Financial inclusion among women low – new ACET study

A new multi-country study on the financial inclusion of women and the youth in sub-Saharan Africa (SSA) has found that cumbersome requirements for opening accounts, lack of assets for collateral, and cultural and social norms that shape women’s access to and control over resources present major barriers to the financial inclusion of both women and the youth.

The absence of enabling regulations on models like agency banking and interoperability is also a major barrier highlighted by the study, titled Promoting Women and Youth Financial Inclusion for Entrepreneurship and Job creation: Comparative study of selected sub-Saharan African countries’.

The findings of the study, conducted by ACET with funding from Canada’s International Research Development Centre in Guinea, Sierra Leone and Zambia, showed that in all three countries women’s and youths’ access and usage of financial services were hindered by the legal requirements on financial service providers, such as banks and microfinance organisations, to capture detailed biological and situational data on prospective customers – referred to as Know Your Customer.

Women, particularly in peri-urban and rural areas, find it hard to obtain the right documents due to illiteracy, the informal nature of their businesses and cultural barriers. In some parts of Sierra Leone and Zambia, women are not allowed to own land – or can only access it through their husbands.

ACET, on August 27, held a policy learning event that brought together stakeholders from the three study countries to Accra, Ghana, to discuss these findings and share experiences on innovative ways to spur the financial inclusion of women and the youth. Panel discussions on women’s and youths’ financial inclusion allowed representatives from the central banks, ministries of finance, financial service providers and researchers to drill down on the findings and discuss what was being done in the countries to achieve inclusion while creating jobs and spurring entrepreneurship among women and the youth.

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The ACET study found that youths also grapple with identity issues and age restrictions, as they are considered risky clients by FSPs and lack the basic financial literacy to leverage financial products at their disposal. A significant number of Guinean youths under 18 do not have admissible IDs; and the study found that in Guinea some financial service providers go to the extent of requesting proof of regular salary – which excludes most of the youth who do not have a steady income.

It further notes that mobile devices are promising enablers access to financial services, both for the 21st century woman and for young adults, with smartphones most common in urban areas and among young males. This smartphone gender gap reinforces the broader findings captured by other key global studies about the gender gap in ownership of mobile devices in general.

“More than ever, the study found mobile financial services – particularly mobile money – to be a major disruptor of traditional financial services typified by bank branches, cheque-books and money orders,” the study notes.

To address some of these barriers to women’s and youths’ financial inclusion, the report urges registration authorities to balance legislation on customer and institutional protections with accessibility, in order to ensure that the youth and women – who tend to be the most financially disenfranchised due to their inability to present formal identity documentation – can register and access financial services with semi-formal IDs.

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“As an example, in Sierra Leone BSL is contemplating the development of a three-tier identification system to replace the current ‘one-size-fits-all’ regime for accessing formal financial services,” the study notes.

At the end of the event, participants noted that in addition to the study’s recommendations, it is important to build collaborative frameworks that allow institutions and organisations working in the financial inclusion space to rope in investors who can fund initiatives aimed at promoting the inclusion of women and the youth, and that upscaling financial literacy initiatives in both formal and informal settings will be crucial to realising the  employment impact of financial inclusion for women and the youth.

They also noted that surmounting social and cultural norms will require including men in developing solutions, largely because of the power shifts in this process – men cannot be left out in the campaign for greater inclusion of women in the financial system.

Prof. John Asafo-Adjaye, Head of Research at ACET, urged participants to ensure that the study’s findings and recommendations are put to good use and not left to gather dust on shelves.

“At ACET, we will continue to work on Financial Inclusion.  We currently have a programme on youth employment and skills, and we plan to weave financial inclusion into this programme,” said Prof. Asafo-Adjaye.

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