New Insights into the Financial Behaviour of Men and Women in Six African Countries

Jun 17, 2013
Financial exclusion in Africa is high, but financial exclusion of African women is even higher: While about one third of the population is completely excluded from the financial sector in Botswana, Namibia and Uganda, this figure amounts to more than half of the population in Rwanda, Malawi and Zambia – and in all six countries more women than men do not have access to services such as bank accounts or payments. Why is there a persistent gap in the usage of financial services by men and women? Do women find it harder to access formal financial services? What are the obstacles that women face when approaching these providers? What could be the reasons for choosing informal services over formal ones? The recent set of country studies conducted by GIZ on behalf of the German Ministry for Economic Cooperation and Development (BMZ) can help us gain a better insight into the very different financial lives that men and women lead in each of the six countries. The largest gender gaps were found in the usage of formal savings products, particularly in Botswana (14.6 % more men than women access formal financial services), Uganda (12%), Rwanda (9.5%), and Zambia (9%). Compared with credit and insurance, the difference in the ‘savings’ category is relatively high. Several reasons were identified in the course of the research: First, women tend to have lower incomes and higher expenses. They are often financially responsible for the whole family and therefore have less money available for savings. If they do save, they prefer informal savings groups over formal financial institutions. Women feel more comfortable talking about their financial matters to people they know, such as other women from the same neighbourhood who often set up these informal savings groups. It also is a question of trust: In some countries, people mistrust in institutions because of bad experiences in the past, e.g. of depositors losing money because of bank closures. In Zambia, only 22% of adults trust in banks. Besides, when income is irregular and excess cash is hard to find, flexible repayment schedules and regular small payments are very important advantages of informal services. The costs of transport and time for travelling to the nearest bank, particularly in rural areas, are other issues that can easily be overcome by using local informal services. With the exception of Rwanda, the financial sectors in the countries researched have a very high concentration of foreign banks, mainly located in urban centres. Formal service providers, particularly these foreign-owned banks, find it hard to adapt to the local market. They still take a rather conservative lending approach, focusing on salaried employees with stable income, and requesting collateral. Since more men than women have salaried jobs, access to formal financial services is difficult for women. For example, by asking for payslips as precondition for loan appraisal, banks automatically exclude the self-employed and non-salaried segments of the work force. Obtaining significant assets that can serve as collateral (e.g. land property) is another major constraint for women, as customary laws still prevail in many regions of the countries studied. These laws can require that the head of the household (mostly the husband) is registered as the property owner, not his wife. Often customary inheritance laws are also found to be discriminatory against women.
Similar constraints can be found with micro and small enterprises: formal banks tend to focus on medium or large businesses that have attained a certain degree of formalisation. Many women-owned enterprises tend to be small or micro, are often informal, and face severe difficulties in accessing formal credit – for example if they are not able to provide financial statements and proof of formal business registration. At the same time, almost no financial institutions target this niche of underserved potential clients – unmet demand among women-owned enterprises in sub-Saharan Africa ranges from an estimated 30% for medium-sized enterprises to more than 60% for micro enterprises.
Insurance providers, but also banks and other formal financial institutions, fail to target women as a clientele; e.g. in advertisements that clearly address the male (working) population. Long and complicated claims procedures and a widespread perception that the costs are too high for no apparent (immediate) do not help to convince people to buy insurance either. Providers need to react by improving their marketing and costumer education and by making their processes more transparent.
Action needs to be taken, not only by service providers but also by regulators. On April 25th 2013, Central Bank Governors and high-level political and private-sector decision makers from the SADC region were invited to the South African Reserve Bank to discuss the ‘Advancing African Women’s Financial Inclusion’ policy recommendations which were drafted during a MFW4A expert round table in 2012. Mrs Graça Machel, the founder of the New Faces New Voices network summed up the recommendations as follows: ‘Regulators and policy-makers need to play a more transformative or developmental role in deepening financial access for women, and financial institutions need to have clear strategies for targeting women in order to expand their access to financial services[…]”. The conference encouraged participants to take the discussions to the national level and push forward Women’s Financial Inclusion in Africa.
If you would like to find out more about why men and women don’t use financial products in the same way and what should be put on the policy agenda in each of the countries, please have a look at our Synthesis Report or the detailed country reports: Namibia
Uganda Zambia

Judith Frickenstein is financial sector advisor at GIZ’s programme Promoting Financial Sector Dialogue in Africa: Making Finance Work for Africa, where she is in charge of Gender and Agricultural Finance. Prior to her current position she led the economic empowerment component of GIZ’s gender sector programme, where she helped to design a regional programme in the MENA region and consulted economic development programmes in Albania, Montenegro and Uganda. Before joining GTZ (now GIZ) in 2007, Judith worked for the Retail Development Group in Cologne, Germany and for the German DEVK insurance company. She holds a diploma in economics from the University of Cologne and completed a vocational traineeship at an insurance company. Sharissa Funk is part of the GIZ team supporting the Partnership MFW4A. She mostly focuses on gender finance issues in her work. Previously, Sharissa worked on agricultural finance with the Frankfurt School of Finance and Management and with Peruvian agricultural cooperatives and Microfinance Institutions for Oikocredit, a social investor. She holds an Economics degree from University of Tuebingen, Germany.

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