CFR Presents

Development Channel

Issues and innovations in global economic development

Print Print Cite Cite
Style: MLA APA Chicago Close


Emerging Voices: Closing the Gender Gap in Financing

by Guest Blogger for Isobel Coleman
January 8, 2014

A woman from the Amazon region weaves a textile in Lima, Peru, July 2012 (Courtesy Reuters/Enrique Castro-Mendivil). A woman from the Amazon region weaves a textile in Lima, Peru, July 2012 (Courtesy Reuters/Enrique Castro-Mendivil).


Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is from Henriette Kolb, head of Gender Secretariat at the International Finance Corporation, the private sector financing arm of the World Bank. Here she discusses how to address the gender gap in access to financing.

Financial inclusion has become a hot topic in recent years, especially with the advent of mobile banking and its potential to reduce the gender gap in access to finance. Women produce more than half of the world’s food and control about $20 trillion in consumer spending. Women also own one-third of small and medium enterprises (SMEs), which are top drivers of job creation in emerging markets, although evidence suggests that only 6 percent of the SME banking portfolio is allocated to women. Overall, women face a global credit gap of somewhere between $260 and $320 billion. And according to the World Bank Group’s Global Financial Development Report 2014: Financial Inclusion, women in developing economies are 20 percent less likely than men to have a bank account. Without financial access, women are at a disadvantage when it comes to growing their businesses, which in turn denies economies jobs and tax revenue.

The World Bank Group has made headway in addressing women’s access-to-finance needs by producing evidence-based policy advice for governments, working with regulators, engaging directly with banks to better serve women, and providing capacity-building training to women entrepreneurs. The International Finance Corporation (IFC), where I work, also manages the Women’s Finance Hub (part of G-20’s Global Partnership for Financial Inclusion), which is an online platform that disseminates research and information on women-owned businesses and the economic gender gap.

In addition, the IFC recently started the first women’s bond program, raising around $160 million to increase access to finance for women-owned businesses. The program is part of the IFC’s Banking on Women initiative, which was created in 2010 to encourage development partners and financial institutions to profitably and sustainably serve women-owned businesses. To date, the program has invested more than $600 million in women-owned businesses.

These types of programs help increase the number of women with financial power and raise awareness about the challenges women entrepreneurs face worldwide. But more is needed to address women’s global financing needs. In order to address the gender finance gap, the public sector needs to enact policies that increase women’s access to finance. Financial institutions also have a much bigger role to play and should enhance their understanding of the women’s market, offer products tailored to women’s needs, and ensure that women can access existing financial services. So far, only a relatively small number of banks, not including microfinance institutions, have focused on addressing women’s financial needs. Institutions such as the IFC, the Global Banking Alliance, and the Small Business Banking Network are trying to change that by advising financial institutions on how best to serve the entire women’s market.

In addition, financial markets can deliver more. For example, investing even one percent of the $30 trillion in assets held in pension funds globally into women-owned businesses could make a big difference in emerging market countries where women’s labor force participation is low. This would also require development organizations, multinationals, and chambers of commerce to identify a large number of women-owned SMEs that such funds could invest in. With better-resourced women-owned SMEs, the world could come closer to reaching ambitious goals of ending poverty and boosting shared prosperity.

Post a Comment 2 Comments

  • Posted by Kavim Bhatnagar

    Financial Inclusion (FI) is Meaningless without Substantial Financial Literacy (FL) and Capacity Building at the Grass-root. However, FL should not be considered with a typical classroom approach, instead,most effectively and efficient use of ‘Teachable Moments’ – ‘that moment when a unique, high interest situation arises that lends itself to discussion of a particular topic’. The time at which learning a particular topic or idea, say, opening and using banking account becomes possible or easiest.. Special emphasis on building capacities of women in Financial Literacy can lead to a more meaningful FI.

    The Madhya Pradesh FI Model- Samrudhhi (Prosperity), in India typically provides for G2P payments landing directly in the beneficiary accounts (DBT) opened at the USB / CSPs. Its Three Pillar approach has created an institutional architecture that is sustainable for the bankers and provides a win win situation to the GoMP on delivery of benefits; financial viability for the BC / USB / CSPs as frequent G2P transaction occur and customers alike, who receive their benefits such as MNREGS payments, pension etc. in their individual bank a/c located within 5 kms from their house. The three pillars constitute a SSSM (Samagra Samajik Suraksha Mission) that has built a common data base of the entire population of MP that would enable to identify individuals and also the family data. to throw up the entitlements. The second has developed a conduit for devolution and transfer of funds. This conduit is developed to ensure devolution to even non-core banking institution like Coop bank and POs. The e-FMS has been developed to transfer funds from Single bank account directly from treasury to beneficiaries’ account that may be in core or non-core banking. The Third Pillar facilitates the financial dispensation facility accessible in order to realize the concept of FI in a holistic manner. Thus, a well-considered norm has been developed to have facility in a radius of 5 km. Areas have been mapped and those devoid of the facility have been marked as ‘Shadow Areas’. Till date 1761 such facilities USB (Ultra Small Bank) have been provided as a business model.
    The channels are now available and the infrastructure fully functional from the ‘supply side’. Now there is a need to activate the ‘demand side’ for financial deepening which is possible by creating awareness through ‘teachable moments’ and offer diversified products like Savings, Credit, Remittances, FD, RDs, NPS Lite (Swawalamban) etc. so that full advantage of the FI model could be utilized by the rural and urban laborers.

  • Posted by Henriette Kolb

    Dear Mr. Bhatnagar:
    Thank you for your sharing your experience and the model you are working with in India. I will share this with my colleagues in India, so that they can get in touch with you if they are keen to learn more or team up to create the demand side. What in your experience is the best approach to financial literacy education? I agree that classroom-based teaching can have mixed to no impact. Have you seen good financial literacy content delivered via mobile?
    Wishing you all the best for your work.

Post a Comment

CFR seeks to foster civil and informed discussion of foreign policy issues. Opinions expressed on CFR blogs are solely those of the author or commenter, not of CFR, which takes no institutional positions. All comments must abide by CFR's guidelines and will be moderated prior to posting.

* Required