The important role of gender focus in financial inclusion

Financial inclusion is a crucial component in the quest to elevate the role of women in the economies of Africa. Women are increasingly playing a role in growing the continent’s largest sector, Agriculture. According to the African Union Development Agency (AUDA), women account for approximately 43% of the agricultural labour force in developing countries and 50% of the agricultural workforce in most Eastern and Southern African Countries. While positive steps have been made in enhancing gender focus in financial inclusion in this fast-growing sector, there is still a long way to go to bridge the equity gap. Women in commercial agriculture face challenges such as lack of credit history and collateral, limited knowledge and learning opportunities and limited market entry opportunities. This is in addition to systemic barriers driven by policies, practices and resource allocation.
 

Various sector players continue to adopt strategies that foster inclusivity to mitigate these challenges. Through various programs across Africa, KPMG International Development Advisory Services (IDAS) plays an active role by continually seeking to bridge the gap between private sector and development partners to catalyse investment in areas critical to enhancing financial inclusion for women. KPMG IDAS also works to equip underserved communities with access to finance.
 

One such program is the Mastercard Foundation Fund for Rural Prosperity, which is managed by KPMG East Africa. When the Fund was conceptualised, financial inclusion for the underserved rural population was at the heart of the US$ 50 million challenge fund. The Fund supports a diverse portfolio of 38 participant companies providing financial products and services in 15 countries in Sub-Saharan Africa. This portfolio continues to create financial opportunities and empower smallholder farmers, including women, by delivering better access to appropriate and affordable savings, credit, insurance and transaction-based products and services to their rural customers.
 

Since its inception in 2014, the Fund has impacted over 5.3 million customers in Sub-Saharan Africa, 35% being women living in rural areas. The number of customers impacted by the Fund ended up amounting to five times the original target. Over 3 million people, women included, have received some level of training support and capacity building to utilise the 171 financial products and services launched by the participant businesses. Close to 5,000 direct jobs have been created within the portfolio companies, with 38% being jobs for women. This is in addition to a significant number of indirect jobs and uplifted beneficiary income as noted in the 30 June 2022 Fund results and impact report. Women have been instrumental in steering and implementing some of the participant projects that received FRP funding either as business owners, directors or senior leadership and continue to shape the inclusive finance landscape. Examples of these women-led participant businesses include Inuka in Kenya, Baobab+ Mali and Pula Advisors in Kenya and Zambia.
 

As seen in the insightful Fund video that captures FRP’s journey, Mame Dior, CEO of Baobab+ Mali speaks on how the affordable financial products and services launched through the FRP project are impacting communities – ‘In addition to the social impact created by the electrification of rural areas, we are contributing to the financial inclusion of our targeted population.’
 

The reason these impact results are particularly impressive from a gender-lens perspective is because they demonstrate that financial inclusion does indeed play a crucial role in breaking the economic bias against women. Fund participants have been developing a more in-depth understanding of the needs of smallholder farmers over the years and offering more than just financial solutions. In a gender study initiated by the Fund in 2018, some participants noted that certain business models such as input based finance, asset financing, out-grower schemes and direct banking proved favourable to female customers thus increasing uptake and usage. These innovative product and service offerings have translated into a wider customer base than initially anticipated, with women forming a notable percentage.
 

In addition to equipping female customers with financial literacy training, Fund participants are also leveraging technology to provide affordable, customer-centred and efficient solutions while in the process eliminating gender bias in financial inclusion. With increased access to technology through mobile phone devices and solar products, women’s access to digital financial services has increased. For example, Fund participant Musoni Microfinance noted that by embracing technology in its offerings, 70% of the new customers onboarded between 2018 and 2020 were women. Faith Kinyanjui, Partnerships Project Manager, Pula Advisors shared in the Fund video that through the FRP funding, the business was able to develop technology that facilitated collection and analysis of data to provide insights on how best to impact smallholder farmers. For Sprint Money, a business strategy that incorporated groups has worked very well in reaching female customers by allowing them to access financing as a unit/pool of women. Through their pooled savings, women are able to access funding using cash collateral thus mitigating the challenge faced by women in owning and fronting property as collateral. Apollo Agriculture's product design overcomes several challenges that undermine financial inclusion for women farmers. For example, Apollo provides phone-based training which allows inclusivity, does not require land titles, and provides credit to farmers with no previous credit history. These interventions have collectively empowered women to manage and grow their enterprises.
 

The lessons learnt through the Fund demonstrate that gender parity in financial inclusion could potentially drive social and economic progress. This may be achieved by increasing the ability of women to invest in modern technologies to raise productivity; product diversification into high value crops; and asset acquisition to increase sustainability. When access to finance for women is further integrated with capacity building and access to essential market functions necessary to grow their economic activities, the impact on poverty reduction and food security in Africa is likely to be significant.