Financial services combined with affordable technologies and digital systems have expanded opportunities for millions of people in Africa. Many African countries are recognizing the importance of technology in the financial space thus speeding digitization for informal and semi-formal financial institutions.
Representing this progress, microfinance institutions (MFIs) are playing a key role in advancing financial services in Africa. They have been providing affordable and reliable credit services to the communities in countries like Tanzania, Kenya, and The Gambia. They are enabling financial services in rural areas where people are primarily engaged in farming and formal services are not actively present.
Microfinance institutions have emerged as a tool to combat poverty and provide financial resources to households and small businesses. Amongst many goals, women empowerment remains a crucial goal that many MFIs aim to achieve.
Over the past years, significant progress has been made to make women more financially included. More women take part in financial activities like savings, availing loans, payments, and more.
Though the growth rate of financial inclusion amongst women looks inspiring, there remains much work to do to achieve better gender equality. Despite substantial overall growth in 2017, the World Bank reported a 9% gap between women’s and men’s access to financial services.
In Sub-Saharan Africa, 48% of men have an account compared to only 37% of women. In countries like Ethiopia, Ghana, Kenya, Nigeria, and Tanzania, women are less likely to have an account compared to men.
According to Global Findex, “Nearly 190 million women have no account at a financial institution across Sub-Saharan Africa.”
The role of women has long been recognized as vital to household welfare. Microfinance institutions, with the help of technology, can help reduce this gender gap.
Promotion of digital skills
Mobile phones and digital infrastructure have taken over the traditional way of accessing financial services. MFIs can use these technology systems to provide mobile financial services and promote digital skills amongst women. This will enable them to manage their finances digitally and avail financial services at a click of a button.
Many female entrepreneurs are leading ventures and organizations that work towards raising women’s living standards. They aim to provide support to women, especially in rural areas. MFIs can promote such initiatives by providing quick and affordable financial services using mobile wallets and digital systems. Affordable and quick loans will also encourage more women to take part in economic activities like starting a new business or buying land for agriculture, or buying a house.
A wider impact on communities
Technology can help reduce the regional barriers to financial services and promote a wider reach. Using technologies and online systems can help expand the reach of microfinance institutions. They will be able to target more people especially in other areas where they are not physically available.