GENDER AND FINANCE

Empower rural women in financial literacy to boost their income

About one in 10 women are not consulted about the way their own earnings are spent

In Summary
  • Many women remain dependent upon their husbands
  • According to UN about one in three married women from developing countries have no control over household spending
Martin training community on different aspect of financial management
Image: HANDOUT

Improving rural women’s access to financial services is a proven strategy for contributing to rural women’s social and economic empowerment, as well as improving overall the livelihoods of rural households and communities.

According to FAO and World Bank, having access to financial services allows rural women to procure the inputs, labour and equipment they need for their agricultural or rural off-farm activities.

Accessible financial services also enable women to take better care of their children, as research shows that women spend most of their income and savings on their children’s education, nutrition and health

Many women remain dependent upon their husbands, according to UN about one in three married women from developing countries have no control over household spending on major purchases.

 They further say; about one in 10 women are not consulted about the way their own earnings are spent.

In addition, women often have more limited opportunities for educational attainment, employment outside of the household, asset and land ownership, the inheritance of assets, and control over their financial futures in general.

Despite important advances in expanding access to formal financial services in the developing world in recent years, a significant access gap remains between men and women.

This is illustrated through a basic measure of financial inclusion: account ownership. According to the World Bank, only 58 percent of women hold an account in a formal financial institution globally, compared to 65 percent of men. This gender gap is even more pronounced between men and women in developing markets.

Nevertheless, the availability of financial services is limited in rural areas, and the existing financial services intended for rural communities rarely benefit rural women. Women’s access to these services is constrained by several factors;

Social-culture and Gender roles: In many parts of the world, sociocultural norms and perceptions define what men and women are capable of, what they are allowed access to, and what their social and economic roles are.

 These norms and their associated gender roles can become barriers to women’s access to financial services. For rural women, a substantial amount of their time is consumed by household activities, which increases their daily hours of work compared to their male counterparts.

 This time burden prevents them from participating in more productive activities, thus limiting their ability to engage in financial endeavors.

Women’s gender roles limit not only their time but also their mobility, which further constrains their access to financial services.

Because of sociocultural restrictions, women are less mobile than men, which limits their ability to travel long distances to reach financial institutions, work in urban areas or even overseas.

 Information access, financial literacy and education: Education is an essential asset for rural communities, as it gives them the capacity to access useful technologies and information, as well as acquire new skills to develop their rural on- and off-farm activities and improve their livelihoods.

All financial procedures such as instructions, rules, contracts, statements, cheques and letters are always communicated in written form.

Therefore, it is indispensable to be able to read and write in order to manage financial transactions and affairs, keep records, and fill out and sign forms and invoices.

According to World Bank, high illiteracy levels among rural populations result to a lack of financial literacy and limited access to information on financial products and services.

UNESCO state that, two-thirds of the world’s adult illiterate population is made up of women, with women making up the majority of illiterate populations in every region of the world.

Moreover, education levels tend to be lower in rural areas in particular all over the world, and illiteracy levels are the highest among rural women.

This is why illiteracy is a key factor limiting rural women’s ability to benefit from financial services.

Collateral constrain

Financial institutions use formal collateral such as land tittle deeds, vehicle logbooks as guarantees, this limit rural women as they are not allowed to own or inherit land as well as formally own assets.

These women are dependent on their husband thus limit them to access loans and other financial products.

 Financial institutions, with clear and transparent collateral laws, can promote alternative forms of guarantees such as future harvests, household items and livestock.

Group-based approaches can also help address the obstacles limiting women’s access to financial services. Numerous microfinance institutions have been promoting group lending with joint liability, which enables asset-poor customers to make use of social collateral instead of physical collateral.

Evidence suggests that group-based approaches work better in rural areas than in urban areas. This could be because social networks in rural areas are denser compared to urban areas, which leads to higher social collateral in rural areas

Taking advantage of technology.

Reaching clients in rural areas is often challenging and delivering services can become costly, as these areas are not densely populated and lack proper transport infrastructure.

A proven method that effectively reduces transaction costs even in remote areas is the use of technology. Use of mobile phones have been successfully promoted to millions of people, enabling them to use financial services, make transactions and access savings.

Mobile technology is considered a cheap, secure and reliable method, which fosters the inclusion of actors who are traditionally excluded from the financial system.

Improving rural women’s access to finance is crucial for their economic and social empowerment, as well as for supporting the well-being and development of their households and communities.

Efforts to remove some of the constraints created by unfavorable policies and legal frameworks are necessary.

Addressing these constraints requires policies and legal frameworks to be clear, adapted to the rural context, and favorable to traditionally excluded people. In order to improve these policies, the many roles, responsibilities and needs of women must be taken into account.

County and national governments should also be involved in the process of improving women’s access to economic opportunities.