Ten Things To Know About Access to Finance by Women

Fact: the gap is increasing; women formal inclusion is increasing at a lower rate than men (55% vs 74% increase) from 2009 to 2014.

 16-05-12 FSD Moz. blog photo

On April 7th, we celebrated the Mozambican Women Day. FSDMoç is taking this opportunity to highlight to importance of access to finance by woman. Research indicates that when women control finances, they’re more likely to be spent on household needs, like food, water, and children’s education and healthcare. In recognition to all Mozambican women, we share in this blog some of the results on financial inclusion for women based on data from Finscope consumer survey 2009 and 2014 and the MSMEs survey 2012.

The results of the FinScope Consumer Survey 2014 are a call for increased action towards gender parity in financial inclusion. Financial inclusion is seen as a major driver of economic development in Africa. However, access to financial services by individuals and enterprises is still limited across the continent. Women play an important in the society, but are the less reached by financial services when compared to men. FSDMoç works to improve access to finance for all women. Here we highlight 10 facts about access to finance by women that everyone should know about. We have based our facts on the results of the FinScope consumer survey 2014.

1. Comparing data of 2009 and 2014, financial inclusion for women (55%)is increasing at a lower rate than for man (74%).

The FinScope survey segments financial inclusion of three (3) categories: inclusion through banks, non-bank financial inclusion, [microfinance institutions (MFIs), insurance companies, mobile money service providers and providers of money transfer services (Western Union, MoneyGram, etc.)] and informal inclusion (savings groups or family and friends). The formal inclusion in urban areas increased by 55% for women, compared with 74% for men. On the other hand, women’s access to finance through non-bank providers increased by 200% compared to 108% for men. But the informal inclusion also in urban areas increased by 33% for women vs. 9.5% for men; emphasizing that access to banks is stronger for men than for women, and that these may have more affinity to informal financial services. This leads us to think about the best strategy to use when you want to take more financial services for women.

2. Women use more informal savings (savings groups and xitique) and remittances (sending money to family and friends).

Out of all financial services, informal inclusion is predominant for savings and remittance products for women clients. The scenario is different for other services; women’s usage of formal credit, principally salaried women I s increasing at a lower rate than men’s, women are significantly less likely to have insurance products or to have access to or use mobile money services. Access to transactional, credit and insurance products is greater for men than for women. This fact, can be related to the issue of women consider other social factors to adhere to certain products, in this case, we can point the opportunity to socialize and to belong to a group of women and not only, in the community besides being able to save and borrow money in case of need.

3. The financial literacy levels of women are low (30%), been least able to understand some questions about financial products and services;

Their levels of education and product awareness are lower than men’s [33% (eg. low understanding of microcredit, mobile/electronic money, mkesho, mpesa, etc.) and women are less likely to turn to banks for financial advice than men. Additionally, they are less aware of the advantages of having a bank account, less likely to know or visit financial services access points and less likely to have either identity documents or proof of residential address. Finally, they tend to make fewer financial decisions, unless they are financially independent. Women level of participation on financial decision making is low, except for the household expenses, unless they are financially independent.

 4. Attitude of women toward banks – increased demand for savings products (ex .: the term-account) and less credit products or current accounts

As shown in point 3, women hold less knowledge about financial services, but when engaged with the banks, look for more savings accounts in order to increase the earnings, while most men open accounts as a result of their employer’s requirements. However, a curious fact is that when women are asked about the reason for not opening a current bank account, most of the women provided not enough money to do so as the main reason.

5. Somehow, barriers to increased access to finance for women are related to, cultural bias,  financial autonomy and gender equality.

The business-focused survey, FinScope MSME 2012 outlines that the majority of MSME owners are males, principally sole proprietorship companies. Given the traditional gender roles in the household (where women are usually engaged with house activities and take care of the children, but also realize their responsibilities in the workplace), women benefit less from the financial products and traditional distribution channels because they are not customized to serve your needs. Given this cultural bias, there is a great need to support products tailored for both women as individuals and women in business.

6. The ability of women to generate income is associated with their participation in decision-making at the household level.

There is a pattern on the ability of women to make decisions about the use of financial resources. For example, women working in the agriculture sector and the ones dependent on others for financial resources it have little autonomy to generate and make decisions about the allocation of resources, but represent the majority labour force involved in agriculture and livestock. In terms of decision-making, 44% of women receiving government pensions take decisions by themselves and the same for women and self-employed persons and those who have their own business.

7. Women are more “attractive” as customers because they invest more in assets that contribute to the benefit of the family (emergencies, building houses and education);

Some studies[1] show that women are intuitively more concerned for the family’s welfare (when compared to men) spending more on medical emergencies, house construction and education, enhancing their sense of responsibility towards utilisation of resources and commitment as a client. An IFC study, “A Research Report on Opportunities, Challenges, and the Way Forward” drawn from analysis in India in 2014, notes that women borrowers have stronger repayment track records and gender disaggregated data from banks indicates that non-performing loans are 30 to 50 percent lower in women-owned businesses.

8. Women are less engaged with Mobile financial services “mobile money”;

The uptake for mobile financial services is low for both men and women, but women are even more into reluctant with only 2.7% women against 4.2% men. This may be linked to the level of affinity and use of technology such as mobile phones, for women, since mobile money services are “delivered” through mobile phones. Interestingly, it would be the ideal financial services delivery channel for women considering the constraints that she has to move to a counter or an ATM, she can do her transactions from a mobile phone at home while taking care of the family.

9. Women have greater difficulties in satisfying the requirements Anti-Money Laundering (AML) regulation or Know Your Customer (KYC), principally in the rural areas;

Financial services providers accept as identification for opening a bank account or other services, BI, passport or water bill or electricity. The FinScope 2014 revealed that few women have the ability to obtain and present these documents to open bank accounts and access to related services. For example, 53.4% of men have BI, against 48.6% of women. The electricity bill has a much larger gap, with 7.4% of men against 2.9% of women. In relation to bank guarantees (collateral for the loan), the figures show about 3.9% for men and 1.7% for women.

10. Awareness of where to go when in need of financial services is very low among women;

Most women do not know where to find finance and other facilities. The percentage of women that do not know of its existence and never travel to a branch or ATM is significant, predominantly in the rural areas, namely 53% ignoring the existence of banks, 58% for ATMs, 63.3% for the money lender and 56.4% for any other financial institution.

Although financial inclusion is increasing, many Mozambicans still lack access to financial services. There is a need to support the growth and development of MSMEs and contribute to the resilience of the most disadvantaged to reduce risks related emergencies and increase provisions to manage the irregularity of income generation of the small farmer in rural areas.

So, what can be done about it?

* Kátia Agostinho is Market Analyst at Financial Sector Deepening Mozambique (FSDMoç). Kátia brings over 5 years’ experience in economic and business development, and, research. Kátia has Honours Degree in Economics and holds a number of Certificates in the financial sector development and policy: Housing Finance from University of Cape Town (2014), M4P from the FSDAfrica Academy (2015) and The Smart Design for Policy and Practice Framework by the Harvard Kennedy School of Harvard University (2015).

[1] See blog: Women key roles as farmers and caregivers: What do we know? By Kátia Agostinho



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