Karandaaz Fostering Financial Inclusion and Women Entrepreneurship in Pakistan
It is a fact that Pakistan faces gender disparity at various social levels. The country ranks 143 out of 144 in the Global Gender Gap Report of 2016 in terms of economic participation and opportunities for women. This global ranking has been unchanged since 2015 because of the complexity surrounding the socioeconomic factors like employment, financial inclusion, business and asset ownership.
Efforts are being made to minimize the gender disparity level in the country. In this regard, Karandaaz Pakistan in collaboration with Department for International Development (UKAid) has launched a program, Innovation Challenge Fund, focused on supporting female entrepreneurs in Pakistan.
In 2014, only 25% of the 90 million Pakistani women actively participated in some form of labor. From 2004 to 2013, the average work force gap between Pakistan and the South Asia market decreased, and an in-depth review of the statistics reveals that most of this development is due to the growth in Pakistani agriculture sector, which increased from 67% to 75%. However, the share of women in industry, services, wage and salaried work has decreased by 3.6%, 4.6% and 6.6% respectively. The above mentioned decline in women’s work participation appeared at the time when adult female literacy rate was increased by 75% between 2005 and 2015. This missed opportunity elaborates the fact that we have a decent number of educated female individuals but the number of females who are actually contributing to the various strata of economy is very less.
Last year, the Women’s Economic Participation and Empowerment status in Pakistan published by the UN Women, analyzing various factors representing gender disparity, reported that the policies in Pakistan and subsequent initiatives merely focused on income generation rather than economic inclusion targets set for women. This kind of short-term focus results in one-off initiatives and greater unskilled employment rather than entrepreneurship or highly skilled jobs. The report also highlighted the financial inclusion of females, a sustainable solution, and associated it with the deeper inclusion of women in conventional economy, which would allow them to generate sustainable livelihoods.
Only 13% of women are able to borrow from a Micro-finance institution and merely 5% of women have a bank account and in Pakistan. This is because of the fact that a low percentage of women have ownership, joint or otherwise, of physical capital which is an important requirement by the financial institutions.
Greater access to formal finance can improve economic empowerment and allow an increasing number of women to participate in the formal economy. It can be argued that better financial access is both a cause and a result of economic participation, as more working class women signify better financial inclusion. Similarly, another report – Financial Inclusion of Women in Pakistan 2016 – states that employment is often tied to banking, as wages need to be received. Hence, greater economic opportunity through employment or entrepreneurship can be a vital factor for the financial inclusion of women in our country.
The UN Women report recommends that there should be incentives for enterprises that have better women employment ratio, women decision makers or the woman owner of the enterprise. The report also recommends improving the ownership of physical assets, technical and management training, improved working conditions for women, and financial inclusion through supporting financial institutions like banks.
The report, Financial Inclusion of Women in Pakistan 2016, supports these focus areas and highlights mobility constraints, banking regulatory policies, property rights and collateral, and the financial literacy as a few factors impeding the financial inclusion.
Above-mentioned challenges along with a complex environment for banks and other financial institutions are the bottlenecks for them as well. This includes expensive and scarce infrastructure, limited understanding of end user needs, predominance of informal financial services, low literacy rate, a skeptical mindset and limited possibilities of revenue generation from existing models.
In such a situation, targeted projects and special initiatives such as Karandaaz are trying to reinvigorate the industry and provide the missing technical and financial links in order to deliver financial services to women and others who are out of this financial circle.
Kaiyan Yousaf is a Senior Manager at Karandaaz Pakistan and has over ten years’ experience in the development and management consulting field specializing in enterprise and industry level strategy and value chain development.