Investments in this strategy aim to increase financial inclusion of women and thus enable greater control over their financial lives, greater independence, and greater say over household budgets. The sections below include an overview of the strategy for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What is the problem the investment is trying to address? For the people experiencing the problem, how important is this change?

Globally and historically, women are disadvantaged compared to men with respect to their economic standing, education levels, literacy levels, land ownership, mobility, and access to a broad range of opportunities. Women are more likely to be poor, unemployed, or employed in informal jobs* that lack sufficient labor law protections or social benefits. When women work, they are typically paid less than men.

Research shows that participation in formal financial systems allows people to better manage their risk, start or invest in a business, and fund expenditures such as education or home improvement.

Despite recent advancements in financial inclusion, the global gender gap in access to financial services has remained unchanged at 7% (1). Women-owned SMEs also have less access to external finance than men-owned businesses. According to the International Finance Corporation (IFC), of 143 countries studied, almost 90% have at least one legal difference between women and men that restricts women’s economic opportunities (2). Lack of economic independence for large numbers of women leads to lower decision-making ability, lower self-esteem, physical insecurity, and reliance on men (3).

The growth of digital financial services, such as mobile money accounts, has increased opportunities to better reach women and other traditionally excluded populations with financial products and services. Some early signs suggest that mobile money accounts might be helping to close the gender gap (1). However, access to digital financial services alone is not enough to increase financial inclusion; financial services must also be tailored to the needs and preferences of the intended beneficiaries (for details, refer to the Contribution section).

*Informal jobs are not necessarily negative. According to research by Innovations for Poverty Action (IPA), women in some developing countries with heavy domestic-care burdens might benefit from the flexibility of self-employment.

What is the scale of the problem?

  • Globally, only half of women participate in the labor force, compared to 75% of men (10).
  • When they work, women are paid 10–30% less on average than are men (4).
  • In 41 of 75 countries studied by the United Nations Commission on the Status of Women, women are more likely than men to live in the poorest households (5).
  • Fifty-six percent of women worldwide remain outside the formal financial system, reflecting a 7% gender gap with respect to access to financial services (1).
  • Formal women-owned small and medium-sized businesses face a credit gap of approximately USD 3 billion (6).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who/What is helped through this strategy?

Women: Both women individually and women-owned SMEs benefit from strategies that aim to increase women's financial inclusion.

Children and Families: Studies in Brazil, Cote D’Ivoire, and the United Kingdom have shown that greater control by women over household income increases spending on goods that benefit children (7).

Severely Disadvantaged Populations: Across and within countries, gender gaps widen at lower incomes. Gender gaps are larger in the poorest economies (7).

What are the geographic attributes of those who benefit?

  • The global gender gap in financial inclusion is 7%(1).
  • Emerging market countries have an average gender gap of 8%, but this varies widely by country. In Bangladesh, Pakistan, and Turkey, the gender gap is nearly 30%. Other developing economies with a double-digit gender gap include Mexico, Mozambique, Peru, Rwanda, and Zambia (1).
  • One in three married women in developing countries have no control over household spending on major purchases (8).

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

Is the investment’s contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How Much and Who?

Women's financial inclusion gives them greater control over their financial lives, greater independence, and greater say over household budgets. This control, in turn, often leads to higher spending on necessities, such as food and water, health, education, and child welfare.

Investments targeting women’s access to, use of, and agency over* financial services will likely make greater contributions if the following guidelines are followed:

  • The offered financial solutions should be designed to address local norms, intra-household dynamics, and women’s strengths. The importance of adapting to local norms should not be overlooked. Programs that provide financial inclusion for women without considering social norms present high impact risk.
  • The chosen delivery channels should effectively reach women. Alternative delivery channels (such as mobile, agent banking, and other non-branch channels) are important when serving women.
  • Non-financial services should be provided to address gender-related constraints that women face. Such services might include, for examples, health services, business education, and courses in financial and digital literacy.
  • The environment should enable women's access to financial services, removing or easing typical legal constraints on that access.

A randomized control trial in India found that giving women access to financial services alone did not observably impact women’s employment or earnings. To precipitate behavioral change, women also need  basic tools (training) for the use of financial services, and resources (wages and payments) must be directed to their bank account rather than, for example, to their husbands' account (9).

For investments in gender equality to make greater contributions than would have otherwise occurred, organizations should understand and adapt to local norms, and they should also design interventions that combine tailored financial services to address female needs and intra-household dynamics together with directly provided non-financial services.

* Agency refers to who makes decisions about or has control over the account and its use.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many can receive the outcome through this strategy?

Worldwide, 56% percent of women remain outside the formal financial system (1). The global gender gap in financial inclusion has not changed since 2014. According to the IFC, 70% of women-owned SMEs in the formal sector in developing countries are unserved or under-served by financial institutions (2). This amounts to a financing gap—and opportunity—of around USD 285 billion.

How much change can beneficiaries experience through this strategy?

The amount of change end users derive from this strategy depends on the context: whether the offered products and services customer-centric and tailored to women and their local norms, and whether non-financial services are also provided, such as training in entrepreneurship and business, healthcare, and education services.

  • A study in the Philippines showed that commitment savings accounts targeted to women led to increased savings, increased decision-making power for women, and greater purchases of women-oriented durable goods (10).
  • A study in rural Kenya showed that access to no-cost, formal savings accounts raised savings, productive investments, and expenditures among female, but not male micro-entrepreneurs (11).
  • Closing the entire credit gap for women-owned SMEs across the entire developing world could boost growth rates in income per capita growth by more than 110 basis points on average (2).

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What risks do investments in this strategy run in terms of either people/planet experiencing impact or society as a whole? What is the probability that those risks happen?

Risk factors include the following (categorized according to the IMP Impact Risk Framework):

  1. Stakeholder Participation Risk: Lack of proper attention to client protection and/or lack of appropriate tailoring of products to women's needs, preferences, and local norms, lack of understanding of the objectives and experience of those affected by the investment, lack of financial literacy, as well as lack of trust in financial and technology service providers could result in access not having as positive an impact on female clients that it would otherwise have. (For footnote: For the importance of product design in attaining desired impacts refer to “Women’s Economic Empowerment Through Financial Inclusion A Review of Existing Evidence and Remaining Knowledge Gaps”, IPA 2017). Importance of adapting to local norms should not be missed. Programs that provide financial inclusion for women without taking into consideration social norms present high impact risk.
  2. External Risk: Lack of a supportive local regulatory framework and/or inappropriate government intervention that could impede the healthy development of the market (for footnote refer to EIU Global Microscope rankings).
  3. Execution Risk: In some cases while loans are taken out in a woman’s name, in reality she might not be the ultimate decision-maker on how to use the proceeds.
  4. Contribution Risk: Oversaturation of markets could result in overindebtedness of clients (for footnote: refer to MIMOSA rankings).
  5. Unexpected Impact Risk: In some cases male partners or other associates of women receiving financial services may feel threatened or resentful of the women’s financial independence and do not allow it to continue, which sometimes escalates to gender-based violence. Additionally, programs that only target women can also result in women to be the only conduit for any financial services and hence the sole carrier of the debt load on behalf of the household.

Diversification of investments across countries and regions, together with a generally strong commitment to the principles of expanding responsible access, putting client interests first, integrating the voice of those significantly affected (for footnote: refer to ""Engaging all affected stakeholders""), and a focus on environmental screening and monitoring means that on a global level, such risks are well mitigated. The inclusive finance community engages in direct discussions with external parties, including regulators, to strengthen the sector, and proactively addresses issues such as client protection (Client Protection Principles), environmental standards, management standards and best practices to put clients at the center of all decisions of financial service providers (Universal Standards for Social Performance Management), as well as principles for mobile money providers (GSMA Code of Conduct for Mobile Money Providers). In addition the inclusive financial sector counts with different types of third party assessments, certifications, and ratings that allow investors to better understand whether and how the practices of financial service providers (investees) align with global principles and standards (e.g., Client Protection Assessment and Certification, SPI4 Assessment, Social Ratings, Mobile Money Certification).

What are likely consequences of these risk factors?

Such risks could lead to an inability of clients to use the services provided effectively and potentially result in negative impacts on clients who carry excessive debt burdens, are resented for their access to such products and services, suffer gender-based violence, or suffer opportunity costs from the use of products and services that are not effectively tailored to meet their needs.

Illustrative Investment

Pro Mujer is an innovative financial service provider dedicated to meaningfully improving the livelihoods of women in Latin America through a combination of financial, health, and educational services. Their integrated approach includes: financial services (loans, savings, insurance), training in basic business skills and entrepreneurship, health education (e.g., on gender-based violence, disease prevention, wellness, and personal development, etc.) and health screenings (cancer screening, diabetes testing, blood pressure checks). As of 2017, Pro Mujer had disbursed more than USD 393 million in loans, served 276,000 women annually, operated over 162 Pro Mujer centers in five countries, and delivered more than 2.1 million health services at Pro Mujer centers and mobile clinics.

M-Pesa is a mobile phone–based money transfer, financing, and microfinancing service operating in Kenya. In areas where M-Pesa has become more accessible, research shows, women are more likely to switch from farming to business occupations, and they also save more. Overall, because of M-Pesa, an estimated 185,000 women have changed occupations, and 194,000 primarily female-headed households were lifted above the poverty line.

Microfund for Women (MFW) is a pioneer in the microfinance industry in Jordan, actively empowering women through their beneficiaries and staff. MFW is also a pioneer in advancing gender diversity within the ranks of its leadership. Despite a challenging environment externally, MFW has maintained staff and governance that is 73% women, far exceeding the national average (14% in the formal sector). This was made possible through a combination of a creative recruiting strategy, recognition of the strong role of families in the lives of women, and a board of directors that takes responsibility for monitoring diversity targets. MFW’s success in reaching large numbers of low-income women results directly from its commitment to ensuring that women are well-represented in the organization’s workforce, leadership, and governance.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 3
Payment Mechanisms and Anti-Poverty Programs: Evidence from a Mobile Money Cash Transfer Experiment in Niger

Jenny C. Aker, Rachid Boumnijel, Amanda McClelland and Niall Tierney, Payment Mechanisms and Anti-Poverty Programs: Evidence from a Mobile Money Cash Transfer Experiment in Niger, 2016

NESTA: 3
On Her Account: Can Strengthening Women’s Financial Control Boost Female Labor Supply?, Field, e., Pande, R., Rigol, N; Schaner, S., Moore, C., 2016

Field, Erica, Rohini Pande, Natalia Rigol, Simone Schaner, and Charity Troyer Moore. On her account: Can strengthening women’s financial control boost female labor supply?. Working Paper, 2016.

NESTA: 2
Female Empowerment: Impact of a Commitment Savings Product in the Philippines

Ashraf, N., Karlan, D., and Yin, W. (2010). Female Empowerment: Impact of a Commitment Savings Product in the Philippines. World Development 38(3), 333:344

NESTA: 2
Banking the Poor via Savings Accounts: Evidence from a Field Experiment

S. Prina;“Banking the Poor via Savings Accounts: Evidence from a Field Experiment”; Journal of Developmental Economics; 2015, vol. 115, issue C, 16-31

NESTA: 2
The Effects of Financial Inclusion on Children’s Schooling, and Parental Aspirations and Expectations

Chiapa, C., Prina, S., and Parker, A. (2015). The Effects of Financial Inclusion on Children’s Schooling, and Parental Aspirations and Expectations. Journal of International Development, 28(5), 683:696

NESTA: 3
Does the Classic Microfinance Model Discourage Entrepreneurship Among the Poor? Experimental Evidence from India

Field, E., Pande, R., Papp, J., and Rigol. N. (2013). Does the Classic Microfinance Model Discourage Entrepreneurship among the Poor? Experimental Evidence from India.” American Economic Review, 103(6), 2196:2226.

NESTA: 3
Bargaining to Work: the Effect of Female Autonomy on Female Labour Supply

Biljon, C; Von Fintel, D; Pasha, A; Bargaining to work: the effect of female autonomy on female labour supply; 2018

NESTA: 3
Savings Accounts for Village Micro-Entrepreneurs in Kenya

Dupas, R; Robinson, J; Savings Accounts for Village Micro-Entrepreneurs in Kenya,

NESTA: 3
The Long-Run Poverty and Gender Impacts of Mobile Money

Suri, T; Jack, W; The long-run poverty and gender impacts of mobile money

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.