Norms hampering women’s access to digital financial services

Innovations in digital financial services such as mobile money, online banking, and digital utility payments among others have the capability to enhance financial freedom for women.

These services attempt to overcome challenges related to inflexibility due to childcare and home duties, remoteness for rural dwellers, delays in remittances and risky financial transactions. Expanded access to digital finances services can translate into business diversification, increased expenditure on consumption, education and health, and importantly women empowerment.

However, continuous digital financial exclusion of some women has hindered the purpose of these services to achieve equality and reduce poverty. While some African Nations are among the frontrunners in the digital finance space, 400 million Africans, mostly women, remained excluded as of 2019.  However, according to the World Bank, the gender gap in bank account ownership had shrunk from nine to six percent by 2021, in developing economies.

Yet, the rural-urban gap in ownership was 12 percent, mostly disadvantaging women that relied on informal financial services. This exclusion partly stems from prohibitive cultural and social norms that still limit women’s access despite the gains made in previous years.

Gender disparity in digital finance access is partly driven by the inequality woven into society. This is a major challenge on the demand side for digital services. This inequality is sometimes manifested through traditional marital roles, whereby in some male-headed households, decisions on borrowing, saving or capital investment are exclusively made by the husband.  This ultimately impacts a woman’s financial behaviour, forcing her to adopt unreliable informal or rudimentary saving practices, such as physically hiding money. Such practices that shun formal bank accounts or mobile money, demotivate a woman from accessing and using digital financial services.

In addition, due to socially prescribed gender roles, particularly in child and home care, women are more likely to seek employment in the informal economy because it offers flexibility. To note, payments in the informal sector do not require transaction through a formal account. Yet, receipt of payments through accounts are an incentive to demand and use other complementary financial services, including digital financial services.

The limited exposure in the informal sector to basic banking systems pre-excludes them from digital platforms. This is more evident in the sale of agricultural produce where payment is predominantly cash.

Further, in social and cultural settings where female subservience is highly valued, women are likely to suffer from low self-perception which lowers their confidence in their financial abilities and increases their risk aversion. Women are more likely to underestimate their ability to access and pay-off loans, and thus opt out. Similarly, inexperience in using digital financial platforms due to financial illiteracy and poor numeracy skills pose a challenge. The World Bank reports that women are five times more likely to request for assistance to use a mobile money account in Sub-Saharan Africa.

Sensitisation of communities about economic empowerment of women is crucial to breaking social and cultural barriers but requires corresponding actions for lasting impact. The Covid- 19 pandemic accelerated the demand of digital finance platforms, with many first-time users; and higher usage of mobile money, and other digital payments platforms, to sustain livelihoods and cash flows.

It is possible to build on these gains. It is vital to increase mobile phone ownership among women – a fundamental element of the digital finance infrastructure.

Furthermore, create digital solutions that are easily adaptable for women, especially in rural areas where financial literacy and numeracy are low. Village Savings and Loan Association (VSLAs) should be leveraged to onboard more women onto digital platforms through strategic capacity building and encouraging peer to peer learning.

Ms Aida K. Nattabi  a research analyst at Economic Policy Research Centre, Makerere University