Financial inclusivity

Friday, 29 August 2014 01:39 -     - {{hitsCtrl.values.hits}}

WOMEN’S rights have recently returned to the limelight but one very important aspect, that of promoting economic inclusiveness to 53% of the population, has gone largely uncommented upon. Women make up 40% of the world’s workforce. In Sri Lanka the quota is higher, with many of the sectors that are critical for economic growth such as apparel, tea and remittances relying heavily on women. Small and Medium-sized Enterprises (SMEs) with female ownership represent 30% to 37% of all SMEs (eight million to 10 million women-owned firms) in emerging markets. These businesses have unmet financial needs of between $ 260 billion and $ 320 billion a year. This is their biggest barrier to growth and development. Access to credit can open up economic opportunities for women, and bank accounts can be a gateway to the use of additional financial services. However, women entrepreneurs and employers face significantly greater challenges than men in gaining access to financial services. The Global Findex, a comprehensive database measuring how people save, borrow, and manage risk in 148 countries, reveals that women are less likely than men to have formal bank accounts. In developing economies women are 20% less likely than men to have an account at a formal financial institution and 17% less likely to have borrowed formally in the past year. Even if they can gain access to a loan, women often lack access to other financial services, such as savings, digital payment methods, and insurance. Restrictions on opening a bank account restrict women’s access to accounts. Lack of financial education can also limit women from gaining access to and benefitting from financial services. In addition, many women may have access to financial services in name only, a case often seen in Sri Lanka. Leasing is another important tool that many women in Sri Lanka do not have access to. Increased and independent mobility is crucial to financial strength and vice versa but there are many instances when leases for vehicles such as three-wheelers are obtained by men but the same opportunity is not afforded to women. Men have also been known to put a woman’s name on the lease but deny her access to driving the vehicle. Lack of access to formal financial services also push women to informal agreements such as ‘seettu’ or borrow at oppressively high interest rates from alternative sources. This could result in high levels of indebtedness worsened by lack of financial knowledge. Therefore, it is imperative to increase access to finance at all institutions across the board. The opening of a bank exclusively catering to women should not give license to others to roll-back their initiatives, nor can it be the end all of Government measures to promote equality. The Government and private sector must also commit to reducing gender-based barriers in the business environment. Creating business opportunities for institutions and in the private sector to improve working conditions for female employees, market segmentation, and inclusion of women in community relationships are all crucial steps in financially strengthening women. Supporting business skills and financial capability trainings for women as well as building the business case for equal economic opportunities for men and women should be a significant focus of all stakeholders.