Global Findex shows 1.2bn increase in people with bank accounts – but where are the women?

by 26th Apr 2018
A woman carrying a VSLA lockbox in Kagadam village, Niger A woman carrying a VSLA lockbox in Kagadam village, Niger

Last week the World Bank’s much anticipated 2017 Global Findex database and accompanying report was released, revealing who has a bank account with a financial institution or mobile money service and how they’re using it. While great gains have been made in overall account ownership, we should be cautious about celebrating just yet. Women continue to lag behind men on almost all the financial inclusion markers and that’s a major shortcoming.

  • Globally 72% of men have an account, compared to 65% of women. In developing economies the gender gap is even bigger at 9 percentage points.
  • 980 million women remain unbanked. They are mostly rural, poor and low educated.
  • In developing economies women are 6 percentage points less likely than men to save at a financial institution.
  • Gender gaps haven’t shifted since 2011, blocking any meaningful realisation of financial inclusion for all.

Published every three years, the Global Findex surveyed individuals aged 15+ across 144 economies and measures their access to and use of basic formal financial services including payments, savings, loans and managing risk. And there is a lot to celebrate, including:

  • 1.2 billion adults opened an account since 2011, meaning 69% of adults worldwide now have an account.
  • Mobile money membership nearly doubled between 2014-17 and 3 in every 4 account owners used digital services to transact.

But this progress needs to be put in context:

  • Half of the 1.7 billion unbanked individuals live in seven countries: Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan.
  • 515 million new accounts were opened in the past three years. 60% of those were opened in India through a strong government push to increase account ownership through biometric identification. But 48% of all accounts in India are inactive.
  • Globally 1 in 5 accounts are inactive.

Findex tables 2017

Of all these insights, it is the stubborn gender gap in women’s access to financial services that is the most concerning, given the impact that this has on half the world’s population. Access to financial services is one of the most direct ways for women to achieve greater control of their lives and increase their own – and their household’s – income and wellbeing.

Here are three opportunities for the private sector, governments and development organisations to do something about that:

1. Target the underlying constraints

Policies must shift away from an emphasis on bank account ownership as the end result, and place a greater focus on addressing the underlying constraints to women’s financial exclusion, like low literacy and regressive gender norms.

Technology too – as impressive and necessary as it is to progress – is not the silver bullet than can tackle complex and deeply entrenched barriers. In low-income and middle-income countries, GSMA reported women are 36% less likely than men to have or use mobile money, and cite restrictive gender norms as a contributing factor. In India, a recent study by BSR cited household norms including husbands controlling their wives’ financial transactions as hampering female mobile financial service uptake.

2. Promote savings-led financial inclusion

Studies show access to savings (not credit) is one of the only interventions proven to accelerate the economic empowerment of all women regardless of their context. So it’s really concerning that Findex 2017 revealed the use of savings accounts has stagnated.

Women more than men tend to prioritise spending on family expenses, so when financial shocks occur – such as unexpected health costs – they are also more likely to take a high interest loan or liquidate their businesses to finance it.

3. Invest in informal savings and loan groups

High quality, informal savings and loan groups tick the boxes above and can help shift the needle on women’s financial inclusion.

An RCT study of CARE’s savings-led Village Savings and Loan Associations (VSLAs) in Ghana, Malawi and Uganda showed statistically significantly increases in women’s access to savings and loans, in women’s business income and ownership, in food provision, and in women’s influence over household and business decisions. Half of the women elected to local municipal office in Niger have been VSLA members.

CARE’s experience working with our private sector partners including Mondelēz, Barclays, National Microfinance Bank, Equity Bank and many others has proven that forming and training savings groups and linking them to financial service providers is an effective pathway to formal financial inclusion. More than 100 group products are offered by financial service providers globally (see the State of Linkage report). And it’s for these reasons that the UN High Level Panel on Women’s Economic Empowerment report identified VSLAs as an accelerator to women’s informal and formal financial inclusion and overall empowerment.

It’s also great to see the Global Findex begin to measure the prevalence of these community-based financial solutions for the ultra-poor. Findings include 1 in 5 adults in Ethiopia, Kenya, Rwanda and South Africa are saving through an informal savings and loan group.

Scaling-up savings groups

There are tremendous opportunities for governments, private sector partners and the development community to get involved to scale-up savings groups so more ‘last mile’ customers can enjoy the benefits this platform brings.

Look out for our policy recommendations in an upcoming blog series ahead of the Global Savings Groups Conference convened by the SEEP Network which kicks off in Kigali, Rwanda, on 22 May 2018.

Fiona Jarden

I support CARE’s work to enable women and girls to have equal and increased control over their financial resources and access to financial services. My role is to ensure institutions like banks and governments adopt policies to bring women living in poverty into the realm of financial inclusion. Since joining CARE I've been leading the development of CARE’s global financial inclusion multiplying impact strategy, and have worked with CARE offices in South Asia and Sub-Saharan Africa to influence financial inclusion policies and practices in these regions. I'm a member of Women Advancing Microfinance, GADN’s Women’s Economic Justice working group, and SEEP’s Savings Led working group.

I have previously lived and worked in remote Australian aboriginal communities to address the barriers families face through financial exclusion and generational poverty. I've also worked with banks to strengthen their ability to link with poor rural customers and I was an advisor for the Permanent Mission of New Zealand to the United Nations. I have an MA in International Development with a specialisation in development economics from the University of Newcastle, Australia, and a journalism qualification from the University of Canterbury, New Zealand.

One good thing I’ve read

Radical Hope by Noel Pearson. Noel is the chief architect behind a radical new approach for social change and development for disadvantaged indigenous Australians. Having worked with him for years he is equally as brilliant and inspiring as he is controversial. In this book he turns his thinking to education with new ideas for transforming the lives of the disadvantaged to ‘raise up the many’ and ensure ‘no child is left behind’.

Email: Jarden@careinternational.org

Twitter: @FiJarden