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FINANCIAL TECHNOLOGIES

Financial inclusion for women through Fintech

26 August 2022

Although women represent more than 50{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of the African continent’s population, they accounted for only 33{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of its GDP in 2018. The persistence of gender inequalities limits the potential of Africa as millions of African women are still excluded from the economy. One of the keys to unlocking economic opportunities for women is to guarantee them access to finance.

A disturbing statistic many may not know, is that 70{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} of the poorest people on the planet are women. Women have been traditionally disadvantaged when it comes to accessing credit and other financial services. Large financial institutions have historically focused on men and ignored the women who make up a large percentage of the informal economy.

Women contribute to the economic growth and livelihoods of their families and communities with the top five countries with the highest female representation in the workforce all being in sub-Saharan Africa. Zimbabwe and Malawi have a 52{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} share in workforce, Gambia has 50.8{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e}, Liberia 50.6{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e} and Tanzania at 50.5{2b3fe3109f87c6f1c896babd3a2485fbf135a42141067a7771ef7eb1664b998e}.

As we have said before, fintech companies could provide a safety net (such as credit, savings or insurance) to alleviate risks that marginalized sections of the society. By providing financial services, targeted at individuals (or businesses) who lack the provision to access conventional banking services more and more people are financially included. Fintech in the form of microfinancing can be crucial for a large proportion of financially excluded women and as a result it can be instrumental in addressing gender inequality.

Microfinancing plays a hugely critical role in empowering women. It offers independence and empowerment and is especially beneficial in poorer households. By helping to promote sustainable livelihoods it offers a significant contribution to gender equality and better working conditions for women. Additionally, by targeting women, microfinancing makes the most business sense as plenty of data shows that women register the highest repayment rates.

Such services also have a widest social impact. According to the world bank, women contribute a larger portion of their income to the household when compared to their male counterparts. The benefits subsequently flow down to everyone in the household, children of female microfinance borrowers are likely to see an increase in their fulltime school enrolment and lower drop-out rates. Studies show that by investing in their children education also benefits younger girls too. And households often have better health practices and nutrition.

However, fintech is not the panacea for financial inclusion for women. Several issues plague the course. For example, women more than men face barriers to mobile phone ownership. Therefore, along with fintech, there needs to be a well-rounded approach which among others it will include improving infrastructure at a macro level, provide financial literacy at a meso level, and even a change in the attitude and support by the government.