GDP – an impact that could grow eightfold by 2040. Young women’s ability to access finance will significantly impact their growth – enabling access to the full range of financial tools they need is therefore critical.

Coming up with alternative ways to integrate young women into the financial system, considering their realities, is critical. 

Filling market gaps for young women’s financial inclusion

Together with government actors, donors can support investments to make the financial ecosystem accessible to all segments of young women. To financially include underserved segments, we advocate for starting with the non-financial building blocks of financial inclusion, building alternative pathways for financial integration, and breaking down silos.

Build agency, confidence, and trust 

Experience shows that overcoming the constraints faced by marginalized young women in the financial ecosystem requires several interventions in non-financial domains. It is key to first build young women’s agency and decision-making capabilities. For example, the Foundation works with BRAC’s Accelerating Impact (AIM) program in Africa to create alternative ways to support young women with information and services to build their confidence and facilitate their integration into the financial system. Donor funding can support organizations with knowledge sharing, resources, and adequate time to build the required level of confidence and agency.

Support alternative pathways to bring young women into the financial system 

Building young women’s trust in the financial system requires a step-by-step approach and tailoring services to their needs. Young women who managed to become financially included by age 24 often benefitted from day-to-day teaching and mentoring from financially savvy adults in their lives. Unfortunately, social norms and personal circumstances often mean that many young women lack this type of scaffolding to help them enter the formal financial system.

Donors can bridge this gap by helping FSPs and community-based organizations offer services tailored to young women’s needs. In this way, public investments can yield long-term financial and non-financial returns for both clients and FSPs. For example, public and philanthropic resources have made it more viable for private operators to engage female mobile money/bank agents, who, in some contexts, are better positioned than men to serve young women. Similarly, supporting alternative mechanisms to build young women’s confidence and financial capability, including some types of indigenous financing mechanisms, could eventually ease their transition into the formal financial system should they desire it.

We need to help young women increase their understanding, make them comfortable with savings and lending in their own space, and support their entry into the formal financial system. When there, we should make sure not to lose them again

Break down silos and forge partnerships to reach scale 

Achieving the necessary scale requires collaboration among the private,  public, and civil society sectors. Policymakers and regulators play a key role in creating an environment where young women can more easily access and benefit from the financial system and donors can support innovation across the financial services landscape, from fintechs to Indigenous financial mechanisms. Collaboration with government entities and civil society is crucial to reach remote and underserved young women. CGAP champions a whole of market approach, advocating for genuine partnerships that foster inclusive financial opportunities.

Considering the potential benefits of financially including young women for themselves, their families, and their communities, there is a clear developmental rationale for donors to bring strategic support services the market is not likely to supply. By investing strategically in non-financial services, alternative financial pathways, and cross-sector partnerships, donors can unlock opportunities that will transform the economic future of young women—and Africa as a whole.