It seems hard to believe, but as recently as the 1970s, it was still legal for U.S. banks to refuse to issue a credit card to a woman because of her gender, and to require a husbands’ permission before married women could get credit or start a business. Keep that context in mind as you consider the following statistics about women’s financial and economic rights and access in the developing world:
- Many Middle Eastern and South Asian countries require women to have a husband or male family member co-sign a loan – and even in countries without legal discrimination, many banks discriminate against women in their lending practices.
- While the mobile revolution has turbocharged financial access across the developing world, family and societal censure and the fear of harassment and lack of trust in agents/operators are key reasons why women are 14% less likely to own a mobile phone than men – a number that increases to 38% in South Asia.
- More than 200 million women live in countries where they need their husband’s permission to start a business.
- As of 2014, 28 economies had 10 or more legal differences for men and women related to business and economic opportunities – 25 of which are in the Middle East and North and Sub-Saharan Africa.
In light of these obstacles, it may come as no surprise that over 1.3 billion women – including more than 40% of women around the world and over 70% of women in Africa – lack access to the formal financial system. And though women’s access to formal finance has grown in recent years, the financial inclusion gender gap hasn’t changed since 2011 – it remains at 9% across the developing world, and goes as high as 18% in South Asia. This lack of parity extends to entrepreneurial activity, as up to 70% of formal, women-owned small and medium enterprises (SMEs) in developing countries are unserved or underserved by financial institutions, resulting in a credit gap as high as $320 billion. To take one glaring example of this imbalance, in Sub-Saharan Africa, less than 12% of agribusiness investments are directed at female smallholder farmers – though women produce more than 80% of the continent’s food.
That last stat hints at the sweeping impact of this exclusion, which is undermining the prospects not only of women, but also of their families and overall economies. And there’s a growing awareness that changing this dynamic is key to ending poverty, both at the household and national levels. In emerging markets, women invest a remarkable 90% of their income in improving their families’ wellbeing – compared to just 30-40% for men. And research has shown that providing women with access to financial services enables them to play a greater role in their families’ economic decisions, boosting their children’s health and education.
Studies have also estimated that providing female farmers with equal access to financial and agricultural resources could increase their production in developing countries by 20 – 30%, feeding an additional 100-150 million hungry people around the world. And since small and medium businesses are the biggest contributors to employment in low-income countries, closing the credit gap for women-owned SMEs could boost per capital income – according to one study, by an average of up to 12%. What’s more, these statistics don’t take into account the chilling effect of gender-based exclusion on potential entrepreneurs. For instance, for every female entrepreneur in the Middle East and North Africa, there are six women who want to start a business but do not.
But though this situation looks dire, there is a bright side: Due to the growing recognition of inequality’s impact, both the global development community and many low and middle-income countries themselves are making women’s financial and economic empowerment a priority. A growing number of initiatives aim to boost women’s rights and access, in areas ranging from mobile financial inclusion, to supporting women-owned SMEs. And a 2013 World Bank study found that 44 countries – largely in the developing world – had made legal changes to increase women’s economic opportunities in the preceding two years.
Looking ahead, these changes are likely to accelerate. Empowering women and girls is a key element of the U.N.’s new Sustainable Development Goals, putting the issue more firmly on the agendas of NGOs and governments worldwide. And women are making impressive strides toward greater political representation in a growing number of developing countries. For instance, they make up 64% of Rwanda’s parliament, and over 40% of the parliaments in countries ranging from Nicaragua and Ecuador to South Africa and Senegal. Though other emerging economies have far more progress to make (not to mention the U.S., where just 20% of Congress is currently female), the percentage of women in parliament has nearly doubled worldwide in the past 20 years. And while the mere presence of a credible female presidential candidate is viewed as historic in America, Africa has already sworn in four female heads of state. This rising generation of female leaders is likely to mobilize more public resources toward the financial and economic empowerment of women.
The combined potential impact of these changes provide considerable reason for optimism. In the developed world – though important progress remains to be made in attaining full parity in entrepreneurship and other areas – legal obstacles to women’s economic advancement have all but disappeared since the days when a husband’s signature was a prerequisite to financial access and entrepreneurship. In light of growing momentum in the developing world, it looks increasingly likely that many emerging economies will follow the same path toward equality – perhaps in a matter of years rather than decades.
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