Since there is substantial evidence that access to savings is a key enabler of women’s economic empowerment across a wide range of situations, we would like the Bank to emphasise gender-sensitive financial inclusion in its plans for achieving universal financial services by 2020. As the Bank’s own data in the 2014 Global Findex says, “in developing economies, where account penetration increased by 13 percentage points for both men and women between 2011 and 2014, the gender gap remains a steady 9 percentage points: while 59 percent of men reported having an account in 2014, only 50 percent of women did.”
We have therefore highlighted our 20+ years of experience in savings-led financial inclusion in poor communities, working with Village Savings and Loan Associations (VSLAs), 75% of whose members are women. While VSLAs are an informal approach to financial inclusion, we have been working in a number of sub-Saharan African countries in the last few years to link our savings groups to the formal financial sector. This brings benefits to the savings group members in terms of improved security and access to more sophisticated products, but is also increasingly being seen by the banks as an attractive business proposition.
However, only a relatively small number of banks are currently engaged in linkage, plus a major obstacle to the formation of groups and the expansion of groups linking to banks is low levels of financial literacy. Finally, some banks are indicating that the costs (or at least opportunity cost) of lending to savings and loan groups are an obstacle that will require balance sheet support to overcome.
Our submission points out that the World Bank Group can better support countries and companies on the financial inclusion of women by embracing a comprehensive definition of women’s economic empowerment so that World Bank Group systems and partners take a holistic approach to changing social norms, relations and structures that prevent women from participating meaningfully and equitably in the economic sphere. They can also use their funding and advisory relationships with commercial banks in developing countries to encourage:
- Commercial banks to expand their products, services and infrastructure to the currently unbanked
- Commercial banks to link to savings groups responsibly in line with the Linking for Change Savings Charter
- The inclusion of savings and loan groups in national financial inclusion strategies
- The removal of bureaucratic hurdles to opening group bank accounts
- Governments to more actively promote financial and basic business literacy through the school system
- Banks to take greater responsibility for the development of financial literacy through:
- joint ‘pre-competitive’ activities
- targeting CSR investment
- incorporating financial literacy training in marketing and sales activities.
We have also asked that IFC themselves sign up to the Linking for Change Savings Charter and join our Alliance, and encourage others to do so. We now look forward to the publication of the updated gender strategy.