Financial inclusion, particularly for women, has a key role to play in both the mitigation, and social and economic recovery from COVID-19, AFI’s Chief Operating Officer Chee Soo Yen said as she opened AFI’s Financial Inclusion Strategy Peer Learning Group (FISPLG) technical webinar on 5 June 2020. Attended by over 130 participants, the webinar focused on solutions to the impacts of COVID-19 onto Gender Savings Groups.

“This is an opportunity for policymakers and regulators to revise and adapt their legislations and regulations through a gender lens so that the COVID-19 recovery can be gender sensitive,” Chee underlined, noting that the financial inclusion can build resilience across all vulnerable groups.

In response to the COVID-19 pandemic, AFI members from across the network developed the AFI’s COVID-19 Policy Response and Dashboard. The dashboard  provides a wider and more strategic perspective to crisis response, and aimed at not only strengthening and securing the gains made from financial inclusion over that past decade, but also at providing an opportunity for digital finance to reach those outside the formal financial system, especially women who are disproportionally affected by the pandemic.

AFI has identified five key pillars for developing a gender sensitive financial system as a response to the COVID-19 pandemic: regulatory institutions, MSMEs, social protection, DFS and regulatory frameworks. Sex-disaggregated data collection, tiered know-your-customer (KYC) and institutional gender focal points are also featured as cross cutting themes.

AFI has previously conducted two webinars in response to the COVID-19 outbreak, with working groups also picking up the issue in their specialized areas to discuss in-depth solutions that build community resilience and expand financial inclusion.

Gender savings groups can play a key role for those excluded from the financial system as they take their first steps into formal financial inclusion, according to Nomcebo Hadebe, FISLPG Co-Chair from the Eswatini Ministry of Finance.

“They provide community support, social protection and education,” said Hadebe, “They also play a key role in many communities and can help women adapt and increase their resilience to the economic shocks they currently face.”

Policymakers can begin by incorporating savings groups in national financial inclusion strategies (NFIS) and national financial educational strategies with women and girls placed at the centre of these interventions, explained Dr. George B. Gould, Deputy Head of the Financial Sector Development Unit at the Central Bank of Liberia and Head of the FISPLG Gender Savings Group Sub-Group.

Providing access to basic financial literacy and opening up access to formal financial services, are two important steps that regulators can take to bring savings groups to the financial mainstream, Dr. Gould emphasised.

According to Dr. Gould, the Central Bank of Egypt disbursed 30 million Egyptian pounds (approximately USD 1.85 million) in order to formalize and digitize village savings and loan associations (VSLAs) on a mobile wallet platform. This fund is used to scale up digitization of 100,000 women beneficiaries and promotes cashless, safe, secure and easier processes for all members, as well as automate reminders for payments and collections. It also reduces errors when counting money.

Dr. Gould also highlighted  the example of Ghana’s NFIS (2018-2022), which recognizes savings groups as a key component in achieving the strategy’s objectives. With the government’s commitment of over USD three million, savings groups have been linked to the formal financial system, providing groups and their members access to credit, housing finance, informal pensions and microinsurance.

Through its NFIS (2017-2022), Bank of Zambia has also recognized the important role that savings groups play in improving access to financial inclusion for women. The Central Bank is providing small grants through its Women Empowerment Program for income generating activities, while its Village Bank Program is supporting vulnerable women by offering collateral free loans.

According to Waringa Kibe, Country Director for Access to Finance Rwanda,  challenges faced by savings groups as a result of the COVID-19 outbreak include handling physical cash, physical distancing and inability to meet in large groups, difficulty in paying back loans or saving due to suspension of physical weekly meetings, as well as lack of or limited access  to savings and credit co-operative societies (SACCOS) and microfinance institutions (MFIs). Members of savings groups who engage in micro- and small enterprises and are affected by lack of digital financial services by SACCOs and MFIs are also experiencing loss of revenue.

Responses proposed by Kibe include commissioning surveys to understand how the community has been impacted, engaging MFIs and SACCOs to restructure loans and waiving interest fees, establishing a COVID-19 emergency fund for MFIs to allow them to continue  serving members, as well as uninterrupted support for digitization efforts.

Aisha Rahamatali, Regional Advocacy Coordinator for CARE International, shared how the COVID-19 context is similar to that of other crises such as  Ebola, droughts and floods. Rahamatali explains that the crisis disturbs both food supplies and economic activities. Measures that are taken by governments to respond to the crisis may also have disruptive impacts onto the community.

“In many countries, VSLA members are ambassadors for sharing messages on COVID-19 approaches. They maintain solidarity through communication, awareness raising and food distribution,” said Rahamatali.

Rahamatali is confident that this is another crisis to which women will adapt to support their families in communities. She cited how in Niger, women are making and selling hygiene kits and distributing these kits together with the government and private sector. In Cote d’Ivoire, women have started working for each other in their fields instead of hiring labour to ensure that there will be crop this year.

According to Helen Walbey, AFI’s Head of Gender Inclusive Finance, the ‘new economy’ that we are creating as a response to the COVID-19 outbreak, should be a fully inclusive one, with women and girls at the centre of the recovery effort.

“Including women makes economic sense as it fosters greater stability in the banking system and enhances economic growth,” said Walbey.

The FISPLG webinar, moderated by AFI Policy Manager Dieter De Smet, highlighted the importance of moving informal savings groups into the formal financial system. According to Dr. Gould, VSLAs and informal savings groups must be encouraged to open formal bank accounts as informal systems exposes them to many security risks.

“When they deposit into bank accounts, they can see their money grow. When this happens, members will want to expand and reinvest,” says Dr. Gould. He explains that when a bank can see positive trends in their account activities, the bank gets attracted to them for potential borrowing. This is one of ways that savings groups and its members can gain access to additional funding for more investment. The additional investment will increase economic growth and citizen livelihood.

AFI’s Gender Inclusive Finance workstream is supported by the Swedish International Development Cooperation Agency (Sida).