Banking on the Future: Developing Financial Opportunities for MENA Women

Low rates of female participation in public life in the Middle East and North Africa (MENA) have long undermined the region’s potential. However, the new global push for financial inclusion for women is likely to have a transformative effect on the region’s economy and society.

More than half of the world’s adult population, roughly 1.7 billion people, does not have “an account at a financial institution or through a mobile money provider,” according to data from the World Bank, an international organization that provides financing, advice, and research to aid the growth of developing economies. While many populations are regularly excluded from the global financial system, one sector of the world’s population has consistently been denied access to financial opportunities: women.

In recent years, the term “financial inclusion” has become a buzzword in the development world, but what does it mean? 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 . . . [and are] delivered in a responsible and sustainable way.”

“[It is through] access to financial services such as credit, bank accounts, deposits, payments services, insurance, and pensions that financial inclusion is improved,” says Ghita El Kasri, COO of UnitedCoin, a multi-currency platform for the exchange of crypto and traditional currencies.

However, the availability of financial services and products is not the same as an individual’s access to them. Financial access is defined as a community’s ability to gain “access to a full suite of financial services, provided with quality, for everyone who can use financial services,” according to the World Bank. In order to decrease the number of “unbanked” people (individuals who do not use banks or banking institutions in any capacity) globally, more needs to be done to ensure that financial opportunities are available and accessible to underserved demographics worldwide — especially women.

Currently, women make up 56 percent of all unbanked adults 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 address the issue of global female financial inclusion, this seven percentage point gap has not narrowed since 2011, according to World Bank’s 2017 Global Findex database.

While these numbers might seem disheartening, there is cause to celebrate as the World Bank’s report also found that the “percentage of women in developing economies with formal financial accounts increased by 13 percentage points [between 2011 and 2014] . . . . In relative terms, these gains were comparable to those among men in developing economies during the same time period . . . .”

MENA Outlook on Female Financial Inclusion

The rates of financial inclusion in the MENA region continue to be cause for concern, as nearly 70 percent of the region’s adults do not have a bank account, according to data from various international organizations. The gender gap in account ownership is particularly wide in the MENA region, with only 35 percent of women, compared with 52 percent of men, having a financial account of some sort. The World Bank claims that this is the widest disparity of any region. However, the rate of female financial inclusion is not the only low development indicator from the region.

Although the global female labor force participation rate dropped from 56 percent to 54 percent between 1990 and 2017, it was still double the rate in the MENA region during the same time period. Between 1990 and 2017, the participation rate of females between the age of 15 and 64 in the MENA region’s labor force only increased from 19 percent to 22 percent, according to the International Labor Organization.

In a region where women face formidable social, cultural, and legal barriers to their pursuit of a better life, it is imperative that regional stakeholders collaborate to facilitate the entry of more women into the MENA’s workforce and financial systems.

Not only will this spur exponential economic growth it will also promote stability and sustainable development in the region. Increasing the number of women in social, economic, and political institutions in the region will also be critical for “the competitiveness of the MENA region, for employment creation, and for raising incomes and reducing poverty,” El Kasri added.

Benefits of Financially Empowering Arab Women

According to Mary Ellen Iskenderian, President and CEO of Women’s World Banking, a global nonprofit devoted to giving low-income women access to financial tools and resources, there is a strong connection between women’s access to financial products and services and their ability to provide greater opportunities for themselves and others.

From a microeconomic perspective, giving women in the MENA region access to quality financial services is vital, because it empowers them to invest in small enterprises while also investing in the overall well-being of their families and communities. The continued infusion of this kind of capital is likely to produce inter-generational change that will lead to long-term social mobility, economic growth, and stability in the region.

More women in developing economies need to gain access and control of their finances, because women are generally more likely than men to spend their income on educating their children, providing health care for their family, improving the quality of their living situation, and increasing the overall living standards of their dependents, according to Iskenderian.

Once women fulfill their families’ basic needs they tend to save their earnings. Generally speaking, women are more likely to use their excess capital to invest in establishing a business, expanding a small enterprise and “engaging in other productive financial activities that contributes to the overall growth of local economies.” In numerical terms, the “greater inclusion of women in the economy would enable gains of 2 percent to 3.5 percent in the GDP in some nations’ economies, according to research by the International Finance Corporation.

However, “the strongest arguments for women’s financial inclusion are economic,” according to an Alliance for Financial Inclusion report published in 2016. The ability of women to gain “access to finance increases [their] access to productive assets and increases productivity, and financial intermediation is linked to stronger economic growth.”

From a macroeconomic perspective, women’s economic empowerment contributes to “sustained inclusive and equitable economic growth, and sustainable development,” as highlighted by a 2015 study by the Global Banking Alliance for Women in partnership with Data2X and the Multilateral Investment Fund of the Inter-American Development Bank. International Monetary Fund (IMF) research shows that when women are able to develop their full labor market potential this translates to broader development gains.

These gains include higher levels of female enrollment in educational institutions, more training opportunities for female entrepreneurs, and the increased productivity of female-owned enterprises. Increasing the number of financially empowered women in the MENA also gives businesses in the region a unique opportunity to reach untapped markets to offer products and services that increase their bottom line and meet their customers’ needs.

“Inequality is not just a moral issue—it is a macroeconomic issue . . . Growth has to be more inclusive, and for this, finance has to be more inclusive . . . to close the gender and inequality gap,” according to Christine Lagarde, the managing director of the International Monetary Fund. Consequently, investing in girls and women in the MENA region needs to become a policy priority for national governments, the private sector, and international development organizations throughout the region.

In order to promote far-reaching and long-lasting change, the MENA region’s key stakeholders need to work together to eliminate the structural inequalities in financial institutions that prevent Arab women from accessing and controlling their finances. Moreover, civil society organizations have to work together to dismantle the discriminatory gender practices that prevent women from pursuing financial independence.

However, it is not enough to dismantle beliefs that allow gender inequality to persist. Governments and development organizations need to educate regional populations about the economic value that the financial inclusion of women will add to the region’s GDP, to their communities’ economic development, and to their quality of life. It is also necessary to mainstream the language and culture of gender inclusivity to  pave the way for new socio-economic and political norms that will financially empower Arab women and communities for years to come.