Empowering Arab Women through Financial Technology

Although the financial exclusion of women in the Middle East and North Africa (MENA) has historically undermined the economic potential of the region, the recent introduction of financial technology (fintech) could play a vital role in disrupting regional financial systems, social paradigms, and gender stereotypes.
Empowering Arab Women through Financial Technology

Since the United Nations Fourth World Conference on Women held in Beijing in 1995, gender mainstreaming, also known as the process of highlighting gender issues and bringing them to the forefront of society, has become a central part of social and economic development strategies globally. The gender mainstreaming approach is unique because it assesses “the implications for women and men of any planned action, including legislation, policies or programs, in any area and at all levels,” according to the United Nations Economic and Social Council definition of the term.

Although the global popularization of this concept has enabled all of the world’s regions to record a narrower gender gap over the past ten years, more needs to be done to accelerate the gender equality agenda. According to the 2017 World Economic Forum Global Gender Gap report, at the current rate, “the overall global gender gap can be closed in 61 years in Western Europe, 62 years in South Asia, 79 years in Latin America and the Caribbean, 102 years in Sub-Saharan Africa, 128 years in Eastern Europe and Central Asia, 157 years in the Middle East and North Africa, 161 years in East Asia and the Pacific, and 168 years in North America.”

One of the main elements of gender inequality that needs to be addressed in order to promote the progress of women is financial inclusion. Like gender mainstreaming, the concept of financial inclusion has also become popular in the development space recently. The World Bank defines financial inclusion as a state that is achieved when “individuals and businesses have access to useful and affordable financial products and services that meet their needs . . . [which are also] delivered in a responsible and sustainable way.”

While global stakeholders have made concerted efforts to increase the rate of female financial inclusion, the economic marginalization of women continues to be an issue worldwide. Currently, women make up 56 percent of all “unbanked” adults  i.e., those without an account at a financial institution or through a mobile money provider) and women’s financial inclusion lags behind that of men “with 65 percent of women [having] an account compared with 72 percent of men.” Despite increasing efforts to close this seven percentage point gap, it has not diminished since 2011.

Although financial inclusion has become a policy priority for several countries in the Arab world, “deficiencies in financial infrastructure and regulatory frameworks [in the MENA region] make expanding access to finance costly and risky for banks,” Ghita El Kasri, COO of UnitedCoin, a multi-currency platform exchange crypto and traditional currencies, told Inside Arabia. The great gender disparity in account ownership that exists in the MENA region is a particular point of concern. It is estimated that only 35 percent of women in the region, compared with 52 percent of men, have a financial account of some sort, according to the World Bank.

Even though women globally have made some gains in terms of financial empowerment, in absolute terms, they still face great challenges when it comes to accessing financial services and products–especially in the MENA region. However, the spread of fintech could change that.

Financially Empowering Arab Women through Technology

There is a growing body of research that demonstrates the positive impact that digital financial products and services, like mobile money services, payment cards, and other fintech applications, could have on addressing the global issue of female financial exclusion.

As the region with one of the lowest levels of female financial inclusion in the world, the MENA region is in great need of innovative, cost-effective solutions that facilitate the financial empowerment of Arab women. Keeping in that mind, how could fintech be used as a vehicle for the social and economic inclusion that the MENA region needs?

Over the next couple of years, fintech is likely to play a major role in helping Arab women achieve progress by enabling them to create digital identities that allow them to access any banking service. By making their data accessible to important players in the global financial system, women in the region will inevitably gain more access to the financial services and products.

Fintech could also help women in the MENA region overcome two main barriers that they face when trying to join the traditional financial system. First, fintech could make accessing banking systems more affordable for women, by stimulating competition between financial institutions. Thus, enabling women to become integrated with micro-entrepreneurial ecosystems and providing them with the skills they need to gradually be incorporated into macro-entrepreneurial ecosystems in the region.

Second, fintech could also increase the financial inclusion of women in the Arab world by enabling women to access banking products and services from anywhere, at any time. Bank branches are not always close to women, especially in conservative cultures or rural regions, and it can be difficult for them to leave their homes to go to a bank or even find one.

Availability Does Not Equate to Access

When it comes to financial inclusion, the main challenge that women face in the MENA region is a cultural one. However, fintech can help overcome the social issues that prevent women, and other disenfranchised populations in mainstream financial ecosystems, from accessing financial resources to fund their personal and entrepreneurial pursuits.

“Access to financial services to be able to invest, innovate, take advantage of market opportunities, manage cash flow and costs, and reduce risks.”

It is through access to financial services such as credit, bank accounts, deposits, payments services, insurance, and pensions that the financial inclusion of women can be improved. Therefore, regional and global fintech companies need to give women and female entrepreneurs more “access to financial services to be able to invest, innovate, take advantage of market opportunities, manage cash flow and costs, and reduce risks,” El Kasri added.

Another factor that is likely to facilitate the spread of fintech in the MENA region is the shrinking digital gender gap across the Arab world. In 2013 the gap was 19.2 percent. By 2017, it had dropped to 17.3 percent, according to data from the International Telecommunication Union.

“Fintech should be used as a tool alongside non-digital means to increase financial inclusion of women in the MENA region.”

However, fintech cannot be viewed as the sole solution to the gender disparity in financial inclusion. It must also be coupled with relevant policies that address the digital gender gap in the MENA. Until the digital gender gap can be closed, “fintech should be used as a tool alongside non-digital means to increase financial inclusion of women in the MENA region,” Blake Goud, CEO of Responsible Finance & Investment (RFI) Foundation, told Inside Arabia.

The availability of technology and financial services and products to Arab women should not be confused with financial inclusion or financial access. The World Bank defines financial access as the ability of individuals to “access . . . a full suite of financial services, provided with quality, for everyone who can use financial services.” Therefore, equality can only be achieved when men and women in the region are given access to quality financial resources that help them develop and thrive in their respective communities.

Various policies need to be put in place in order to achieve greater financial inclusion for women in the MENA region’s financial systems. These strategies include educating women about the benefits of financial services, equipping them with the basic requirements to qualify for these services, encouraging banks to implement new ways of evaluating customers, incorporating non-bank financial institutions in the economic empowerment process, and providing more funding to female-owned and managed micro, small, and medium enterprises.

Ultimately, by making the concerns and experiences of women an integral part of the design, implementation, monitoring, and evaluation of development policies and programs, women in the MENA can start to make more development gains in political and socio-economic spheres. If key stakeholders in the region can collaborate and deploy effective strategies that eliminate the gender gap in the realms of digital and financial inclusion, Arab women will be free to unleash their full potential and, by extension, that of the MENA region.