By Mary Ellen Iskenderian, president and CEO, Women's World Banking
Over the past 30 years, the world has seen unprecedented economic growth and a digital revolution that could help solve our most pressing social and environmental challenges. Yet despite this, our current model of development is deeply flawed, threatening our global sustainability.
Social inequality is worsening in many countries and inequality of economic opportunity – particularly for women –persists. On average women are still paid 25% less than men for comparable work and one billion women do not have access to formal financial services.
These inequalities are signs that business leaders have yet to embrace their role in building a more prosperous, secure, and sustainable world. The recent report, Better Business, Better World, by the Business and Sustainable Development Commission, on which I serve, offers a solution: set business strategy in line with the UN sustainable development goals, which provide a blueprint for global development that ends poverty, protects the planet and ensures universal prosperity. The commission estimates the economic “prize” for achieving these global goals at $12tn (£9.5tn) by 2030.
The report offers a prescription for a new, socially and environmentally focused business model that can bring new resources and energy to parts of the global economy, previously left largely to public aid and thus ensure sustainable and inclusive growth. This can be a compelling growth strategy for individual businesses, especially in the financial services industry.
Financial inclusion is a cross-cutting theme critical to the success of all 17 of the global goals. Of the four global goals identified by the commission as hotspots of private sector opportunity, two – zero hunger (goal two) and good health and wellbeing (goal three) – have a major impact on the financial inclusion of women.
Globally only 10% of rural residents use credit and only half have access to a formal bank account. Women, who make up about half of the world’s farmers, are even more excluded. Recognising this market opportunity, Women’s World Banking worked with three institutions in Latin America – Banco Interfisa (Paraguay), Fundación delamujer (Colombia) and Caja Arequipa (Peru) – to develop rural lending products tailored to women’s needs.
The institutions broadened their footprint in rural areas, and women clients grew their businesses and brought more security to their household finances. Together the three institutions reached more than 100,000 clients with loans; one more than doubled the percentage of women in its portfolio.
A recently completed study revealed that women who received this economic lifeline were also empowered in the rest of their lives, reporting stronger decision-making positions in their household.
Giving women access to meaningful financial services can also make a huge difference in health and wellbeing. Insurance can prevent low-income families from falling deeper into poverty when health emergencies strike. Women in emerging markets represent an important untapped opportunity for insurers.
The IFC’s SheforShield (pdf) found that the value of health insurance premiums paid by women in these countries could grow from $5bn today to $29-46bn by 2030. Women’s World Banking tapped this potential by developing Caregiver, a hospital micro-insurance product, with Microfund for Women (Jordan), with a specific focus on covering maternal health issues. We have since expanded it with partners in Peru, Morocco, Uganda and Egypt – reaching a total of nearly 1.5 million clients.
Women’s financial inclusion also contributes to meeting the global goals in other ways. We know that when women have control over discretionary income, they spend it on their families, and particularly on their children’s education – key to succeeding in goal four, quality education. And for the first time, we have evidence that financial inclusion helps eliminate poverty (goal one).
New research shows that M-Pesa mobile phone financial services have helped an estimated 186,000 households in Kenya – around 2% of the country’s total population – to move out of poverty. The impact for women was even more pronounced. Women-headed households were twice as likely to be lifted out of poverty, and researchers also found that women shifted from subsistence farming to starting their own small businesses.
By setting business strategy in line with the global goals, financial service providers can tap into the economic prize of financial inclusion, opening up new markets and a source of revenue that is more sustainable, both for their business and for the planet.