The Role of Financial Inclusion in Bridging the Gender Gap

By Caroline Agaba

The government of Uganda has made efforts to address gender issues for example through the development of a National Gender Policy in 1997. The policy provides a framework for addressing gender imbalances. Unfortunately, this policy was last reviewed in 2007 which demonstrates that more must be done to close the gender gap.

The gender gap manifests in different ways. One such way is that women have a lower social status than men. This means they have less power to make decisions, get an education, obtain a profitable job, and be independent.

What the data says

According to the 2022 World Bank Gender Statistics, in Uganda, the labour force participation rate is 67.6% and 72% among females and males respectively. The Sub Sahara Africa average of labour participation for women is 60.4%. Adult literacy in Uganda is lower among women at 74% compared to men at 84%. 25.1% of girls in Uganda complete lower secondary education compared to the Sub-Saharan Africa average of 43%. In terms of decision making only 51.1% of women participated in making major decisions in the household as of 2016 data. For asset ownership, 62% of women did not own a house compared to 44% of men.

This shows that gender inequality in Uganda revolves around education, asset ownership, and participation in the workforce. To close the gender gap, strategies to address these three key issues need to be developed.

One way gender inequalities can be addressed is through the economic empowerment of women through financial inclusion. Financial inclusion in and of itself may not be the sole solution to all the gender inequality issues in Uganda since many of them are rooted in social norms and beliefs about women and their role in society. However, there is evidence from various studies about how access to financial services can help close the gender gap in education, asset ownership, and labour participation.

How savings accounts can help.

In 2013, Silvia Prina conducted a study on banking of the poor via savings accounts in Nepal. In this study access to a simple, liquid bank account—with no opening, maintenance, or withdrawal fees—was randomly offered to a sample of 1,118 female household heads in 19 slums in Nepal. Through this experiment, the impact of access to the bank account on household saving behaviour, asset accumulation, expenditures, and income was assessed.

The study found that being offered access to a savings account strongly increased household investment in health and education, and the investment in human capital in the form of textbooks and school uniforms rose by more than 50%.

Education is a fundamental pathway toward social and economic progress. The study findings demonstrate that access to financial services empowers women to tap into the transformative potential of education for their children and themselves. This is done by using their savings to cover school fees, educational materials, and additional learning opportunities. Enabling women to invest in education through financial inclusion initiatives can help them break the cycle of poverty and create brighter futures for themselves and their communities.

Other findings from the study showed that access to the savings account increased monetary assets by more than 50%. In addition, total assets, which include monetary and non-monetary assets (consumer durables and livestock), grew by 16%. This suggests access to financial services can play a key role in helping women invest in their future and build up their assets thus closing the asset ownership gap.

Mobile money helps women.

Another study in Kenya titled The Long-run Poverty and Gender Impacts of Mobile Money by Suri T & W. Jack, showed that the impact of the introduction of mobile money in moving households out of poverty was particularly pronounced for female-headed households. The study estimated that the spread of mobile money helped raise at least 194,000 households out of extreme poverty and induced 185,000 women to switch to business or retail as their main occupation. The study suggested that the more pronounced impacts on female households, appeared to be driven by changes in financial behaviour—in particular, increased financial resilience and saving—and labour market outcomes, such as occupational choice, especially for women, who moved out of agriculture and into business. The results from these studies have important implications for policymakers and development organisations.

Financial inclusion plays a vital role in closing the gender gap and empowering women. By providing women with access to formal financial services, such as savings accounts, credit, and insurance, financial inclusion enables them to secure their economic futures, invest in education and healthcare, and start and grow businesses. It not only enhances their financial well-being but also fosters gender equality by breaking down barriers, challenging traditional norms, and promoting women’s economic independence.

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