Financially Empowering Women, Disrupting Poverty
Financial Services have long been identified as a means to create opportunities for low-income households to weather setbacks and achieve greater financial stability over the long term. We know that within poor households in the developing world, men and women manage diverse financial portfolios and pursue complex strategies to manage the use of resources and meet their needs.
However, as individual economic agents, men and women often generate, allocate, control, and spend income in different ways. Women often earn smaller, more regular streams of income used to meet day-to-day expenditures, often to support children's nutrition, health, and education. They piece together income from multiple activities and remittances. Women's income does not often result in the larger lump sums that would allow them to weather shocks or make investments in their businesses. In contrast, men tend to receive larger lump sums that facilitate investments in productive assets, like farm inputs, and for which financial assets such as credit, bank accounts, and savings, are developed
These differences matter because households do not always operate as unitary entities nor do the individuals in them necessarily pool their resources. Men and women may disagree on how to spend income, what crops to plant, and which children to send to school. Women's ability to influence these household decisions, or bargaining power, is largely the result of their access to and control over resources. A growing body of evidence, including in a report the foundation recently conducted with the World Bank and the Better Than Cash Alliance, demonstrates how digitizing payments, transfers and remittances contributes to women's economic empowerment.
That's why the Financial Services for the Poor team is excited to announce that we are a part of a group of foundation teams that together are looking to effectively reach women and girls with innovations that simultaneously improve health, development and economic outcomes: for them, their families and their communities. As part of the Bill & Melinda Gates Foundation's 10th Grand Challenge Putting Women and Girls at the Center of Development, we are actively seeking your solutions that unpack and generate evidence on how to empower women and girls and promote gender equality – particularly equitable decision-making power – sustainably and cost-effectively, with potential for scale.
Why? Because when we address women's need for financial services:
- Low-income households are more productive. Globally women make up 43 percent of the agricultural labor force. Evidence consistently shows that improving women's direct access to productive resources would enhance their productivity, raise agricultural output, and reduce the number of hungry people in the world.
- Nutrition and health are prioritized. Women contribute significantly to household economic well-being as decision makers, especially related to food security and health. Research shows that women's investments in human capital are strengthened when they earn an income and improve their influence over household economic decisions. Women's influence over household economic decisions also improves with direct access to a range of financial services.
- Households can better weather shocks. Men and women weather the impact of shocks differently because of their different roles, responsibilities, and asset endowments. Women have a more difficult time coping with shocks because of their small and irregular income streams, limited savings, and fewer assets. Women's assets are also more vulnerable to being liquidated in response to shocks. Targeting women for social cash transfer programs can also lead to improved capacity to survive shocks.
One of the biggest challenges is to figure out why women don't more readily adopt and use digital financial services beyond mobile money. We are looking for strategies that could be a product, or business model, or technologies (or all three) that get women more actively using digital financial services beyond payments. We hope to see respondents put forward hypotheses and underlying reasons for why women don't rapidly adopt and use digital financial services, based on solid evidence. Respondents are encouraged to take into account those insights and apply them to create products and strategies that help poor women store, transfer, secure and build financial value digitally, thereby better economically empowering themselves.
This will be the Gates Foundation's first Grand Challenge on gender equality and women's and girls' empowerment; it signals a more concerted, multi-sectoral push to put women and girls at the center of our work.
So be creative! How do we get women more rapidly connected to and using digital financial services that can then be used to improve outcomes in other areas of their lives?
Originally published on Impatient Optimists