Financial inclusion and women’s integration

Mao Zedong proclaimed that ‘women hold up half the sky’ but he forgot to recognize that we still live in a man’s world.

Women’s empowerment through access to finance, jobs, education and health has tremendous potential to turn around the destiny of women. Years of research champions women’s contribution to the economy, including impact on growth, productivity, and long-term wellbeing, sustainability, and value creation in countries, communities, and companies. Following the adoption of the SDGs agenda, women’s empowerment is reinforced by all interrelated goals. This requires an all-encompassing strategy as our challenge is multidimensional and interdependent in nature.

The World Economic Forum (WEF) ranked Pakistan third from the bottom in its 2021 Gender Gap Index report. For the sub-indicator ‘Political Empowerment’ Pakistan was ranked 98; for the other three – Educational Attainment, Economic Participation and Opportunity, and Health and Survival – it was ranked at 144, 152 and 153, respectively. Adding to this alarming state of affairs is the Covid-19 pandemic, which has reversed progress on poverty and worsened inequalities – both of which disproportionately impact women.

The WEF ranking clearly demonstrates the need for Pakistan not only to make significant investment in women, but to embark on all-encompassing social, economic and financial inclusive policies that can help raise women’s participation in the workforce backed by access to education, health and jobs and ensure far-reaching development spillover.

While we cannot proclaim that financial inclusion is a panacea and an answer to all problems, it is however a phenomenally powerful lever – both in tangible and intangible ways – which can help women find multifaceted pathways to empowerment. Within the financial inclusion arena, a number of positive steps have already been taken.

First, as a country, our commitment to enhance financial inclusion started more than a decade ago. Sequentially, the primary financial inclusion framework was introduced in 2009 followed by the 2015 National Financial Inclusion Strategy (NFIS). A combination of policies were deployed: microfinance institutions were licensed as banks to serve the micro client, offering holistic financial intermediation services from deposit and credit to insurance facilities; apex lending helped the sector grow and mature; risk management framework capacities were nurtured supported by credit enhancement facilities; branchless banking and mobile banking laid the ground for technological partnerships; regulatory and supervisory enhancements were enacted; NADRA’s National ID system allowed for proper targeting of G2G and G2P payments; and credit information bureaus have all played their role. Today the microfinance sector has over seven million active borrowers, of which more than 50 percent are women.

Second, an enhanced NFIS, rolled out in 2019, now has a target of extending the reach of financial services to 20 million women with support of digital transaction accounts by 2023. As of December 2020, the State Bank of Pakistan (SBP) reports that approximately 15 million women operated mobile money accounts – over 50 percent YOY growth as the pandemic has catalyzed online transactions, though we need to keep an eye on how sticky this growth will be.

Third, the SBP’s Banking on Equality policy released in December 2020 is a welcome step, recognizing supply and demand constraints while calling for promotion of gender diversity in access points of financial institutions, delivery of women-centric products and services, gender disaggregated data collection and target setting, and promotion of champions and policy forum on gender. Mainstreaming gender and ensuring coordinated and responsible action, targeting and marketing along with financial literacy would be critical for deeper penetration.

Fourth, developing financial infrastructure and regulations has to be top priority for the SBP and Karandaaz. Karandaaz is supporting SBP endeavors with a $16 million grant from the Bill & Melinda Gates Foundation to help launch Raast micropayment gateway system which will support swift settlement of transactions.

Fifth, a range of women entrepreneur programmes have taken off and the SBP is backing them with a refinance facility. Karandaaz has been running its Women Ventures programme since 2017. These bespoke initiatives have evolved a viable and vibrant community of women entrepreneurs, operating in a wide array of sectors including food processing, fashion, technology and software, and the lifestyle industry, to name a few.

As we move forward, we should watch that digitization does not reinforce the gender gap and deepen the divide but is focused to enhance women’s cellular connectivity and ownership. At the same time, the government should offer a right environment for financial market participants as they prepare to enhance women’s empowerment. Provincial poverty incidence, inequalities and financial access disparities are pronounced. Data indicates that 67 percent of the women operating mobile money accounts are in Punjab, with the share growing by 3 percentage points during 2020. Sindh and Khyber Pakhtunkhwa – making up 22 percent and 10 percent of the pie, respectively – saw a contraction in their respective shares during 2020. Balochistan, Azad Kashmir and Gilgit-Baltistan combined constitute a meager three percent of these female accounts.

To conclude, the gravity of women’s exclusion from economic and financial markets and their predominance in informal sectors renders the realization of financial inclusion a task complex. Thus far, there have been more supply-driven actions. However, the industry will evolve and mature faster should there be robust demand by women seeking financing. To transition the non-bankable to become bankable clients, there is a need for effective coordination between the central and provincial governments, community mobilization, move from non-conditional cash transfers to conditional transfers, credit enhancement, and better risk management.

And last but not least, gender-sensitive recovery strategies will be critical in making up ground lost during 2020 due to the pandemic. As stated by the managing director and head of the Centre for the New Economy and Society at the WEF: “We have an unprecedented opportunity to build more resilient and gender-equal economies by investing in inclusive workplaces, creating more equitable care systems, advancing women’s rise to leadership positions, applying a gender lens to reskilling and redeployment, and embedding gender parity into the future of work” and, I would add, into the future of our world.

The writer is the chairperson of Karandaaz.