The financial gap between men and women is a global issue. It is a problem because economically excluding women prevents them from participating and contributing to the social and economic activities of society. This is bad for women and for society.
In South Africa, the government has implemented different measures to address gender equality. But policies on financial inclusion have always been generalized and not gender-specific. Financial exclusion It is when people do not have access to financial services or cannot afford them. Financial inclusion means being able to access credit and manage or mitigate risks with products that meet the basic needs of a person.
In the case of women entrepreneurs, financial inclusion means being able to save and invest, and having products that help them manage their businesses in a sustainable way.
The focus of my PhD investigate was to analyze the conditions that explain financial inclusion among women-owned businesses.
My findings show that South African women are financially included in terms of bank account ownership. But they are not financially included and do not use a variety of other financial products or services.
I also discovered that there is a huge gender gap in terms of policies and interventions that would help women entrepreneurs. Government policies have not been designed to address the particular situations faced by women who run a business.
Financial inclusion and women
My study involved 30 female entrepreneurs in South Africa’s economic center, Gauteng, as well as five legislators.
My findings align with previous research This shows that South African women are more economically included than those of other countries in the Southern African Development Community.
This has been attributed to the fact that South Africa has an extensive grant distribution program. Upon 18 million are paid every month by the South African grant agency SASSA. Most are paid into bank accounts and recipients use a Mastercard to withdraw money at ATMs and to swipe in stores.
But having a bank account is not the same to use it. Research has shown that 28% have active bank accounts, defined as those with a monthly deposit and where transactions take place on a monthly basis. A higher proportion transacted on their accounts only twice a month or had inactive accounts.
Most of the female entrepreneurs in my research said they had difficulty accessing financial services and had to partner with a man before being heard by financial stakeholders. Most of the women also attested that they were still restricted to household financial responsibilities. They also said they had limited exposure to the benefits of financial institutions and the products they had to offer.
Other limitations that emerged in my study were:
- Lack of information
- Issues such as race, social class, and family values that prevented women from taking responsibility for finances.
- Related issues such as discrimination, insufficient networks and lack of collaboration, lack of skills and illiteracy.
Participants also pointed to the fact that they tend to be declared insolvent by financial institutions, as they have a greater tendency to go into debt and their businesses to liquidation than their male counterparts.
What’s in place
Different institutions are working on financial inclusion in South Africa.
The first is the National Treasury. The Financial Sector Conduct Authority also has a mandate for financial inclusion.
The Financial Sector Charter was another initiative implemented by the government and financial service providers to transform the sector by increasing the use of and access to financial services. Part of this has been an ongoing commitment to financial literacy efforts.
But none of the interventions carried out so far has decisively addressed the issue of women’s financial inclusion.
What to do
The critical response highlighted from the study is that the government should facilitate and have direct programs targeting women. This initiative would allow the government to add policies that financially empower women and encourage equitable access to financial services for women.
Women should also be helped to become economically empowered and self-sustaining through financial education about the opportunities accessible to them.
Second, there should be sufficient financial aid available for women entrepreneurs. The list includes credit systems, access to loans, financial grants, and other financial products.
There should also be equal access to financial services, mentoring and support systems.
Lastly, the government should provide more programs to monitor and facilitate women entrepreneurs to help them sustain their businesses. This could be achieved through the collaboration of government departments with the different networks to ensure constant monitoring and evaluation of gender mainstreaming programs.
Several developing countries, particularly India, Brazil, the Philippines and Malaysia, have signed gender budgeting programs that track how budgets respond to gender equality and women’s rights requirements. The results have been higher rates of financial inclusion and women becoming active participants in the economic sector.
The gender budget leads to financial inclusion because it promotes gender equality in the formulation and administration of fiscal policy.
This should be replicated in South Africa.
India has also adopted a number of financial inclusion initiatives. Indian government has started schemes such as “No-frills account.” He also created a system to help people access loans and credits. This was implemented to ensure that credit applications meet basic requirements before credit is issued to individuals.
It has also been proactive in terms of technology, promoting mobile banking and branchless banking. What’s more, financial education it is a large part of what is being done. This is designed to help people understand financial services products.
The success of these strategies has led to more inclusive development for women entrepreneurs. As a result, accessibility to finance has boosted the long-term macroeconomic performance of Indian women. Particularly in low-income areas the initiative brought benefits associated with greater gender equality and social cohesion in communities.
Similar initiatives could ensure better financial inclusion opportunities for South African women entrepreneurs.