Gender equality could unlock USD12 trillion of incremental GDP in 2025 through financial and digital inclusion, AFI Executive Director tells W20 Summit in Buenos Aires
“Gender equality could dramatically unlock an estimated $12 trillion USD of incremental GDP in 2025 with financial and digital inclusion being among the key enablers,” revealed AFI Executive Director Dr. Alfred Hannig, as he cited recent research by the McKinsey Global Institute, during the panel ‘New financial tools promoting development’ at the W20 Summit in Buenos Aires, Argentina on 2 September, 2018.
The panel aims to address women’s financial inclusion including its barriers and challenges, alternative forms of financing from MSME and fair trade. Moderated by Elena Rodriguez, Global Head of Diversity and Inclusion from Novartis, the distinguished panelists also included Rebecca Ruf, Deputy Director from the Global Banking Alliance for Women (GBA), Gema Sacristan, Chief Investment Officer (CIO) from IDB Invest, and Denise Ferreyra, Director from Pro Mujer.
Opening the panel discussion, Dr. Hannig highlighted that “AFI stands for both, emerging economies in the G20, but also non-G20 countries. Most of the innovations we are going to talk about today are actually happening outside the G20, so it’s very important to bring this knowledge (the experiences of non-G20 countries on women’s financial inclusion) to the table”.
Policy and regulation prioritize women’s financial inclusion
“Central bankers and regulators have recognized that including women is extremely important for economic growth and poverty alleviation,” Dr. Hannig said. According to the McKinsey Global Institute, gender equality can dramatically unlock an estimated $12 trillion USD of incremental GDP in 2025 with financial and particularly digital inclusion being among the key enablers”.
The 2014 and 2017 Global Findex indicates there is an average 9 percent gender gap in access to bank accounts across developing economies. In some regions, this figure is far higher. This gender gap has remained unchanged since 2011 despite overall progress towards financial inclusion.
In response to the persistent gender gap, Dr. Hannig explained that 98 percent of the AFI network consisting of emerging and developing countries, endorsed the Denarau Action Plan (DAP) in 2016 targeting to accelerate the progress of women's financial inclusion. The DAP aims to increase women’s access to quality and affordable financial services globally — bridging the financial inclusion gender gap. So far, 30 AFI member institutions committed to halving the financial inclusion gender gap across their jurisdictions by 2021.
“This is a huge statement. 98 percent of these regulators are (now) dealing with an issue that they have not dealt with before,” Dr. Hannig highlighted during the panel, adding that “with the DAP, we are addressing financial inclusion initiatives through workstreams including financial education, financial literacy, financial inclusion strategy and digital financial services; these workstreams have gender dimensions — a cross-cutting issue that runs through all AFI activities.”
The DAP contributes to women’s economic empowerment and the United Nations’ Sustainable Development Goals (SDG) specifically Goal 5 — Gender Equality.
Active members of the AFI network are advocating women’s financial inclusion in their respective jurisdictions: Bank of Zambia is producing sex-disaggregated data collection for policymaking; Bangladesh Bank introduced a simplified KYC process for women to access basic bank and mobile money accounts; Bank of Tanzania added specific focus on closing the gender gap in their National Financial Inclusion Strategy (NFIS) published in 2017.
“Full financial inclusion is only possible if we fully include women and this means including 1 billion women,” Dr. Hannig emphasized.
Digital financial services hold promise for women’s financial inclusion
Responding to barriers faced in implementing digital financial services, Dr. Hannig highlighted that “1 billion women globally still do not own an account with a formal financial institution, yet 600 million women own a mobile phone.”
“However, ownership of mobile money accounts by women is on the rise, as is usage of digital payments by women, with 40 percent of women having made or received a digital payment in the last year in developing countries,” Dr. Hannig countered.
The panel revealed that digital ID policies have shown to be effective in countries such as India. “According to the last Global Findex, we have seen that 457 million Indians have been banked and many of them are women. However, almost 50 percent of this big number, are dormant accounts. How can we help to make these consumers, including women, to understand financial services, and use financial services? Usage is extremely important,” Dr. Hannig emphasized during the panel.
He added that “technology comes with risks, especially for those that are illiterate. We need to make sure that these vulnerable customers who get exposed to these new technologies are protected. If we don’t do that, we might face a situation that is that hype around financial inclusion can actually convert into a backlash against financial inclusion.”
“A backlash against financial inclusion is also a backlash against women’s financial inclusion.”
“We need to work very hard to ensure that access is complemented by usage and quality of financial services. Market conduct, financial education, financial capability, awareness, this is where we have to start — a bottom-up approach,” Dr. Hannig expressed during the panel.
AFI co-chairs the W20 Financial Inclusion Group under the Argentinian presidency of the G20, alongside the GBA for Women. As a co-chair, AFI supports the content development to inform W20’s policy recommendations as well as advocacy, and outreach on gender and women’s financial inclusion. Earlier this year, AFI took part in the W20 roundtable held in Riyadh, Saudi Arabi where Dr. Hannig discussed how holistic approach to DFS can lead to narrowing the gender gap.
Women 20 is an engagement group and a transnational network that brings together women leaders of civil society, businesses, entrepreneurship ventures and think tanks. The main goal of W20 is to influence the agenda of the decision-making bodies and agendas of the G20 leaders, with a view to impacting public policies towards greater gender equality and advocating for more prosperous and inclusive societies.
The 2019 W20 Summit in Japan will focus on four main topics including financial inclusion, labor inclusion, digital inclusion and governance inclusion, accelerating the pace and enforcing the implementation of various proposals.