How Financial Inclusion Paves the Way to Empowering Women and Girls

Women and girls worldwide face the persistent challenge of gender inequality. This disparity results in limited access to resources, opportunities, and the power of decision-making for women and girls. However, a powerful antidote is emerging to cure this: financial inclusion. By providing women and girls with access to crucial financial services, individual empowerment is fostered by groundwork for a more equitable and prosperous world.

Financial inclusion is the concept of ensuring individuals have full and equal access to useful, affordable and timely financial services and products. It is more than just an economic ideal; it is a powerful catalyst to spur social change. For women and girls, in particular, having access to financial tools such as credit, equity, savings accounts and insurance is not just a convenience to self-sustainment, but an essential pathway to empowerment. Therefore, breaking cycles of poverty whilst fostering independence.

Financial systems globally exclude women from formal financial systems. This exclusion goes far beyond a lack of bank branches or financial institutions; it is often rooted in patriarchal societal norms, legal barriers, and a lack of proper documentation, resulting in far-reaching consequences. Without a safe place to save their financial resources, women are vulnerable to various forms of financial theft and, therefore, unable to build assets, which creates equity.

Without access to credit facilities, women and the girl child cannot invest in their education, start businesses, or improve their livelihoods. Women are most at risk of financial ruin from unexpected crises due to lack of insurance. A 2022 research report by the Financial Health Network, titled ‘The Gender Gap in Financial Health’, indicated that women are more likely to be ‘Financially Vulnerable’ than men. Meaning they struggle in nearly all areas of their financial lives. The research found that even after controlling factors like income and demographics, women are still 5% points less likely to be considered ‘financially healthy’ than men. The report also highlighted that women are more likely to have past-due medical bills and are more concerned about paying off debt, which increases their risk of financial ruin from an unexpected crisis.

However, a transformative ripple effect occurs when women gain financial access. The ‘simple act’ of women opening a savings account provides security, fosters a habit of saving, and allows for goal setting in all spheres of life. These seemingly ‘small steps’ are empowering women to attain financial independence.

Microfinance initiatives are a major contributor to empowering women, as they offer small loans to women entrepreneurs who would otherwise be deemed ‘unbankable’ by traditional financial institutions. These loans are not just handed out; often, they are accompanied by financial literacy. This training has enabled many women to establish and expand businesses, from small-scale farming and crafts to retail and services. The income generated does not only improve their own lives but also supports their families whilst contributing to the local economy.

Studies have consistently shown that when women control income, a larger proportion is invested in household well-being, particularly in children’s nutrition, health, and education thus fostering the growth of wholesome individuals and overall well-rounded communities. International development research organisations like World Bank and United Nations have extensively documented the link between women’s economic empowerment and improvements in child health, nutrition and education.

Financial inclusion goes beyond empowering women to journey into entrepreneurship; financial inclusion empowers women to navigate life’s challenges with leverage. For instance, access to mobile banking reduces the need for long and often dangerous journeys to physical banks, which increases personal safety and saves time. Women accessing and using financial services and products gives them control over their finances, for example, remittances sent through digital channels reach women directly, giving them more control over the funds. Insurance products, tailored to the specific needs of women, provide a safety net against health issues, crop failures, or other unforeseen events, preventing them from falling deeper into poverty in comparison to general insurance policies.

For girls, the impact of financial inclusion is equally profound. When their mothers are financially empowered, girls are liberated with more likelihood to attend and stay in school, delaying early marriage, childbirth and having a voice in society. They gain exposure to a broader range of realities and are more likely to envision and strive for a future where they, too, are financially independent. Financial literacy education for girls equips them with the knowledge and skills to manage and increase their money effectively in adulthood, perpetuating the cycle of empowerment and independence.

Progress has been made significantly; however, challenges remain. Overcoming deeply entrenched social norms such as the patriarchal system, low financial literacy, lack of collateral, geographical barriers and digital divide. Moreover, broadening financial literacy capacity, creating entrepreneurship environments women can easily integrate into, developing innovative inclusive and gender-sensitive financial products and services, addressing social and cultural norms, data collection and analysis are just some of the crucial next steps to achieving financial inclusion for women and girls.

The evidence is clear: investing in financial inclusion for women and girls is not just a matter of equity and equality; it is about human rights, dignity and social justice. It is also a strategic imperative for sustainable development that fosters empowered and independent women and girls, stronger families, more vibrant communities, and a more equitable world for all. Paving this path forward ensures that no woman or girl is left behind in the journey towards economic equity, prosperity and self-determination.

 

By Nelly T. Ndagurwa
Founder of Enthusiastic Hungwe Incorporation (Pvt) Ltd
Digital Frontiers Institute Alum

 

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