The Global Findex tells us that 1.1 billion women – more than half of the world’s unbanked population — do not have a bank account, while hundreds of millions more do not have access to the full set of financial products. In addition, women own roughly one-third of the 200 million businesses in emerging economies that have no or insufficient access to credit.
The increased participation of women in economic activities of developing countries has been neglected, although they often work longer hours than men. In Africa, Asia, and the Pacific, women average 12-13 hours more a week than men. They are often heads of households as male partners become ill, migrate, or die.
The UN Statistical Office estimated that the percentage of economically active women increased between 1970 and 1990 throughout the entire whole world with the exception of sub-Saharan Africa. Yet the gap between female and male employment in the developing world remains wide because of fewer educational opportunities and social restrictions affecting women.
For some stats, 3 of 4 women aged over 25 in Asia and Africa are illiterate. In Latin America and the Caribbean less than 25% of women are illiterate. Female illiteracy reaches over 75% in northern Africa and western Asia, almost 75% in sub-Saharan Africa, under 50% in eastern and southeastern Asia, and 75% in southern Asia. There is a wide gap between urban and rural illiteracy of women aged 15-24. In Africa over 40% of urban women were illiterate vs. nearly 80% of rural women in 1980.
However, poverty decreases when more women and girls are educated. This is because with basic education, a woman is more likely to obtain a job and earn a higher wage since one percentage point increase in female education raises the average level of GDP by 0.37 percentage points.
Giving women greater economic empowerment means enabling women to increase their right to economic resources and their control over meaningful decisions that benefit themselves, their households and their communities. These include the right to control their own time, their income and access to participation in existing markets equally. Greater empowerment improves their well-being and economic status.
Women spend, save and invest money in profoundly different ways than men. One such difference: when women have discretion over their financial choices, they prioritize spending on their families. On average, women spend 90 cents out of every dollar earned on education, health care, and housing, in comparison to men’s 60 cents. Improving a woman’s financial access brings with it a “multiplier effect” that will be critical to realizing the potential of financial inclusion for reducing poverty and driving economic 17 growth.
It's not only about women earning higher wages, women also benefit their families and communities as they are often more likely to spend money on things that support their children, the household. This then improves the chances of their family to achieve health and prosperity. When women earn a fair wage, they can support their families, but they also gain respect and confidence. Their families grow stronger and they reinvest in the future, becoming leaders in their community.
Reducing gender inequality is therefore key to economic development. Gender inequality comes at a significant economic cost as it hinders productivity and economic growth globally, countries are losing $160 trillion in wealth because of differences in lifetime earnings between women and men. Empowering more women to work, results in better growth of third-world economies. This is because women’s economic empowerment, increases economic diversification, boosts productivity and income equality, resulting in other positive development outcomes. Additionally, providing women and girls with more educational opportunities contributes to: "reductions in fertility rates and increases in labour force participation rates, and in which thereby better quality of human capital of the future economy and generations."
It's important to recognize that men and women entrepreneurs face inherently different constraints including psychological and cultural factors. Female entrepreneurs often lack access to financial and human capital, which impedes business growth; have different mindset constraints, such as risk-aversion; and have not caught up in soft skills, such as leadership.
In addition, women have culturally-imposed constraints that psychologically and physically impede their independence, aspiration, and priorities. Thus, the success of female entrepreneurs depends on their personal traits and entrepreneurial skills, and how supportive institutions and stakeholders address or work around these major constraints.
Providing these women with basic financial services — that fundamental first step toward economic empowerment — can unlock unprecedented economic growth and job creation and can have a direct impact on development outcomes such as health, education, food security, and water and sanitation.
