Coming together – Women’s Social Capital for Women’s Financial ‎Inclusion in Egypt
Blerta Aliko , , Tuesday 10 Jul 2018

As concepts and buzzwords on women’s financial inclusion increasingly penetrate boardrooms and ‎local communities alike, the gender gap in accessing the formal financial system persists globally. ‎According to the latest Global Findex data, 56% of the 1.7 billion of adults worldwide who do not have ‎a bank account are women and data on account ownership shows a gender gap at 9% in favour of men ‎across all developing economies ‎.‎

In Egypt, significant efforts have been made to increase women’s access to financial products and ‎services. According to the Global Findex Database, formal account ownership among women has more ‎than tripled between 2011 and 2017 (from 7% to 27%). However, it is still below the rate among men ‎‎(39% in 2017). ‎

Financial inclusion: a key enabler to escape poverty

Financial inclusion has been identified as key to reducing poverty and fostering economic growth and is ‎significant for the realisation of seven SDGs ‎. It is commonly defined as the effective access to a range ‎of financial products and services that are adapted to people’s multiple needs (in terms of business, ‎household economy, education, health, etc.) and to the different socioeconomic and cultural ‎contexts they navigate in.‎ ‎

Research has shown that financial inclusion can boost consumption, self-employment and foster SME ‎growth, asset accumulation, risk mitigation and speed wealth creation Therefore, it has been also ‎identified as a valuable tool in fostering women’s economic empowerment by enabling them to ‎engage in measurable economic activities, and set the basis for sustainable economic development at ‎large. Therefore, women’s financial management capacity and economic independency are ‎enhanced. ‎

When designed using a gender sensitive approach, digital financial services (available through digital ‎financial technology (‘fintech’) and the widespread use of mobile phones) offer additional tools to ‎boost women’s economic empowerment. Digitalisation has facilitated expanding access to financial ‎services to hard-to-reach populations (mostly women) and small businesses (often women-owned) at ‎low cost and risk. Fintech addresses important barriers in accessing financial products and services, ‎such as women’s reduced mobility due to unpaid domestic work, time constraints, social norms and ‎cost of transportation ‎. ‎

Village Savings and Loans Association as the social platform for Women’s Financial Inclusion in Egypt

The current environment holds huge potential for women’s financial inclusion in Egypt. Egypt’s ‎National Women’s Empowerment Strategy and its accompanying pillar on Women’s Economic ‎Empowerment list women’s access to economic resources, through increased access to financial ‎services, as an important objective. Strong political will for regulatory reform is evident, particularly ‎with the approval of the Microfinance Law (No. 141 of 2014), which strengthens regulations on ‎microcredit provided by non-bank financiers allowing them to enter the formal microfinance sector.

‎Political commitment is also demonstrated by the ‘National Council for Payments’, which supports ‎electronic payment systems. These efforts have been internationally recognised in July 2017 when ‎Egypt was chosen as a model in the new World Bank Financial Inclusion Global Initiative. However, ‎there are still challenges to be addressed, with a need for new regulations on group mobile wallets ‎and other financial services that particularly cater for marginalised women. ‎

Financial institutions and regulatory bodies are also joining the widening array of actors supporting ‎financial inclusion. In 2016, the Central Bank of Egypt (CBE) approved new regulations for ‘Mobile ‎Payment Services Regulations’ allowing customers to transfer funds and remittances via their mobile ‎accounts. The CBE also supported the Government of Egypt in hosting the 2017 Alliance for Financial ‎Inclusion Global Policy Conference, in which more than 94 States and 119 international institutions ‎participated. As a result, the CBE and the National Council for Women (NCW) agreed to work jointly on ‎fostering women’s financial inclusion.‎

In line with the joint efforts implemented, NCW and UN Women Egypt have been advocating for ‎implementing and expanding a tested model on reaching the most vulnerable and marginalized ‎women in society through sustaining and transforming the social capital of Village Savings and Loans ‎Associations (VSLAs) into a broad base platform for financial inclusion of Egyptian women.

The VSLAs ‎target poor and marginalized women in rural communities, empowering them through participation in ‎savings and loan groups, supporting them to better manage household cash whilst investing in income ‎generating activities. In one programme alone, in partnership with Care International and funded by ‎the European Union, UN Women Egypt have supported the establishment of 1,036 VSLA groups in ‎Assiut, Menia and Beni Suef, comprising of 18,844 members (92% of which are women) with a total ‎savings of EGP 4,577,190, alongside financial literacy trainings and non-financial services.‎‎

Applying the SDGs principle of “leaving no one behind”, capitalizing on the social capital of women is ‎necessary for the progress of any public or private stakeholder. The VSLA offers a ready platform for ‎accessing the furthest left behind first which is appealing to Micro Financial Institutions because of ‎significant lower “acquisition” cost as they develop women clientele from the bottom of the pyramid. ‎It is also appealing for banks as the approach builds on the savings concept and not on loans that carry ‎the perceived risk of debt.‎

The stage is set for large scale action on Women’s financial inclusion. For its part, UN Women is rallying ‎a call for action for interested stakeholders to unite and comprehensively work together within a ‎unified strategy, in which tested and standardised models for VSLA expansion are implemented, ‎leading to financial inclusion through technological digital solutions while focusing on developing ‎enabling regulatory laws and policies and outreach activities that can rapidly increase women’s ‎financial inclusion. ‎

*The writer is Representaive, UN Women Egypt