Nigeria Faces Significant and Growing Gender Gap in Financial Inclusion


Tuesday, September 29, 2020 / 04:33 PM /by  CBN / Header Image Credit: CBN, EFInA


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This gender gap is larger than in most other countries, and whilst financial inclusion is increasing for both men and women, the gender gap is widening.1 In contrast, comparator countries in Africa such as Kenya, South Africa, Tanzania, and Uganda all exhibit a decreasing gender gap. The gender gap in Nigeria represents a major issue to be resolved if the country is to achieve the targets it set in its National Financial Inclusion Strategy (NFIS).


Through the analysis of gender specific data, this study seeks to better understand:

a) how usage, access, and supply of financial services differ between women and men in Nigeria,

b) what specific gaps and challenges impede Nigerian women's access to financial services, and

c) what can be done by CBN, EFInA and its partners to address the gender gap and reduce inequality


Our analysis found that the most important drivers of financial exclusion2 for both genders are lack of income, lack of education, and low trust3 in Financial Service Providers (FSPs) and that these factors also drive the gender gap.


They jointly explain 60% of lack of access for both genders. Because women have lower income, education, and trust levels than men, these factors also, to a large extent, explain the gender gap in overall exclusion. In other words, women and men with similar levels of income, education, and trust in FSPs are approximately equally likely to be financially excluded yet women typically have much lower levels of income and education than men do. Income, education, and trust in FSPs are so important that the effects of other factors on exclusion-that are commonly believed to be strong and that are often the focus of interventions-are dwarfed by comparison.


Income and education are generally known to be gendered factors. Amongst others, socio-cultural drivers and gender expectations lead to women having lower levels of income and education then men. Thus, to overcome the gender gap in financial inclusion, these gendered drivers should be understood and tackled as the core binding constraints.


Gender plays a significant role in formal financial inclusion. Women are less likely to be formally included than men, even when controlling for levels of income, education and trust. Given the NFIS's ambition to increase formal inclusion as the preferred status, it is vital to look beyond absolute exclusion and to understand the gendered drivers of these differences when designing interventions.


Three additional variables complement the dominant factors (levels of income, education and trust in FSPs) when looking at formal and informal-only inclusion. The first, mobile phone ownership, acts as a powerful predictor of formal financial inclusion. The second, location in rural areas, corresponds with a greater likelihood that individuals, even at higher levels of income and education, will rely only on informal services. And the third, marital status, has a complex and nuanced effect on informal-only inclusion.


Our discussions with excluded women confirm that, even though they do have financial needs and ambitions, low income limits the need for financial services that they themselves perceive. 

Approximately half of the Nigerian population earns less than 700 Naira per day, and those we spoke with did not feel they had enough income to save, make investments, or take risks on loans. They devote the little income they have to living costs (e.g., food, rent, cooking fuel, and clothes), their children's education, and, occasionally, family and community events (e.g., births, weddings, and funerals). That is not to say that they have no need for relevant financial products and services. For example, structured savings solutions could support women's efforts to save effectively and manage their often competing daily needs. Similarly, financial products that enable traders to manage business purchases and savings could ease financial setbacks and help low-income populations in Nigeria, particularly women, avert volatility.


FSPs do not see a sufficient business case in serving the financially excluded, but the underlying fact-base can be strengthened. Today's cost structures, licensing requirements, and other operational considerations such as credit risk management, combine with the existence of opportunities with a more attractive risk-adjusted return to dissuade (most) FSPs from targeting low income populations; they simply have more commercially attractive alternatives. Although FSPs consistently mention this lack of commercial viability, the extent to which lowcost solutions could be viable without improving livelihoods, is unknown. There is no in-depth insight into cost structures, opportunities for economies of scale, cost savings and joint investments, or the ability and willingness of customers to pay. Each of these elements should be understood in order to determine the actual gaps in commercial viability and to prioritise the interventions and innovations best suited to overcome this lack of viability.


Yet, creating that insight will be resource-intense and may require collective action, as it is unlikely to be a responsible investment for any one single provider. Interventions focused on increasing and deepening women's financial inclusion must focus on three key areas to achieve sustainable change and may be complemented by subsidy efforts to provide services in the meantime.


First, the focus of efforts to boost women's financial inclusion should shift beyond product innovation to address the underlying drivers of gender gaps, through more systematic efforts to address women's incomes and economic empowerment, education and boosting trust in FSPs.8 Our analysis suggest that these are key to closing gender gaps and improving the financial inclusion of women. Second, ideally in parallel with the first point noted above, targeted collaboration across stakeholders is needed to understand and identify options for improving the commercial viability of serving financially excluded women, even in the absence of improved income, education, and trust in FSPs. Such effort would need to outline the degree to which commercial viability is actually lacking and then determine interventions that could 'tip the balance'. Lastly, stakeholders who choose to provide financial products and services to excluded women who, despite efforts in the first two categories, do not present commercial viability (yet), must recognise that, until viability is reached, such services will require subsidies. In any case, product offerings must be relevant, not just 'aspirational', and must meet women 'where they are'. They must be suited to women's low current levels of income, education and trust in FSPs. Ideally, to achieve lasting impact, they should be designed to increase women's low current levels of income, education, and trust in FSPs.


When addressing the gender gap in income, education and trust in FSPs, the highly contextual, gendered, and multifaceted nature of these issues needs to be considered.

Income, education, and trust in FSPs are gendered and interlinked. For example, poverty, gender norms, and traditional practices, including early marriage, increase the risk of premature school dropout and unemployment, particularly for women. Nigeria exhibits a large gender gap in education9. The net enrolment rate at the primary school level is 56% for girls and 61% for boys10. The gender gap for completion widens from 9% in primary school to 14% in secondary school11. Because of patriarchal traditions, in some cultures, parents invest in male children whom they recognise as future heads of households as opposed to girls whom they view exclusively as current and future homemakers12. Such perceptions mean girls are more often burdened with household chores. This limits their capacity to regularly attend classes or pursue gainful employment outside of the home. Restricted access to education also impedes women's access to high quality, well-paying jobs. As a result, women are more likely than men to be vulnerably employed or unemployed. In fact, their male counterparts are nearly twice as likely to hold wage-earning jobs.


Consequently, there is an urgent need for stakeholders to collaboratively identify and address the macroeconomic and sociocultural determinants of women's lower access to education and income-generating opportunities. Furthermore, stakeholders must understand the drivers of trust in FSPs, develop specific interventions that effectively address the gender gap, and identify appropriate pathways for implementation of these solutions.


Targeted knowledge gaps have surfaced in this work, which should guide stakeholders in the design and implementation of their interventions. This research has questioned fundamental assumptions and has not necessarily replaced those with a new set of 'answers'. Thus, a more in-depth understanding is needed of some of the factors and their effects, and specifically of some of the underlying, gendered drivers of these primary factors.


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