There is no Gender Equality without Financial Inclusion

March 04, 2022

Visions of Development is a section promoted by CAF—development bank of Latin America—that discusses the region’s main development issues. Its articles are published simultaneously in the main media outlets around Latin America.

There is no Gender Equality without Financial Inclusion

Gender equality remains one of the main outstanding tasks in Latin America and the Caribbean. The work fronts are many, broad and complex, ranging from ensuring women’s physical safety to promoting more equal participation in the economy, guaranteeing their rights and fostering their financial autonomy and ability to make decisions autonomously.

The management of household finances is one of the key issues on the path to gender equality. According to a new CAF report, women currently make fewer financial decisions than men in Latin American households. After analyzing the cases of Brazil, Colombia, Ecuador and Peru, the research shows that, in the households of the four countries analyzed, 33% of women make financial decisions on their own, compared to 48% of men.

This reflects the need to improve women’s access to the financial sector, which requires—experts claim—greater financial education to foster savings, money management, access to the credit system, self-confidence and digital and negotiation skills. In any case, to achieve effective financial inclusion of women, men will also have to be involved.

“It is necessary to work on financial literacy strategies and create gender-disaggregated indicators to design public policies that minimize inequalities and encourage greater participation of women in the economy of their countries,” says Diana Mejía, senior specialist in Financial Inclusion at CAF.

According to Mejía, this involves working on reducing gaps in financial behaviors, planning, knowledge and attitudes, as well as in financial inclusion and vulnerability. Additionally, it will be necessary to work on improving access, use, quality and impact of financial products on the financial well-being of women.

First, it seems clear that in order to be part of the formal financial system it is necessary to have an account at a bank or some financial institution. But according to figures from Global Findex, 57.4% of men have an account, compared to 51.4% of women, which suggests that around 160 million women in Latin America and the Caribbean do not have such an account.

There are also broad gaps in the use of financial products. According to recent studies, although there are different segments depending on profiles and needs, women tend to have less confidence in financial issues and more risk aversion. For example, they tend to cut back spending during adverse events and save informally. Furthermore, financial knowledge is very low, both in men and women. We are talking about calculating simple interest or knowing what compound interest or inflation is.

The quality of financial products in the region can also be improved, and new services must be created to take into account the differential traits of women, to encourage informed decision-making.

“There is currently an opportunity to forge new alliances and strengthen existing ones with the Fintech ecosystem in the region, as it provides payment solutions through electronic wallets that facilitate the expansion of women’s access to financial products and services, and also tailor solutions to the specific needs of women,” says Mejía.

Creating an adequate financial environment in which women trust and feel confident in communicating their needs is a prerequisite for bridging gender gaps in the region. To this end, it is essential to promote financial literacy, strengthen women’s skills and create financial products with a gender perspective.