Kafaalat: closing the gender gap in financial inclusion

Islamabad : For the last 10 years, Pakistan has been witnessing stipends of the Benazir Income Support Programme (BISP) being abused by some well-to-do women. Although it is acknowledged that BISP served many poor women, its abuse was no secret either; it was always a question of the exact percentage.

The decision of the Prime Minister’s Special Assistant on Poverty Alleviation Dr. Sania Nishtar to run data analytics on the BISP database and exit 820,000 beneficiaries out of 5 million was a courageous step in this regard as it provided evidence to the effect that around 18% of the beneficiaries were non-deserving. This may, however, be just the tip of the iceberg. Data analytics have been run on husband and wife for now—meaning that if someone herself is an undeserving beneficiary, or if she is the wife of a person who doesn’t deserve to be in the safety net, only then will data analytics pick them. Sisters, daughters, etc., have not been caught yet, and if they are, God only knows where the number will land.

In her famous election day speech in Geneva after having lost the election of the Director General of the World Health Organisation (WHO) in 2017, Dr. Sania termed integrity as the bedrock of any change. In this decision, she has demonstrated that rather clearly.

Based on available information, the exit of beneficiaries is just one of the multi-dimensional reforms ongoing in BISP. Others aren’t as sensational though but are critically important. A new data collection system has been established after 10 years, which involves desk-based registration to register those that need government stipends. A new banking payment system has been installed after a 10-month procurement process. Critical policies have been drafted after 10 years. For example, we got to know that an organisation disbursing Rs100 billion in cash didn’t have payment regulations approved by its board for the last 10 years. Dr. Sania has lived up to her reputation as a reformist and strong advocate of integrity in turning around these reforms. But significant challenges remain to be addressed, and the momentum of the clean-up operation must not dampen.

Only three weeks ago, Prime Minister Imran Khan launched the new Kafaalat programme, which will give 7 million women access to their own bank accounts through mobile banking in addition to cash stipends. This gender-inclusive financial inclusion programme, which replaces BISP’s unconditional cash transfer programme, will help unlock the potential of some of the most vulnerable and downtrodden sections of society. Financial inclusion is an essential tool in the empowerment of women in society, and by extension, the economic development of a country. Only by closing the gender gap in financial inclusion can Pakistan inch towards meeting its targets on economic growth, poverty reduction, and inequality.

According to latest figures from the World Bank, just 7% of women in Pakistan have access to financial services, making it home to one of the largest financially excluded groups in the world. Moreover, the gender gap in financial services is substantial, with men nearly five times more likely to have a bank account than women. The revolution in mobile-banking that has swept through other regions, including countries like Kenya where nearly 80% of women have a mobile bank account these days, has been stymied in Pakistan due to lack of prioritisation by previous governments.

The Kafaalat programme will tackle this by providing mobile bank accounts to its 7 million beneficiaries, and with policies to ensure access to smart phones by end-2020. For the first time, the poorest women in Pakistan will have the option to save their payments. Evidence shows that women who can access savings accounts are more likely to invest their savings in the welfare of the family, including education and health, reducing the vulnerability of the household, and improving their chances of graduating out of poverty.

Distributing mobile phones and setting up accounts will only address some of the barriers to financial inclusion. Financial literacy is key to the success of Kafaalat. Dr. Sania knows that women who are part of the programme have never previously used an ATM or visited a bank, which is why she is seen making surprise visits to banks and is known to insist that partner banks– Habib Bank and Alfalah Bank –fulfil the terms of their contracts by making their branches open to these women .

The barriers are numerous, but not insurmountable if tackled systematically. With the backing of the Prime Minister and Dr. Sania’s credibility, Ehsaas can truly be a game changer.