eBusiness Weekly
Business Writer
Women and youths have remained marginalised in terms of accessing financial services such as loans and advances, latest figures from the central bank show.
According to figures contained in the Reserve of Bank Zimbabwe’s Financial Inclusion Bulletin for the year 2021, women got as little as 5,57 percent of the loans that were advanced by financial institutions in 2021.
Although this was higher than the 3,98 percent recorded in 2020, the figures showed women are marginalised and less empowered than their male counterparts.
Youths are facing similar challenges with loans to them remaining low at 2,37 percent of the total loans advanced by financial institutions. In nominal terms, loans to youth however grew to $6,2 billion in 2021 from $1,9 billion in 2020.
Youths and women constitute the bulk of the country’s population and yet they do not get as much support for their economic ventures.
In 2020 the number of loans to women also dropped significantly to 173,810 from 521,018 in 2020.
The drastic drop could, however, be a result of the Covid-19 pandemic and its associated restrictions that affected activities by women who largely work in the informal sector. The informal sector was often considered as non-essential during the Covid-19 lockdown restrictions.
The RBZ acknowledged this and said the lockdown restrictions adversely impacted on the mobility and functioning of the majority of MSMEs, most of which rely heavily on the face-to-face business model.
“Due to the lockdown restrictions, the greater part of the year witnessed a decline in demand and supply of products which in turn impacted negatively on the cash flows of the majority of MSMEs.”
When cashflows are disrupted, it could affect the capacity and capability to borrow.
The value of loans to women, however, grew to $14,6 billion in 2021 from $3, 2 billion in 2020.
Likewise, the value of youths loans also increased to $6,2 billion from $1,9 billion.
Currency depreciation and inflation could, however, explain the huge jump.
Small to medium enterprises, often run by women and youths also got a smaller share (3,9 percent) of the total bank loans.
The RBZ noted the marginalisation of women and youths and said while significant inroads into the financial inclusion of women and MSMEs was noted during the period under review, “loans to these marginalised groups as a proportion of the total banking sector loans remains low.”
Worldwide, women’s access to finance is disproportionately low and according to Trigrams Investment analyst, Walter Mandeya, constraints such as high interest rates and collateral requirements play a major role in excluding women from the formal credit market.
Mandeya said in the credit market, women entrepreneurs failed even to apply for loans because of such factors as low financial literacy, risk aversion, and fear of failure.
“Arming women entrepreneurs with the appropriate financial knowledge and skills will boost their effective engagement in the credit market,” said Mandeya.
According to African Center for Economic Transformation (ACET), Senior Fellow, Caroline Kende-Robb, in an article published by the World Economic Forum, using a basic bank account is beyond the reach of almost one billion women worldwide.
She said 80 percent of women-owned businesses with credit needs are either unserved or underserved.
This is equivalent to a massive US$1.7 trillion financing gap, Kende-Robb wrote.
“Most financial systems have been designed by and for men. Therefore, when a person requires a business or personal loan, the lender asks for collateral, such as land or a house. In many cultures, it is men who traditionally own the land or the house, which immediately excludes women,” Kende-Robb wrote.
Akin Adesina, President of the African Development Bank, in 2018 stated: “While societal limitations and belief systems often kill many a woman’s dream, it is often at the bank counter that dreams come crashing down.”
“Without collateral and without access to land or other financial resources, the bank is the end of the road for many women entrepreneurs. This is a status quo that must change – not because it’s charity or the right thing to do, although it most certainly is the right thing to do, but because it’s the smart thing to do. It’s the strategic thing to do.”
This is also at a time evidence shows that women are stronger savers than men, more responsible borrowers and more calculated risk-takers. According a research by the Bank of New York Mellon, giving women better access to finance could unlock US$330 billion in annual global revenue.
Kende-Robb suggested that financial institutions should start to think outside the box and use other methods to credit-check an individual, such as issuing loans based on cash flow, savings group history, mobile phone transaction history or a track record of enterprise performance.
“As we search for a solution to the inequality between men and women in accessing finance around the world, the answer could be simple: stop asking for collateral.”
