As the world fights to extract itself from the COVID-19 pandemic, the role of women in the global economy has been correctly cited as an important source for future economic growth. Women took to the front lines over the past two years – in their roles as doctors, nurses and scientists, home providers, home teachers, and caretakers – to save millions from the disease and minimize some of the worst consequences of the pandemic and COVID containment measures on families and communities.
But at a meeting earlier this week there was broad consensus from leading champions in the financial sector that women remain woefully underserved by financial services in economies worldwide, undermining their ability to contribute to the post-COVID recovery. Further, as Dr. Elsie Addo Awadzi, Deputy Governor of the Bank of Ghana and Chairperson of the Alliance for Financial Inclusion’s Gender Inclusive Finance Committee emphasized at this gathering, “Thanks to the recent pandemic and the economic fallout that we have seen all around the world, the plight of women when it comes to access to finance has actually worsened.”
Recent studies undertaken in six countries for the Women’s Financial Inclusion Data (WFID) Partnership – a coalition to improve the availability, production, and use of sex-disaggregated data to promote women’s financial inclusion – found that if no further action is taken to promote women’s financial inclusion, the gender gaps in access to financial services are likely to persist – and even grow – in most countries over the next decade. For example, in Honduras, this gap could double from 8% to 16% by 2030, while in Pakistan it could remain at 32%. Even in countries like Kenya which have succeeded in narrowing their gender gaps in access to finance, find that there is still a significant usage gap (in Kenya, that usage gap is still at 14%).
Both data and political will are key to unlocking women’s financial empowerment
Dr. Addo Adwadzi said that “evidence-based policy regulations and other actions are needed to be able to remove the barriers that continue to fight against women’s access to finance. To do this, data is key—and sex disaggregated data is critical.”
She’s right. Financial service providers (FSPs) and financial regulators are data-driven organizations—but not always when it comes to women. The lack of sufficient production, availability, and use of gender data plays a major role in sustaining the gender gap in financial services.
Antoinette Sayeh, Deputy Managing Director, International Monetary Fund, underscored this point in her keynote address at this week’s event, “gender data is fundamental to help track developments in women’s financial inclusion. It enables policymakers to formulate actions based on evidence and to assess their impact.”
WFID’s diagnostic studies were conducted in these six countries (Bangladesh, Honduras, Kenya, Nigeria, Pakistan, and Turkey) – chosen because of these countries’ expressed commitment to women’s financial inclusion. The researchers aimed to do three things: map the state of gender data, understand the gaps in data production and usage, and develop a blueprint to close them.
Here's what the researchers found:
1. There is more demand- and supply-side data than expected, but women-owned MSME data is still lacking
Countries have more gender data available than expected, including demand-side data, i.e. data from surveys that tracks the financial needs and behaviors of populations, and to a lesser but still notable extent, supply-side data, i.e. administrative data which financial institutions track in their client portfolios. However, there is a dearth of data on women-owned micro, small, and medium enterprises. While there is increased interest in the international community around supporting these businesses, especially supply-side financial data on them simply doesn’t exist yet.
What can decisionmakers do? Going forward, increasing the availability of gender data requires political will. The study found that internal gender data champions and ecosystem influencers are key to driving data collection and reporting. In many countries (Honduras, Nigeria, and Pakistan), the commitment from champions in financial regulatory agencies to launch sex-disaggregated data collection was critical. External stakeholders (donors and international financial institutions) have played an important role in all countries in influencing financial regulators to collect gender data.
2. Data production is uneven, and its reporting is impractical
The uneven mechanics of how data is generated impact the quality of the data and make standardization difficult. Financial service providers in several countries, including Bangladesh and Kenya, typically rely on manual data entry which increases risk of errors and affects quality, frequency, and reliability of the data collected. In other countries, like Nigeria, a mix of manual and automated processes is involved potentially creating discrepancies that can impact the integrity of the data analysis.
Further, the types of data financial service providers produce to meet regulators’ requests are not necessarily the types of data that could deeply inform decisions to develop commercial solutions. For example, typically, regulators ask for data on the number of female accounts. This information is only the beginning of what is needed to design commercial offerings. Granular, sex-disaggregated indicators such as non-performing loans as well as customer-level data are key for financial service providers’ business objectives and can provide a more nuanced view of women’s financial behaviors.
What can decision makers do? Going forward, the primary data production challenges will require upgrading data systems from manual to electronic platforms and deepening the data collection to include sex-disaggregated, individual customer-level transaction data. The rise of fintechs could ease reporting challenges, as branchless banking in all countries present a unique opportunity to electronically collect and report detailed sex-disaggregated data.
3. Data is not being used in regular reporting mechanisms
Financial service providers do not routinely include the gender data produced in their own reporting to management. This could be due in part to the limitations in availability and production noted above. In Nigeria for instance, only about a quarter of microfinance banks routinely include sex-disaggregated data in management reporting. About a half include this data only occasionally, and another quarter never do. Similarly, in Pakistan, despite decent data capabilities, less than 40 percent of financial service providers include sex-disaggregated data in their regular automated reporting.
What can decisionmakers do? Going forward, mainstreaming gender data into regular management reporting will be the primary data usage challenge to address. This requires strengthening the business case for women’s financial inclusion, improving the mechanics of data collection and, importantly, increasing the capacity of financial service providers to collect and analyze data to inform decision making.
4. Data can drive action through more evidence on the business case for the women’s market.
Financial service providers do not routinely deploy gender data to inform the design of new products and services or to track performance of women’s portfolios. To some extent, this could be due to knowledge gaps, which financial service providers themselves appear eager to close. Financial service providers that were interviewed in all six countries routinely requested information on how to use data in designing and scaling women’s customer value propositions. There is a bit of circular logic at play among decision makers. Many said that they wanted more evidence of the business case for expanding their reach into the women’s market. But they do have some of this evidence at their fingertips—in the form of the gender data they are already producing.
What can decision makers do? Going forward, governments, donors, and international networks have a critical role to play in breaking this cycle by publishing best practices, research, and use cases on the business opportunities of the women’s market.
Note that you can find a more detailed summary of lessons learned from the diagnostic work in the six countries as well as the individual country reports are here.
The diagnostic studies revealed the richness of the financial sector ecosystems in these countries and provide a tool to identify ways to strengthen all stakeholders’ ability to collect, report, and use gender data, so that gender data can better enable effective action The diagnostic studies have also catalyzed and reinforced important conversations, helped build and strengthen coalitions of stakeholders, and provide useful analytical frameworks.
Beyond the six countries that researchers looked at, the diagnostic studies also call global attention to the important role and contributions of different public and private sector stakeholders in helping countries advance along the pathway towards women’s full financial inclusion. The researchers’ results highlight the need for enhanced coordination and collaboration among all stakeholders to develop data-driven women’s financial inclusion solutions.
As Alba Luz Valladares O’Connor, the Chief Commissioner of the National Commission of Banks and Insurance Companies in Honduras said, “Data is power. Financial service providers need data to measure and know what business model they need to grow the financial system and promote economic growth in their countries.“
Data is power – and data can change the world. Now is the time to start collecting more and better data on women and using that data to help unlock women’s economic empowerment around the world.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.