By Emily Ericksen
It should go without saying that women are valuable players in a country’s economy. The problem is their full economic worth is often not recognized in many parts of the world. However, once women are provided greater opportunities to earn and save, they can benefit their local communities and impact national growth. In tandem with the positive micro and macro effects they have on the economy, women also tend to see an increase in social benefits. The opportunity to earn a wage typically leads to greater financial decision-making power, and for young women in particular, earning an income precedes an increase in levels of education, as well as delayed marriage and childbirth. Making small-scale financial opportunities, such as the ability to bank, available to women is not only empowering, but also has an economic impact far beyond individual women and their communities.
The World Economic Forum conducted a study to determine the happiness a person experienced simply by having a savings account. While it is not surprising people are indeed happier when they are saving money, what is interesting is that comparatively, women experienced a bigger boost in happiness than men. However, 120 million wage-earning women globally are unbanked.
There are several reasons for women to bank. When they transfer their money from informal means of saving—say, keeping their money under the mattress—to formal savings institutions, they are able to earn interest. Furthermore, the money is safe from robbery or impulse spending by other members of the household. However, low-income women often do not find it worthwhile to take time off work, buy a ticket for public transportation, and make their way to a bank in order to deposit their earnings.
Jennifer McDonald, a product development director with the Women’s World Banking organization, explained there are ways of overcoming this barrier to women opening and maintaining a savings account. McDonald’s team worked with a Nigerian financial institution, Diamond Bank, to develop a savings program specifically advertised toward women who work in the country’s busy urban markets. She explained that there already existed an informal method of saving in which a collector makes his way around the market, gathering and storing the daily earnings of the vendors. Thus, the physical depositing of earnings conveniently came to the depositor rather than the other way around. If a vendor needs to make a withdrawal, they simply wait for the collector to make his rounds and request a specific amount on the spot. Diamond Bank built upon this well-established method of saving and offered the underbanked a formal means of saving their money.
First, Diamond Bank sent an employee through the market to speak to potential clients about opening a mobile savings account, which would allow the account holder to monitor the funds in their account via a mobile phone application. Once enrolled, clients were given an ATM card, and a collector, this time employed by Diamond Bank, came to their stalls daily to collect their earnings and deposit them into a savings account. This system of mobile accounts is called the BETA savings program.
There have been more than 270,000 accounts opened through BETA since it was first launched in 2014, and 37 percent of those clients are women. Within the first six months of the program launch, account holders had saved over $1.5 million, and most of them access their accounts more than once a month. Additionally, McDonald notes that BETA is valued as a successful business by the Diamond Bank and is on track to become profitable, thus contributing to the sustainability of the program.
Saving money amplifies the benefits of earning a wage. Women are able to keep their money safe, and they are able to make decisions about where their money should be spent. Nabeela Alam, a professor of international political economy at Seton Hall University, explains that studies in Kenya show that many women are concerned about the safety of their money. One study was designed for ATM accounts to be given to two groups: married couples who had equal access to the account, and women who were married but were the sole accessors of the account. The results indicated women were more likely to deposit money into an account that their husbands could not access.
Alam suggests that this uneasiness regarding sharing funds is most likely due to the variance in spending preferences between men and women. The money is meant to accumulate in the account for the purpose of being withdrawn for a specific purchase; however, men and women do not always share a vision for where the money should be spent. Economic researchers, such as Alam, have shown that a woman’s decision-making power—specifically decisions about making purchases—typically increases as her wage-earning ability goes up. Earning, saving, and then choosing where to invest her own wages yields benefits not fully available when any or all three of those steps are absent. When women are able to make financial decisions, they also tend to invest in the education and health of their children, thus collectively raising the level of wealth and well-being of the community. If children are healthy and attending school, they are in a better position to earn higher wages, care for their families, and contribute to local development. Therefore, allowing women to choose where they invest their money often benefits the community as a whole.
Furthermore, the potential clout women carry as members of the labor force extends beyond the improvement they can provide their communities. As women attain the ability to direct their families’ spending by earning a wage, they also contribute to their countries’ gross domestic product.
A study by the International Monetary Fund reported that by some estimates, reaching parity between female and male labor force participations rates would result in an increase in GDP of 9 percent in Japan, 12 percent in the United Arab Emirates, and 34 percent in Egypt. It is estimated that due to high rates of adolescent pregnancy, joblessness and high school drop-out rates among women in India led there was an estimated loss of $56 billion from GDP for each of the past several years.
Of course, women need not be valued strictly by their contributions to economic development; the value of a person extends far beyond that which can be monetized or quantified. But the fact remains that working harder to include women in economic and financial processes is not an act of charity or an extension of goodwill; it is an effort to improve collective well-being. By earning and saving their wages, not only are women empowered as members of the labor force, but they also benefit their communities as stakeholders in the countries’ prosperity.
Emily Ericksen is a masters candidate at Seton Hall University’s School of Diplomacy and International Relations and an editorial assistant at World Policy Journal.
[Photo courtesy of Wikimedia Commons]