Women & Financial Inclusion in Latin America: Are We Making Progress?
“Financial inclusion” refers to the accessibility and usage of a wide array of financial services, ranging from account ownership and digital financial payments to credit and insurance, made available to consumers to meet their specific needs. These services help citizens to improve their wellbeing by facilitating access to money (through credit and savings) and by reducing transaction costs, including those of transportation, time and safety — the issue of safety being especially important for women.
The 2030 Agenda for Sustainable Development established 17 Goals to eradicate poverty in all its forms and guarantee sustainable development through access to water and renewable energy and by strengthening institutions and governance. While no specific SDG sets financial inclusion as an explicit target, financial inclusion is essential to many of the SDGs, including poverty eradication (SDG 1), gender equality (SDG 5), affordable and clean energy (SDG 7), and reduced inequalities (SDG 10). The most evident impact of financial inclusion is increased productivity, which is linked to sustainable economic growth.
How is financial inclusion empowering women?
As the World Bank, the UN, and many other global organizations have acknowledged, financial inclusion leads to women’s empowerment by increasing women’s participation in the economy, increasing women’s autonomy, challenging pervasive social norms, and giving women control over their financial lives and other aspects of their lives. Moreover, when women have access to financial products and services, whole societies benefit: there is strong evidence that women are more likely than men to spend money on education and healthcare for their children, thus breaking the cycle of poverty.
When a woman has a bank account and is able to make digital payments, she can save money, make payments without walking long distances (thereby avoiding safety risks and wasted time), shape household decisions, manage economic risk, and invest in business, health services and educational opportunities for herself and her family. Access to financial services gives her a broader set of tools to build financial resilience and achieve economic empowerment.
This year, the Global Findex, released by the World Bank, revealed that 72% of men worldwide hold bank accounts, compared to 65% of women. However, almost 1.7 billion adults do not have any account at a financial institution — and more than half of these people are women. Obstacles to bank accounts are related to exclusion and poverty, unemployment, poor education and lack of official ID — all of which impact women more severely than men.
How are women accessing financial services in Latin America?
Poverty and exclusion are especially strong forces in Latin America, with a more severe impact on women than men, and especially on rural women. The Global Findex makes clear that a lot more progress needs to be made to target financial services to rural women in order to promote their development and empowerment.
- Account ownership
In Latin America today, half the population holds a bank account — a 15% increase since 2011. (Meanwhile, in South Asia, women’s ownership of accounts increased 40% over the last 6 years.) Despite the increase experienced in the region, disparities among the countries remain. In Peru and Costa Rica, the gender gap –the difference between men and women who own an account– reaches to 17% and 15% respectively. Moreover, in Nicaragua, El Salvador and Haiti, only 2 out of 10 women have an account at a financial inclusion.
- Digital payments
During the last year, 32% of men received digital payments – including payments from government and private sectors, such as pensions, conditional cash transfers, and wages — compared to 28% of women in the Latin American region. However, in Central American countries such as Nicaragua, only 1 out of 10 women received digital payments in the last year. Moreover, only 9% of women used the internet to pay bills, and only 1% higher than women in the Middle East. Central America has the lowest rate on this indicator: 2% in Honduras, 3% in Nicaragua, Guatemala and El Salvador.
- Financial resilience and savings
Saving patterns — both institutional saving (at a bank) and saving at home (“under the mattress”) — remain at low levels in Latin America. 17% of men save money in order to launch, operate or expand a business — compared to 10% of women. In Argentina, Mexico and Paraguay, even fewer than 10% of women report saving for these purposes. These data are worrying as women’s economic empowerment is diminished if individual women do not save enough capital to achieve autonomy, build financial resilience, and invest in their futures and the wellbeing of their families.
How to ensure women’s financial inclusion?
- Education to promote financial literacy
As the Global Findex reveals, it is more likely for people with secondary education to have an account compared to those who have only primary education. The gap is 15%. School enrollment and the completion of studies tends to be a struggle for girls, particularly in rural areas, owing to obstacles such as pregnancy at a young age, informal employment (to help impoverished families to survive), and pervasive social norms. Governments need to adopt measures to guarantee access to quality education for girls and to provide girls and women with the tools they need to become financially literate.
- Foster technology
Digital financial services have great potential to address women’s needs in terms of cost, safety, and time. Mobile money allows women to safely and efficiently make deposits, withdrawals and payments.
Businesses and governments can strengthen this trend by enabling an appropriate regulatory environment that promotes women’s access to financial services and removes discriminatory practices and laws that impede women’s financial inclusion.
- Tackle poverty by increasing social protection
Inequality and poverty are harmful trends in Latin America, particularly for rural and migrant women. Around a third of women in the region have no personal financial resources, owing to their lack of paid work. In an effort to reverse this, redistributive policies have been adopted in recent decades, in the form of tax reforms and increases in minimum wages, while conditional cash transfer programs have helped to enhance women’s income. However, a greater push is needed to guarantee women’s participation in the economy, with increased formal employment opportunities and investment in activities that increase women’s productivity and thus allow them to work their way out of poverty in the long run.
Women’s access to financial services has improved in Latin America; however, disparities in access and use of financial tools remain. This is an opportunity for governments and businesses to tackle rooted factors – poverty, discrimination, violence, gender norms- that prevent progress. By prioritizing women’s access to financial services, they will ensure gender equality and unleash women’s potential, which will lead to the region’s development.
 Klapper, Leora et al. “Achieving the Sustainable Development Goals”. CGAP, 2016.
 An interesting piece on this was written by Leora Klapper and posted on the CGAP website: http://www.cgap.org/blog/financial-inclusion-has-big-role-play-reaching-sdgs
 People over 15 years old.
 ECLAC. Gender Equality Observatory for Latin America and the Caribbean. 2016. https://oig.cepal.org/en/indicators/people-without-incomes-their-own