Women’s financial literacy is key to economic empowerment

Christine Marincowitz, Head of Investor Relations: Ecsponent Limited

By: Christine Marincowitz, Head of Investor Relations: Ecsponent Limited

While fathers tend to take the lead on big purchases, mothers tend to manage a household’s day-to-day money issues. Moreover, 81% of people say that their mothers were responsible for sharing financial knowledge with them, according to a survey conducted by The Omnibus Company. According to the same survey, the majority of respondents say their mothers taught them about shopping smart, using sales, and setting budgets. This is particularly important because financial lessons learned in childhood can set the tone for the rest of your life.

Despite this, many women throughout society and the world, continue to experience the effects of gender inequality which results in, and from, a lack of financial inclusion and financial literacy. Generally, women earn less, are less likely to have access to credit and as a result are less able to break from the shackles of generational poverty.

These obstacles, and others such as the inequalities highlighted by the #MeToo movement and gender pay gap debate, feed into the broader narrative of gender inequality and the plight of women today. While many initiatives aim to redress this inequality, the reality is that women are less able than men to transcend their circumstances through economic empowerment. So, in this context, how do we correct the gender imbalance and why is it important?

Why does gender inequality remain prevalent?

The Women’s Legal Centre points out that gender inequality is ingrained in South African society. Furthermore, black women are especially vulnerable due to the racial and gender impact of poverty and unemployment. In a rural setting, these problems are aggravated.

Inequality often starts at home with the country’s high levels of violence against women, which are exacerbated by a complex criminal justice system, despite a strengthened legislative framework. These realities undermine women’s ability to empower themselves from the outset – often with lasting consequences.

In addition to these challenges, women own less property and earn approximately 25% less than their male counterparts in the same job. We also see that fewer women are financially literate.

This financial illiteracy results in women being unable to uplift themselves through sound financial decisions. And, as more women are single parents, they pass this lack of understanding on to their children. It makes generational upskilling difficult, which perpetuates the cycle of financial illiteracy.

How financial literacy brings about economic empowerment 

A term that has gained much momentum in South Africa is ‘economic empowerment’. It refers to tangible and measurable upliftment of society, breaking the shackles of poverty. Empowering women in this way will achieve the same.

Anecdotal experiences link financial literacy to real, measurable economic empowerment, especially for women. These are supported by several studies including that published in the paper ‘Women and Financial Literacy’. This paper asserts empirical research has led G20 leaders to conclude that financial literacy among women and girls will main barriers to female entrepreneurial success ind opportunities. This makes sense because sound financial decisions are impossible without some financial literacy.

While financial literacy means different things to different people, an accepted working definition is: “A combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and achieve individual financial well-being.”

Financially-literate individuals do better at budgeting, saving money and controlling spending. They also tend to plan for retirement, partake in financial markets and saving instruments, while further work has even linked physical and emotional well-being. Studies have further suggested that such individuals have improved physical and emotional well-being. Clearly such individuals take responsibility for their own financial wellness and reduce the drain on resources of the fiscus.

How to bring about financial literacy among women, particularly the vulnerable

According to The Open Society Initiative for Southern Africa (Osisa)’s Nomsa Daniels, women in the informal sector contribute more financially than is officially recorded but have substantially less access to credit. She adds that one of the main barriers to female entrepreneurial success in the informal and rural setting is having inadequate access to credit and how rectifying this could lead to closing the financial gap and broader women empowerment.

This thinking is aligned with that of the Ecsponent Group, which provides entrepreneurs previously ignored by mainstream banks with niche credit solutions. The Group also includes financial literacy as part of its product offering as it believes that providing credit without skills will only succeed to exacerbate the problem. It knows full well the power of unleashing SMEs in Africa and beyond, many of which are run by women.

But how is this achieved?

Financial services enabled by fintech has the ability to go where no one has gone before and has made a marked impact on the barriers to inclusion in the mainstream economy.

The aspects of financial literacy that are earmarked for women in Africa by companies like Ecsponent may not seem like rocket science to the financially savvy, but they form the foundation that underpins the types of decisions that will lead to economic empowerment. Giving access to this information is as empowering as the provision of credit. Both change lives.

The information Ecsponent provides includes:

  • The basics of budgeting, how and why a budget is important, and how a budget holds you accountable.
  • The importance of saving and understanding the different types of saving.
  • Understanding interest and how it works.
  • Credit and how to differentiate between good and bad credit.
  • Behavioural patterns and how changing habits can go a long way to unleashing your true economic potential.

Conclusions on women’s empowerment

There is a need for bold and concerted action on the part of governments, regulators, policymakers and all stakeholders in the financial sector to address the obstacles to meaningful financial literacy among women. The resourcefulness of women and mothers offers a tiny glimpse into the greater economic potential for under-empowered regions if women are truly economically empowered.

Solving the problems goes beyond paying lip-service to equality as a grand ideal. It is an economic imperative that will unlock immense economic prosperity for communities, society and the businesses operating in these regions.

What may seem like simple financial concepts to some can change the lives of others and unleash sustainable economic prosperity. Coupled with fair credit access, the potential is limitless – for society, and the women it will affect most.



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