Credit for all: Increasing women's access to finance

Tuesday, 11 November 2014 22:44 GMT

An employee of the Industrial and Commercial Bank of China Ltd (ICBC) counts money in Shanghai on September 24, 2014. REUTERS/Carlos Barria

Image Caption and Rights Information

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Affirmative action programs can ensure that creditors recruit and engage qualified women to provide equal opportunity in access to important financial services.

More than 2.5 billion people worldwide lack access to quality financial services, and at least half are women. Yet women’s need for financial services may actually exceed that of men because they tend to live longer, have lower levels of formal employment, own fewer assets, and have less control over household finances. Limited financial inclusion is one important factor keeping women poor and perpetuating inequality.

 One area in which women often face more difficulty is access to credit, meaning the ability to obtain goods and services before payment. Without credit, women’s opportunities to work in the private sector and succeed as entrepreneurs are limited.

 Unfortunately, many women are systematically denied credit regardless of their ability to repay loans. Creditors may assume that women pose a credit risk because of misconceptions about their spending and saving habits, or because they lack collateral. Biases and discrimination could deny qualified women credit simply because of their gender. Some economies have outlawed gender discrimination in credit transactions to address this.

 The Women in Development Act of 1992, for example, gives Filipina women the capacity to “borrow and obtain loans and execute security and credit arrangements under the same conditions as men.” It also grants women equal access to loans in agrarian reform and land resettlement programs.

 South Africa and the United States have similar regulations that prohibit discrimination on grounds of gender in financial services. A European Council Directive implements the principle of equal treatment between men and women in access to goods and services, including credit.

 Laws such as these undoubtedly improve access to financial services for women, enabling them to build individual credit histories and use credit to participate in financial markets.

 Other economies have gone a step further by implementing affirmative action programs. These initiatives aim to ensure that qualified women have access to financial opportunities and counter long histories of credit discrimination based on gender.

 In 2001, Brazil’s Ordinance 121, under the Minister for Agrarian Development, reserved 30 percent of credit granted under the National Programme To Support Family Agriculture (PRONAF) to women. The Ordinance also recommended that a specific credit line be created for women farmers. This initiative, PRONAF Mulher, began in 2004.

 Romania’s Order No. 473/2014 finances implementation of the best business plans submitted by women entrepreneurs. This initiative aims to cultivate entrepreneurship among women-owned businesses.

 In Senegal, the National Fund for the Promotion of Women’s Entrepreneurship gives women preference in access to credit by acting as a guarantor and providing security on behalf of women borrowers.

 Affirmative action programs such as these can ensure that creditors recruit and engage qualified women to provide equal opportunity in access to important financial services.

 Regulations that promote credit for women boost equality in access to finance--and much more as a result. Policies that affirm women’s equal access and opportunity in obtaining credit help ensure that women with initiative and ability can succeed.

If you are knowledgeable about such laws in your country and are interested in contributing to Women, Business and the Law 2016, please email  

-- Nisha Arekapudi joined the World Bank’s Women, Business and the Law team in 2014, and primarily researches and analyzes women's economic development and entrepreneurship.



Our Standards: The Thomson Reuters Trust Principles.