What Does Financial Inclusion Mean for Young Women’s Well-being?

There are nearly 600 million young women aged 15-24 in the world today, and about 90% of them live in developing economies. Many of these young women face normative and structural barriers that make them among the most socially and economically excluded of all potential financial service users.  

A new working paper from CGAP finds that well-implemented financial inclusion initiatives for various sub-segments of young women have proven to produce positive financial outcomes, such as increased financial capability and savings.  Some have also been associated with improvements in non-financial areas like education, health, and psychosocial functioning. Although these impacts are difficult to disentangle, current research indicates that plural programs with financial inclusion components can benefit marginalized young women.

A critical age, with lasting impacts on financial inclusion 

Many young women aged 15-24 undergo dramatic transitions in a relatively short time span – from legal minor to major, student to worker, single to partnered, child to caregiver. Each transition can have lifelong impacts on these young women and future generations – but many face formidable obstacles to making those transitions successfully. Globally, the proportion of young women not in employment, education, or training is twice that of young men. In sub-Saharan Africa, they are eight times more likely to be married before the age of 18. And the prevalence of HIV among young women globally is almost double that of their male counterparts.  

Young women’s levels of financial inclusion reflect these broader challenges. While rising sharply at fairly equal rates among people in their late teens in developing economies, young women’s and men’s adoption of formal accounts begins to diverge around the age of majority, producing a gender gap that persists across ages.  

What can financial inclusion do? 

Almost two decades of research indicate that financial inclusion interventions can help young women develop financial assets.  Financial inclusion may also facilitate the development of human capital, voice and agency, and bodily integrity – all of which are necessary to become healthy, productive, and empowered adults. However, more research is needed to understand what exactly financial inclusion – defined as services and/or financial education – can contribute to young women’s well-being outcomes. 

To fill this research gap, a forthcoming paper from CGAP combines findings from the Global Social Development Institute, with a broader review of research on the financial and non-financial impacts of financial inclusion programming on young women. The vast majority of studies reviewed were from sub-Saharan Africa, on work with highly marginalized young women – all in high-poverty settings, often out of school, child brides, young mothers, or orphans/vulnerable children. Almost all these programs combined financial inclusion with interventions in other domains (i.e., they were plural in nature).  

The most common financial inclusion intervention in these programs was financial education, often in combination with some type of financial service. The programs also offered a wide variety of interventions in other areas, most frequently related to health, followed by psychosocial functioning and livelihoods, and, less often, education. Sometimes, these included cash or material transfers. Very often, these services were delivered through clubs facilitated by female mentors, commonly known as “safe spaces”.  

Financial inclusion may also facilitate the development of human capital, voice and agency, and bodily integrity – all of which are necessary to become healthy, productive, and empowered adults.

Almost all the studies showed an improvement in financial knowledge or behaviors, from improved motivation and plans to save, to higher financial capability, better savings habits, increased savings, access to credit for income generation, and greater assets. Positive impacts from these plural programs were also demonstrated in other areas corresponding to their interventions. Illustrative outcomes included improvements in sexual and reproductive health, less engagement in risky sexual behaviors, and improved HIV knowledge; increased self-efficacy, aspirations, and gender empowerment measures; higher labor force participation and earnings; and increased ability to meet educational costs, higher enrollment, and better grade attainment. 

While there was ample evidence of improved outcomes, practically all the plural programs were implemented and evaluated as a package, making it close to impossible to disentangle the impact of the financial inclusion components specifically. In addition, findings from the few studies that were designed to isolate the impact of financial inclusion were not consistent. A few plural programs did suggest that financial inclusion strengthened some non-financial outcomes, but other rigorous studies did not find those impacts.  

The research does, however, suggest arguments for including financial inclusion interventions in broader programs to support marginalized young women: 

1. Financial inclusion components appear to boost program participation – which is not surprising in the context of poverty.  

2. Plural programs may reduce risks for young women. For example, they may better enable them to work part-time while studying, without compromising their schooling.  

3. Complementary programming may also help protect young women from the male backlash that can sometimes occur when financial inclusion interventions lead to women’s rapid, visible access to resources. Savings groups appear particularly effective, as they build both financial and social assets. 

Getting beyond “whether” to implement financial inclusion interventions, to “how”  

While the evidence to date is encouraging but not definitive, pursuing conclusive answers on the non-financial impacts of financial inclusion for young women might be unrealistic given the number of studies needed in diverse contexts. Rather, it may be more practical to further research how to most effectively add financial inclusion interventions to plural programs for young women.  For example:  

• Which is the best tool to help young women accumulate and control financial resources: financial education and/or financial services? How do these tools perform with or without livelihoods programming, and how do they compare to cash or other transfers? 

• How can tradeoffs between the coverage, cost, and complexity of plural programs be minimized? Can digital channels be leveraged without sacrificing impact? And are there potential cost-savings through commercial financial services in such programs? 

Answering these questions will require collaboration across not only the researchers, youth-serving organizations, and funders that have already produced so much of the research, but also private actors such as financial service providers and telecommunications operators. 

Stay tuned for more analysis, conclusions, and implications in the forthcoming CGAP working paper (sign up for the CGAP newsletter to be notified). We look forward to working with partners to continue exploring how to maximize the positive impact of financial inclusion for young women.