Shaping the financial sector for a more gender-inclusive system

Policymakers worldwide have embraced financial inclusion as crucial to economic empowerment and a response to increasing inequality. Mounting evidence demonstrates that it has significant benefits for excluded populations, particularly women and people living in poverty. According to academics, financial inclusion is considered the process of ensuring access to affordable finance in the formal financial sector by every individual excluded from the financial mainstream, especially the underprivileged. Four factors have drawn the attention of academics and policymakers to financial inclusion. First, financial inclusion is viewed as a major strategy for achieving the UN’s Sustainable Development Goals. Second, financial inclusion contributes to increased social inclusion and cohesion in many societies; third, it can help bring poverty levels down; and fourth, it has additional socio-economic benefits in terms of income, employment, equality, and literacy. Over the last few years, the financial sector in emerging markets has embraced the mission of financial inclusion, and building corporate understanding of the role of finance in social inclusion.

Gender Equality, Social Inclusion, and Financial Institutions

To truly build inclusion, particularly for women, within the financial sector, it is vital financial institutions start with an understanding of gender equality and social inclusion. Gender equality and social inclusion (GESI) is on the agenda of governments, civil society, corporations, and the United Nations, and is endorsed by the sustainable development goals – Goal 5  ‘ending all discrimination against women and girls’ and Goal 10 ‘reducing inequality within and among the countries’. Previously embedded within the concept of social inclusion, the aspect of disability inclusion is now elevated to a distinct goal, reflected in the updated terminology of gender equality, disability and social inclusion (GEDSI).

Gender equality, disability and social inclusion (GEDSI) is a holistic approach that considers the intersectionality of gender identity, sexual orientation, age, ethnicity, religion, disability, and socio-economic status as drivers of marginalization and exclusion. Financial inclusion for women is seen as a vital step in tackling gender discrimination and is also an opportunity to progress society and the economy at large in terms of growth and empowerment. That said, women and marginalized populations (including people with disabilities) continue to face barriers in many circumstances, whether it be access to affordable financial services, discriminatory statutory and customary laws, disparities in work, which include lack of representation in leadership positions, and levels of gender-based violence. 

Documented evidence on the adoption of the gender equality/GESI/GEDSI approach within financial institutions is scarce, although there has been a rise in the integration of gender equality, social inclusion and women’s empowerment in the design and development of financial products and services. 

Gender Self-Assessment (GSA)

Organizational gender self-assessment or gender audit tools have been developed extensively by development organizations, including the United Nations, with the rationale that organizations’ programming and procedures must incorporate gender equality. The gender self-assessment process helps to capture and examine current organizational characteristics, and suggest practices that could support the organization to integrate real change toward gender equality in the dimensions of organizational culture, technical capacity, accountability and political will. The UN General Assembly has mandated the promotion of gender equality and the empowerment of women in all parts of the UN system. As a result, UN Women and other agencies within the UN system have supported government organizations, development agencies, and other entities in the development of gender audit tools to ensure their commitment and progress on the ground.  A study by McKinsey and Co. also found that “companies in the top quartile for gender diversity on executive teams were 21% more likely to outperform on profitability”; studies like this are growing the business case for gender balance. Building an inclusive workplace could be one of the best managerial solutions for maintaining and enhancing gender equality and a crucial step towards improving the delivery of products and services of any organization, including financial institutions.

Good Return’s Technical Assistance – Bridging the Gap for a Gender-Inclusive Financial System 

While some people may easily see the benefits of gender equality for businesses, changing mindsets is often still needed to combat pervasive stereotypes around who would make a good entrepreneur to invest in. Good Return’s Impact Investment Fund and associated programming takes a gender lens approach, integrating gender-based factors into its investment strategy and analysis to produce financial returns and move towards gender equality. Through the Impact Investment Fund, Good Return and partner investors incentivize financial service providers to lend to marginalized business owners who are likely to be excluded from the formal financial system by de-risking the investment through a limited loss guarantee. The majority of investee entrepreneurs are women. 

Research shows that impact investment could be more effective with combined technical assistance which can improve investor knowledge, investee business performance and impact for beneficiaries and help to strengthen the market overall. Taking this approach, Good Return supported partner financial institutions in Nepal, Cambodia, Fiji and Indonesia by providing technical assistance using gender self-assessment tools, and helping each institution to formulate its inclusive policies and practices. The gender self-assessment included a combination of quantitative and qualitative methods – desk reviews of policy and procedures, surveys, focus group discussion and key interviews with staff. The process involved collaboration with the gender team within the institutions – gender focal points and champions – the establishment of which has been a first step towards the action plan. Based on the post-assessment report, Good Return further supported partner organizations in the formulation and implementation of their gender action plan.   

In Nepal, Good Return supported Unique Nepal Laghubitta Bittiya Sanstha Limited (Unique Nepal) – a Class “D” microfinance institution providing services to poor and marginalized communities. Good Return helped Unique develop its GEDSI and safeguarding policy, and provided Training of Trainers to 17 staff members to embed the policies. The trained staff members then went on to conduct in-house training sessions for their wider team (183 participants), including senior management and Board members, to enhance their understanding of gender equality, safeguarding principles, and the importance of being active bystanders in promoting a safe and inclusive workplace（Photo 1).

In Indonesia, Good Return collaborated with CROWDE – an innovative agriculture-focused fintech company that is empowering farmers through access to technology and capital. The collaboration included technical assistance on gender self-assessment, followed by the development of their whistleblower and safeguarding policy, and a staff training program on gender equality and prevention of sexual exploitation, abuse and harassment (PSEAH) (Photo 2).

The gender self-assessment work with partners, combined with an action plan, the formulation of policies, and improving practice, has been complementary to the partners’ drive to be part of Good Return’s Impact Investment Fund, as it supports internal progress as well as staff’s ability to see both men and women as investable. In an evaluation carried out by Good Return, Unique Nepal mentioned that they found the technical assistance extremely useful in shaping their plans and policies, ensuring they updated their GESI policy to include disability and also establishing a safeguarding policy. Unique Nepal is ensuring to continuously provide refresher training sessions on GEDSI (updated from their GESI policy) to the entire staff annually and training to the new recruits to enhance and develop a deeper understanding of GEDSI concepts, which were new topics for many. Clarity on gender issues and safeguarding helped Unique ensure a consistent approach towards nuanced and complex reported incidents and dealing with sensitive information and confidentiality within the organization. It further supports all staff to deal with clients in the field, both men and women, in a fair and respectful manner, and contribute to similar practices in the institution itself. Unique Nepal has now made sure female staff members are on their complaint resolution committee, as recommended in their gender self-assessment report. 

The gender technical assistance process has supported Good Return’s partner financial institutions in identifying their internal challenges and opportunities for increasing gender skills, and organizational and client equality. It examined the existing barriers and gaps, the needs of men and women at an institutional level and supported the promotion of equal access to leadership and opportunities within organizational policies and structures. 

Technical assistance provided through gender self-assessments and training tools have been stepping stones in developing the conceptual understanding of gender equality and financial inclusion within financial institution policies and structures in alignment with gender lens investing. It has also been pivotal in narrowing the access gap that exists in the financial system so that both women and men can be treated fairly and benefit from investment.