Dr. Lucy Newman is the Managing Director/ Chief Executive Officer of Financial Institution Training Centre (FITC). She was one of the inductees during the 2017 MMS Woman of Fortune Hall of Fame (WoFHoF) induction, conference and awards last week. She also delivered an elaborate presentation on the; Options and Strategies in Building and Developing Financial Capacity in Women. Enjoy it.
Firstly, let me make some essential disclosures on my mind-set in approaching this topic:
ü Personal life story on how attaining financial capability early in life, has been helpful to me and my family
ü My over 29 years working experience, of which about 90%, is from the Financial Services Sector
ü My personal insights as one who has benefited from mentoring through the years, and also had the privilege of several layers of being a mentor to others
ü I like facts in numbers and wisdom from words of the ‘elders and the wise’ on subject
What is Financial Capacity/Capability?
According to the Centre for Financial Inclusion;
‘Financial capability/capacity is the combination of attitude, knowledge, skills, and self-efficacy needed to make and exercise money management decisions that best fit the circumstances of one’s life, within an enabling environment that includes, but is not limited to, access to appropriate financial services’.
It is the capacity of an individual to manage his/her own money/financial affairs and make relevant decisions. To put it more succinctly: Financial capacity is not just what you know, but whether you have the willingness, confidence, and opportunity to act on what you know.
Of course, we are aware that Financial capacity for women is increasingly becoming a priority for policy makers, because it is recognized to contribute to the financial stability, financial inclusion, and to the effective functioning of financial markets, including economic sustainability of the nuclear and extended family units.
The Business Case for Building & Developing Financial Capacity of Women
– Quotes from the elders on subjectivist
· “Think about it, women control 70 percent of global consumer spending . . . when women do better, economies do better”.
Christine Lagarde
· “You can judge a nation and how successful it will be, based on how it treats its women and girls”.
Barack Obama
· “There is no tool for development more effective than the empowerment of women”.
Kofi Annan.
· “When women participate in the economy, everyone benefits”.
Hillary Rodham Clinton
· “When you empower a woman, you kick-start a cycle of success. It makes economic sense, it makes social sense, and it makes moral sense.
Queen Rania of Jordan
Where are we on Building & Developing Financial Capacity of Women?
– The Policies
1. The Nigeria Government has taken several commendable steps in developing financial capacity for women. Recently it was reported the Federal Government, had set aside N1.6 billion for women empowerment programme called the National Women Empowerment Fund, NAWEF.
2. According to the Minister of Women Affairs and Social Development, Mrs. Aisha Alhassan, NAWEF is part of the FG’s Social Investment Intervention Programme known as the Government Enterprise and Empowerment Programme (GEEP). The GEEP is a micro-credit programme for men and women, boys and girls; and out of the GEEP fund, a sum of N1.6 billion, has been set aside exclusively for women. NAWEF and GEEP are financial inclusion and microcredit programmes.
3. The CBN has also done a lot on financial literacy and inclusion for women, by implementing several projects to foster financial inclusion in women. The CBN even went further to develop the Nigerian financial literacy framework (NFLF). The NFLF aims to promote financial literacy to drive the National financial inclusion policy that will ultimately promote economic growth. This year, the CBN declared 30 March as Financial Literacy Day in celebration of Global Money Week 2017. On that day, Managing Directors, Chief Executive Officers and top members of management of 29 banks and financial institutions visited over 800 schools in 36 states, to teach financial literacy curriculum among school children. The CBN is currently developing a Financial Literacy Curriculum (FLC) for schools. This shows a glimpse into the many initiatives within the Nigerian financial system. The Nigerian Stock Exchange, the Nigerian Insurance Commission and the Pension Commission has also rolled out various initiatives aimed at enhancing understanding on mostly gender neutral basis.
I believe that even with the steps implemented by the government and regulatory agencies of the financial system, we could still achieve more. Why do I think so? …The numbers say so.
Where are we on Building & Developing Financial Capacity of Women?
– The Numbers
The Global Findex, a comprehensive database measuring how people save, borrow, and manage risk in 148 countries, reveals that women are less likely than men to have formal bank accounts. In developing economies, women are 20 percent less likely than men to have an account at a formal financial institution
Interestingly, women make up 40 percent of the world’s workforce. Many of the sectors that are critical for economic growth in some of the poorest countries rely heavily on women. Small and medium-sized enterprises (SMEs) with female ownership, represent 30 – 37 percent of all SMEs (8 million -10 million women-owned firms), in emerging markets. These businesses have unmet financial needs of between US$260 billion and US$320 billion a year. This is their biggest barrier to growth and development.
Coming back home in Nigeria, I have been an ardent stakeholder in tracking the EFInAreport series on Access to Financial Services in Nigeria (A2F) Surveys from the first report published for 2008, and will be referencing numbers from the 2016 Survey Report on subject.
Findings in the 2016 EFina Access to Financial Services in Nigeria survey relative to the trend from 2008, indicated that;
– Of the 96.4 million adults in the 2016 survey population, 41.6% are financial excluded. In 2008 survey, 52.5% were excluded. The lowest exclusion rate recorded so far is in 2014, with 39.5%.
– Generally, over the years, financial access has been skewed towards male adults.
– Adult men were more likely to be banked than adult women, with data in 2016 report indicating that 46.3% of adult male are banked, compared to 30% adult women.
– It is also noteworthy that the survey further showed that women (10.9%) tend to use informal (ajoo, esusu, moneylenders, cooperatives etc.) financial services, than male (8.7%)
Key things I want us to note are that;
1. The 2016 survey revealed that of the financially excluded population, 46.6% adult females were financially excluded, while 36.8% were adult males.
2. The 2016 survey revealed general financial exclusion benchmarking by jurisdiction as Nigeria, 41.6%; Rwanda, 11%; Kenya, 17.4%; South Africa 13% amongst others
3. The report showed access to finance by ages, location and gender. Thus, shows that our one-size fits all approach and policies haven’t really been as effective as aspired!
It is interesting to note that one of the sessions at the just concluded World Bank Group Annual Meeting which held in Washington DC about 2 weeks ago had two interesting sessions, namely; [1] Catalyzing Women’s Financial Inclusion – The Role of Data and [2] Banking on Women: The Changing Face of Finance.
The bottomline as a business case, is that building financial capacity of women with strategic and deliberate actions that are measureable and sustained over time, has a very high correlation to Human Development Index, which is as a measure of a composite statistic (composite index) of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development. The global UN report on HDI was officially launched on March 25, 2017 in Stocklom, while the Nigerian version was launched Tuesday, April 18th 2017. Sadly, Nigeria ranked 152ndout of 188 countries.
Therefore, the timing for this conversation is apt, because developing financial capacity of women can open up economic opportunities for women; bank accounts can be a gateway to the use of additional financial services like insurance, mortgage, exports. However, the situation is that women entrepreneurs and employers face significantly greater challenges than men in gaining access to financial services.
My Suggestions on Options and Strategies for Building & Developing Financial Capacity of Women
– To Executive & Legislative Arms of Government + Regulation – Policies
1. The Sustainable Development Goals (SDGs), which is officially known as ‘Transforming our world: the 2030 Agenda for Sustainable Development’. It is a set of 17 “Global Goals” with 169 targets covering a broad range of sustainable development issues. We need a more serious commitment to supporting and staying on track with successful outcomes in our implementation as well as objective allocation of the 169 targets to various MDAs and performances tracked
2. Review the existing Nigerian Labour Act 1990, for Gender Inclusivity. The employer employee relationship in 2017 is nothing like it was in 1990!
3. Add Corporate Social Audit to required annual fillings at Corporate Affairs Commission and the Financial Reporting Council, by registered companies in capitalisation categories
4. Strongly advocate for parents opening a savings account in the name of every child registered for Primary education, as part of the registration process and the account be operated by the parents and then transferred to the child upon attainment of 18 years of age. Mandate all banks not to place any account of a minor on dormant status, till the child attains 21 years of age.
5. All schools to adopt financial literacy day for parents as part of PTA activities, once each school year for primary and secondary education stages. This to be monitored by the Ministry of education as part of annual supervision of schools and resource persons to be from financial institutions that have custody of the school’s bank accounts, as part of CSR as applicable to Financial Literacy
6. Escalate the process of deployment of Agency Banking and ensure all settlements of with a population of a defined number, have at least one agent bank or banking services point
7. Enhance the Microfinance banking framework for authorisation and supervision to accommodate agent banking.
8. Request insurance as a key component of credits from businesses and Financial Institutions in the formal and informal sectors, especially for purchase of high value retail items
9. The government should give tax incentives to organizations that support women education, health, financial capacity etc
10. Deliberately build more inclusive public-private dialogue processes by empowering women’s networks to actively participate in policy dialogues at the national, regional, state and local levels.
To speak further on what government can do to promote financial capacity for women, I will share below some action points recommended by the recent International Finance Corporation/ Global Partnership for Financial Inclusion (GPFI) 2011 report.
· Develop a supportive legal and regulatory framework that increases women’s legal access to property to improve access to collateral and control over assets, as well as strengthen women’s incentives and ability, to grow their businesses.
· Expand financial infrastructure, such as credit bureaux and collateral registries (which is already in place in Nigeria), that can increase access and reduce the cost of borrowing.
· Strengthen SME access to small claims courts and alternative dispute resolution mechanisms.
· Build the capacity of financial institutions to better serve women entrepreneurs.
· Expand research to combine access to finance and business training.
· Strengthen women entrepreneurs’ human capital by developing appropriate entrepreneurial education and training opportunities.
· Consider providing incentives and specific goals for increased procurement by government of goods and services from women-owned enterprises (specifically women-owned SMEs).
– To Operators in the Private, Public and Social Sectors –Social Investments
1. Have a well-defined Corporate Social Responsibility Framework and strategy, aligned to your usual corporate and operational strategy, and think equal opportunities in;
a. Product and services development
b. Promote organizational policies that promote gender inclusivity and equal opportunities
c. Be gender inclusive in considerations for recruitments and placements
2. Encourage your staff to invest in social projects of their choice, identify with an NGO in their areas of interest and request that employees put in a specific minimum number of hours a year, as part of personal development and investment in society
3. Identify and invest in addressing barriers that tend to prevent women from accessing financial education, improving their financial literacy, including cultural, social and legal norms that tend to reduce women’s opportunities to learn about financial matters, to acquire financial skills, and to act independently.
Building financial capacity for women is good business! So says someone who knows! –Melinda Gates;
· If you want to lift up an economy in Africa, you basically start with the women.When we invest in women, we invest in a powerful source of global development.
· If you don’t invest in the woman, empower her, give her the things she needs to lift her family up, you’re just not going to make the progress that you want to make; if you put her at the centre, you can change a lot for that family, and it has ripple effects through the economy.
· Men make different investments than women do. Women tend to invest more of their earnings than men do in their family’s well-being – as much as 10 times more.
Options and strategies for women as individuals;
ü Build personal effectiveness skills
ü Join cooperatives and other informal but legitimate ways of generating capital for business. Accessing loans should be the last resort.
ü Set your priorities right. Do not borrow for consumption. Also, do not finance consumption from capital but from the money you pay yourself, from the profit. Part of the profit should be reinvested.
ü Seek inner circle support, like family and friends but be careful not to fall into the hands of those that can abuse you. Recall the ongoing Harvey Weinstein case.
ü Read books on financial management like;
o The popular Rich Dad, Poor Dad.
o We also have books written by natives like;
§ A-Z of Personal Finance by NimiAkinkugbe,
§ The Smart Money Woman: Ultimate Guide to Financial Freedom by Arese Ugwu
§ A Conscious Life. Navigating Critical Stages and Aspects of Life Successfully, By FunmiOyetunji etc.
Additional advice from other experts;
· “I think the harder part is having the discipline to save. So my tip is: save now or pay later. Far too many people wake up in their sixties and realize they don’t have enough money. I say, let go of the mentality of spending money for immediate gratification, to protect yourself in the long-term.”
Jeannette Bajalia. A financial adviser.
· “Stop buying things you don’t need, to impress people you don’t even like.”
Suze Orman, Author, 9 Steps to Financial Freedom, Women & Money: Owning the Power to Control Your Destiny
In closing
Based on all I have said in the past few minutes, I am sure you can tell that I don’t believe we should leave the task of building and developing financial capacity for women to government alone; all institutions and individuals, have roles to play. Each of us has an aunt, a sister, parent or proxy parents, extended relations, and house helps. We can start by requesting that if they don’t have an account, they should do so going forward, to get their regular stipends and support from you. Don’t pay your domestic staff in cash, but via their accounts. Don’t send charity and various help to your dependents in cash, but credit their accounts and encourage them to earn a living, rather than depend on the charities; wean them off as so as possible, so that they can stand on their own. Rather than make them dependent on ‘fish’, encourage them to learn how to effectively and profitably ‘fish’.
Our contribution to this path from FITC is that my colleagues and I are developing an app for basic financial literacy skills knowledge. The plan is to make it easy to understand by all generations and it will be free for access and download, to all and sundry. As an employer, FITC also gives its staff customised training on financial literacy and retirement planning.
We can all chip in a little, to make a major systemic impact over time. Therefore, I will close with another quote by Barak Obama;
“Empowering women is not just the right thing to do, but the smart thing to do’
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