Sanusi Lamido Sanusi: Increasing women's access to finance -
challenges and opportunities
Paper presented by Mr Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria, at
the Second African Women's Economic Summit, Lagos, 13 July 2012.
* * *
Prepared by the Research Department of the Central Bank of Nigeria.
Protocol
It is my pleasure to present this keynote speech. I am delighted on two fronts. First our
current quest to secure a level playing field for the girl child makes this meeting important.
Second, recognizing the role of women in national economic development makes it
imperative to explore options for improving access to finance for women entrepreneurs. For
this keynote speech, I shall focus on the latter with particular reference to Nigeria.
Economic advancement leads to higher standard of living. Earlier theories of economic
growth recognized the importance of labour and capital as key determinants of growth.
However, human capital was not given visible prominence, as it was positioned exogenous in
earlier growth models. With significant progress in economic thought and research, human
capital is now regarded as the most fundamental ingredient for driving economic growth. The
development of human capital through formal and informal training directly increases the
productivity of labour. The efficiency of capital is also boosted by technological innovations
also powered by human capital.
The contribution of women to economic development is well documented. Yet there exists
several barriers to the full optimization of women's economic potential. These range from
cultural, to religious, traditional, and legal discrimination amongst others.
A recent publication by the Global Partnership for Financial Inclusion highlights that in
developed countries, women are starting businesses at a faster rate than men, and are
making significant contributions to job creation and economic growth. The same is true for
transition economies, although the comparable rate of growth is slower. In Indonesia, 2007
data showed that women-owned businesses grew at 8 per cent, while men-owned
businesses shrank 0.3 per cent. In Thailand (2008) women-owned businesses grew by
2.3 per cent while the male counterparts grew only by 0.3 per cent. (GPFI, IFC, 2011).
Access to Finance is often cited as one of the major factors impeding the growth of
women-owned businesses in developing countries. The key barriers include lack of
ownership of collateral - as tradition would seldom cede property rights to women; coupled
with the absence of credit histories - owing to the fact that most women businesses are
informally organized.
Yet, it is a fact that improving financial support for women would increase the number of new
businesses, which in turn, would boost economic activity, enable the expansion of old
businesses, leading to increased productivity and growth. Financial empowerment enhances
the bargaining power of women at the family level and this allows larger latitude for
investment in child-nutrition, health and education, thereby regenerating the future workforce.
Beyond the family, financial freedom is a precursor to gender equality and consequently, the
assurance of social security. Women constitute not only a formidable demographic force, but
are also responsible for the youth that make up the next generation. Therefore, their
well-being has implications not only for their own lives, but also for the society at large. Their
ability to play this role effectively depends on how far the society supports their development.
Empowering them is a crucial challenge which calls for constant review of policies,
re-assessment of priorities, commitment of adequate financial resources, and effective
implementation of programmes.
The experience of the Grameen Bank of Bangladesh provides evidence that women might
be better fund managers. Of loans made by the bank, over 98 per cent were recovered,
implying a near 0 per cent default. Moreover, giving women access to finance has emerged
as a lucrative business for fund providers. The Global Banking Alliance for women has seen
a steady upward trend in its profits, which has also put its operations on the path to
sustainability.
The place of women in Nigeria
Nigeria's female population is estimated at 80.2 million (UNFPA, 2012), representing
49 per cent of the total population. About 54 million of Nigeria's female population live in rural
areas where they provide 60-79 per cent of the rural labour force. Recent data from the 2009
Nigerian Education Data Survey showed that 1.5 million children (8.1 per cent of children
aged 6-14) were not in school at the time of the survey. Of this, 1.5 million people,
53 percent were girls. While on the one hand, the survey shows a doubling of the net
attendance ratio for female students between 1990 and 2010, it also indicates that most of
these girls do not make the transition to secondary school. There has only been a marginal
increase in the number of girls enrolling for secondary school over the 20 year period.
Although there is a policy of free education, the literature suggests that there are still some
significant costs that deter parents and cause pupils to drop out (Lincove, 2009).
Nigeria's maternal mortality rate is amongst the highest in the world; the rate is estimated to
be around 828 and 351 per 100,000 live births in rural areas and urban areas respectively.
There are also regional disparities between the North and South. The North East has the
highest rates of maternal mortality at around 1,549 per 100,000 live births and the lowest
rates are recorded in the South-East, with 165 per 100,000 live births.
Teenage marriage also contributes to low female attendance, retention and achievements in
school. About 30 per cent of school age girls drop out of school having already begun
childbearing at an early age. The physical and psychological implications of these
phenomena cannot be overemphasized.
Challenges to women's access to finance
The challenges to women's access to finance include:
Property rights and control over assets
Legal regulations and customary rules often restrict women's access to and control over
assets that can be accepted as collateral, such as land or livestock. Women are less likely to
have land titled under their name, even when their families own land, and are less likely than
men to have control over land, even when they do formally own it. Biased inheritance rights
often bestow land to male relatives, leaving both widows and daughters at a disadvantage
(Agarwal, 2003).
Cultural norms and family responsibilities
Socially accepted norms and expected family roles have a profound effect on the type of
economic activities that women can engage in, the technologies available to them, the
people and agencies with whom they can interact, the places they can visit, the time they
have available and the control they can exert over their own resources such as capital.
Biased attitude of banks
Women's access to financial resources is also limited by biased lending practices that
emerge when financial institutions consider them inexperienced and therefore less attractive
clients, or when institutions lack the knowledge to offer products tailored to women's
preferences and constraints (Fletschner, 2009).
Lack of collateral and start-up capital
Access of collateral and asset-based lending generally constrains borrowers from access to
finance. This is much more serious women for obvious reasons. Data from the NBS (2009)
showed that men are twice as likely to secure finance compared to women. A recent World
Bank report on the "Investment Climate in Nigeria" showed that capital rather than
productivity narrows the range of activities in which women engage. The report also showed
that majority of women (76 per cent) rely mostly on internal funds and retained earnings, and
that only about 1 per cent obtain capital from the formal financial sector. The report
substantiates that formal financial institutions, especially banks, have not supported women
entrepreneurs as much as they could have (Halkias et al., 2011).
Lack of awareness of finance
Women generally lack knowledge on the financial options available to them. Furthermore,
the cost of getting this information (measured in money, time, and energy) may be high due
to family responsibilities.
Financial market imperfections
Enterprise survey data shows that small firms are more likely to be negatively impacted by
financial constraints than large firms. Women entrepreneurs are largely concentrated in small
firms and hence are likely to face greater financial constraints.
Formal employment
Women are significantly underrepresented in secure wage employment in both public and
private employment. Those who have formal sector jobs are constrained by the reproductive
roles they play. As a result, majority of women occupy low-level posts that offer them the
flexibility they need to manage their households while working in the formal sector. They
spend most of their time doing unpaid household work, which undermines their business
potentials.
Opportunities for increasing women's access to finance
The opportunities for increasing access to finance for women are discussed in terms of the
various initiatives of the government and allied agencies that support access to finance in the
economy including women. I shall go on to discuss some of these initiatives below while
highlighting some of the progress that the Central Bank of Nigeria (CBN) and the banking
industry have made in their to efforts to empower women.
Government initiatives
The Federal Government recently launched the Public Works and Women/Youth
Empowerment Scheme (PW/WYE). The programme which is a component of the Subsidy
Re-investment and Empowerment Programme (SURE) is targeted at generating about
370,000 jobs across the country. The PW/WYE is intended to create employment
opportunities for women and youth in labour-intensive public works and is expected to
generate 50,000 skilled jobs and 320,000 unskilled job opportunities. The implementation
would be in partnership with the States, the Local Governments and the private sector. To
boost the scheme, the government has set aside some portion of the partial subsidy on
petroleum prices removal proceeds to support the employment generation intervention
nationwide.
Policymakers need to establish an enabling environment that will facilitate access to financial
services for women entrepreneurs, through the development of a supportive legal and
regulatory framework, and the development of education and training opportunities that are
more aligned with the specific needs of women.
Skilled women are likely to access finance more easily. Therefore, a necessary step in
enhancing finance for the women should be to ensure an upscale of their leadership,
technical, entrepreneurial and managerial skills. An important priority for governments should
be increasing the enrolment of girls across all levels of education complemented by efforts to
improve the quality of education that they receive. While it is important to build the capacity
of financial institutions to better serve women entrepreneurs, it is also imperative that women
are provided with the opportunity to be financially literate, so that they can speak the
language of finance.
Women face peculiar exclusion as a result of cultural, religious and social biases that hinder
their access to financial services. It will be pertinent to explore the possibility of enacting laws
that address gender inequality, sexual harassment and discrimination as first step towards
improving their access to financial services.
Initiatives by the Central Bank of Nigeria
Women component of Micro, Small and Medium Enterprises Development Fund
(MSMEDF)
In order to promote the development of the Microfinance sub-sector and provide for the
wholesale funding requirements of Microfinance Banks and Microfinance institutions, the
Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria provided for
the establishment of a Microfinance Development Fund. One of the key targets of the
microfinance policy is to eliminate gender disparity by ensuring that women's access to
financial services increases by 15 per cent annually. In view of the peculiar challenges faced
by women in accessing financial services in Nigeria, the CBN has approved the
establishment of MSMEDF. It is intended that a minimum of 60 per cent of the MSMEDF
should be committed to providing funding to women in order to address their peculiar
financial exclusion challenges. The key objectives include providing grants for capacity
building of staff in microfinance institutions (MFBs, MFIs and similar institutions) and their
apex bodies on women based lending, promoting the development of regulatory provisions
that are favourable to women lending, supporting initiatives that can improve financial
literacy, entrepreneurship development for women clients, supporting programmes that are
geared towards the mobilization of women, research and development, and promotion of
women friendly financial innovations and products.
Financial inclusion and entrepreneurship development
The Central Bank of Nigeria (CBN) appreciates the fact that financial access, inclusion and
literacy are cornerstones for reducing poverty. To his end, we have taken the lead in
developing Nigeria's National Financial Inclusion Strategy to ensure that a clear agenda is
set for increasing both access and usage of financial services within a defined timeline for
excluded groups including women. Indeed, the financial inclusion strategy provides for
reducing the exclusion rate of women from 54 per cent to 20 per cent by the year 2020. To
achieve this, special incentives and provisions would be made available to financial
institutions to develop products that would meet the needs of Nigerian women. The CBN as
part of its developmental efforts supports Entrepreneurship Development Centres (EDC) in
the six geo-political zones of the country. The bank would endeavour to place more of a
focus on women in the implementation of these centres.
Promoting women into leadership and decision making roles
The Bankers' Committee, which comprises of the CBN, Nigerian Deposit Insurance
Corporation (NDIC), Deposit Money-Banks and Discount Houses declared 2012 the year of
"Women Economic Empowerment". I am also pleased to report that the Bankers' Committee
also now has a dedicated sub-committee focused on women economic empowerment
headed by the Chief Executive Officer of Standard Chartered Bank (Nigeria) Limited,
Mrs. Bola Adesola. One of focus areas of this sub-committee is to facilitate the decision of
the Bankers' Committee to ensure that women occupy more leadership positions in the
industry. Presently, we have a situation where at the junior levels; we have a situation where
about 42% of the junior roles in the industry are held by women. Unfortunately, as they move
on to middle and senior management roles, this starts to diminish to 31 and 27 per cent
respectively. We have collectively agreed that by 2014, 40 per cent of senior management
and 30 per cent of board level positions should be occupied by women.
As we strive towards the improvement of the lot of African women, we must continue to
extend their participation in leadership positions in the public and private sectors. The
Federal Government of Nigeria has shown some leadership in this regard through the
appointment of 16 women as Ministers in the cabinet. The CBN in recent years has also
provided some leadership for the banking industry through its appointment of up to seven
female directors in some cases to head departments that have been seen as traditionally
male dominated environments. It is instructive to note that the CBN is coming from a position
where it has only had four directors between 1959, the year of its establishments and 2009,
when it celebrated 50 years of existence.
Conclusion
Ladies and gentlemen, as in other developing nations of the world, women in Nigeria are
faced with numerous socio-economic challenges some of which were discussed in this
paper. One of the potent solutions to these menaces is the empowerment of women for
active participation in economic activities. Lack of finance has been identified as one major
limiting factor to women entrepreneurship development. Therefore, I used this speech to
highlight some of the challenges of accessing finance for women. I have also mentioned the
available avenues for providing financial encouragement to women. It does not stop there.
The Central Bank also encourages advocacy for institutional support to women
empowerment.
And as you are aware, small and medium-sized Enterprises (SMEs) in market economies
are the engine of growth and development. SMEs contribute to sustainable growth and
employment generation in a significant manner due to their private ownership,
entrepreneurial spirit, flexibility and adaptability as their potential to react to challenges and
changing environments in a competitive market frame work. Women occupy pivotal positions
in SMEs. Increasing access to finance for women-owned or operated businesses is a sound
strategy for financial institutions if they are to establish a foothold in the SME space.
Therefore, supporting women entrepreneurship by means of training and granting financial
support is a key step to take towards guaranteeing the contribution of women to national
economic development.
I thank New Faces New Voices and the African Development Bank (ADB) for organizing this
forum and the opportunity to speak and I would like to end by urging a concerted effort to
ensure that women are included as an integral part of our strategies for the development of
various sectors of the Nigerian economy.
Thank You.
References
Agarwal B, (2003) Gender and land Rights Revisited: Exploring New Prospects via the State
Family and
Market, India
British Council, Gender in Nigeria Report 2012, Improving the Lives of Girls and Women in
Nigeria
Rural women's access to financial services: credit, savings and
Fletschner D, (2009),
insurance, Lisa Kenney Evan School of Public Affairs University of Washington
UNFPA 2012: Gender in Nigeria Report, British Council and UKaid
GPFI,IFC (World Bank) (2011) Strengthening Access to Finance for Women-Owned SMEs
in Developing Countries
Mike I. O, Productivity and Employment in Nigeria, National Center for Economic
Management and administration (NCEMA), Ibadan, Nigeria
Onno Ruhl (2010), "Nigeria's youth: Turning challenge into opportunity", a convocation
lecture delivered at the Federal University for Technology in Owerri
World Bank (2011), An Assessment of the Investment Climate in Nigeria, Directions in
Development, edited by Giuseppe Larossi, Peter Mousley, Ismail Radwan