Conference on Gender, Inequality and Microfinance

Organized by Saida Waheed Gender Initiative at LUMS, Mahbub Ul Haq Resource Center at LUMS, and Kashf Foundation

Wednesday, 30th March 2021: Kashf Foundation with Saida Waheed Gender Initiative (SWGI) and Mehbub Ul Haq Research Center (MHRC) at LUMS jointly hosted a panel discussion to discuss the reasons behind gender gaps in Pakistan and to deliberate on the success and limitations of possible interventions.

Titled ‘Gender, Inequality and Microfinance’, the webinar started with a powerful keynote address by Pakistan’s first female Deputy Governor of the State Bank Ms. Sima Kamil. This was followed by a panel discussion that brought together academics and practitioners including Dr. Hadia Majid (Associate Professor, LUMS), Dr. Maryam Mustafa (Assistant Professor, LUMS), Ms. Roshaneh Zafar (CEO and Founder, Kashf Foundation) and Mr. Mudassir Aaqil (CEO, Telenor Microfinance Bank) for a consultative session, moderated by Ms. Zainab Saeed (Head of Research, Kashf Foundation).

Ms. Sima Kamil, Deputy Governor, State Bank of Pakistan (SBP), in her key note speech shed light on state of gendered financial inclusion in Pakistan and the pressing need for the adoption of a gender intentional approach by the financial sector. Referring to the State Bank’s Banking on Equality Policy, Ms. Kamil explained the 5 main pillars of focus to reduce the gender gap in female financial inclusion. These include (1) enhancing gender diversity in Financial Institutions and access points, (2) applying a gender lens to products and services with a special focus on gender intentionality, (3) creating (and placing) women champions at all access points, (4) collection and submission of gender segregated data, and (5) policy forums and consultations on gender and finance with a variety of stakeholders. The Banking on Equality Strategy is using the regulatory abilities of the State Bank to champion the change required for espousing women financial inclusion in Pakistan. Ms. Kamil further stated that the financial sector needs to learn from and build upon the women centric work being undertaken by the NGO sector. Acknowledging that the pandemic had left women worse off, not just with respect to labor force participation but also in terms of the exceedingly high burden of unpaid care, Ms. Kamil highlighted SBP’s initiatives of supporting female micro-entrepreneurs through lines of subsidized debt.

The key note speech was followed by the panel discussion, which started with the broader question on what the participants considered to be the biggest challenge hindering women’s economic participation. Dr. Majid stated that entrenched gender roles which lead to the understanding that women’s role is only productive is the biggest challenge to women’s labor force participation. She further said that her research had shown that this was one of the major reasons why women were considered as secondary workers in the economy. Mr. Aqil posited that the one major hurdle in his opinion was women’s lack of access to the outside world and limited mobility which restricts them from accessing all services including financial services. Dr. Mustafa said that if she had to choose one singular challenge it would be the lack of access to a smart phone. Ms. Zafar posited that the gender wage differential which reduces the value and worth of a woman’s time as the biggest challenge in women’s economic participation.

Talking about how women’s limited access to labor markets impacts gender equality/inequality and ways in which it can be improved, Dr. Majid explained the positive correlation that exists between women’s access to income and empowerment, and thus their ability to make decisions regarding not just her own well-being, but also her children’s and her household. Referring to studies in this area, Dr. Majid highlighted that being involved in the formal labor force and access to stable income has proven to have a direct impact on women’s empowerment. Ms. Zafar supported Dr. Majid’s point by sharing evidence from studies conducted with Kashf clients, which showed a decrease in the incidence of domestic violence as womens’ earning potential increases. Moreover, she also stressed on the need to involve and invest in the building blocks of the society, i.e., the family unit including male members, to bring about any real change at the cultural level.

With respect to supply side challenges in accessing and retaining female micro borrowers, Mr. Aqil stated that the Know Your Customer (KYC) requirements, such as proof of income and a registered business, make it difficult for women micro-entrepreneurs to access microfinance banks. Moreover, the low debt absorption capacity of women led micro-enterprises make it less economically viable to extend loans to such businesses. Mr. Aqil suggested that technology can play a pivotal role in bridging the gap between women clients and microfinance banks, and to enable this use of smart phone among women needs to be promoted. In a similar vein, Mr. Aqil said that experimentation in the financial sector needs to be facilitated through regulatory sand boxing.

Adding on to the discussion, Dr. Mustafa stressed on the need for customizing technology to the needs of women and involving them in the creation of digital tools to make the uptake of technology more convenient. Supporting the creation of safe digital spaces for women, Dr. Mustafa considered it to be an important tool which has connected women entrepreneurs with each other and at the same time has enabled dialogue on issues effecting women’s labor force participation like wage gap, working conditions and unpaid work.

Cautioning against the widely ignored underbelly of technology that hinges on breach of privacy, Ms. Zafar stressed on the financial education of clients at the same pace as development to ensure that fin-tech growth takes place in an ethical bandwidth. On product development, she stressed on collaborations among the stakeholders, who through collective efforts could expedite the process of reducing gender gap in financial inclusion.

In the end, all panelists discussed the one key opportunity that can be leveraged to improve women’s economic participation. Dr. Majid stressed on recognizing women’s role in the economic sphere which would result in a reduction in the gender wage gap. Ms. Zafar talked about the abysmal saving rates in Pakistan and envisioned a savings account for everyone also highlighting the important role that collaborations between Non-Banking Microfinance Companies and Microfinance Banks can be pivotal for this. Mr. Aqil posited that providing internet access to women and creating a digital ecosystem would be the most important tool to reduce gender gap in financial inclusion while Dr. Mustafa stressed on ensuring that the digital space is safe and harassment free via clear policy on consumer protection and safeguard will be key.

Based on the above discussion that following key policy action areas were highlighted:

1. Regulatory sandboxing to allow innovation and experimentations, especially for,
   a. NBMFC led female deposit account
   b. Allowing roaming agents for Microfinance Banks
2. Facilitating women to open bank accounts through government led initiatives
3. Shifting focus of digital money eco-system development on sectors/value chains from geographies
4. Fostering collaborations between Financial Institutions
5. Focusing on not just technology and Digital Financial Services (DFS) infrastructure but also customer journey.