“Empowering women economically is not only the ‘right thing’ to do to honor the world’s commitments to human rights. It is also the ‘smart thing’ to do for development, economic growth, and business.” (Klugman & Tyson, 2016)
Between 2020 and 2022, the percentage of adult women with bank accounts in Pakistan increased from 7% to 13%, indicating a positive trend towards financial inclusion. This figure, however, remains low when compared to global numbers.
According to the World Bank’s Global Index, only 21% of adults in Pakistan are financially included, compared to a global average of 69%. Women have been left behind, with the gender gap in financial inclusion remaining stubbornly wide.
Pakistan is home to 240 million people, with 49% of them being women. Fostering gender equality and advancing women’s empowerment via job opportunities are essential strides in attaining sustainable development. While there is a strong correlation between women’s economic rights and economic growth, Pakistan fares poorly on global indices and reports, ranking in at 142 out of 146 countries on the Global Gender Gap Report 2023, above only Iran, Afghanistan, Algeria, and Chad.
Gender diversity is not just a moral imperative; it is also a strategic advantage for companies. Studies have shown that organizations with diverse teams, including strong representation of women, tend to outperform their peers in terms of profitability and innovation.
Social norms and cultural bias are primarily responsible for women being left behind. Women face restrictions or societal pressures that deter them from maintaining independent financial status. To highlight the graveness of the issue, only 38% of women own mobile phones, reflecting one of the lowest rates of female cell phone ownership worldwide. This disparity, wherein the devices are often, registered under male names, results in women being excluded from the digital economy and contributes to a digital divide.
The globe is increasingly connected and diversity, especially the inclusion of women, has added brilliantly to the skill set in any given workplace. The productivity and economic growth gains from adding women to the workforce are way larger than previously thought, simply put, closing the gender gap could increase GDP by an average of 35 percent.
Sustainability, hence, comes with the need to build a company’s vision around the principles of Diversity, Equity, and Inclusion (DEI). Recognizing the diverse needs and aspirations of women, International Women’s Day 2024 is promoting ‘investing in women’ for a prosperous economy. This theme resonates deeply in a world where economic empowerment and gender equality are intertwined goals for sustainable development for unlocking diverse perspectives, and creativity, driving better financial outcomes.
Given that, 97% of Pakistan’s population is Muslim interest-based transactions are an impediment for many to become part of the documented economy. Assets of the Islamic Banking Industry (IBI) grew by Rs 303 billion in the quarter from January to March 2023 to reach Rs 7,532 billion by the end of March 2023. Deposits of IBI also grew by Rs 191 billion during the period under review and were recorded at Rs 5,352 billion by the end of March 2023.
The significant growth of Islamic banking in Pakistan can be attributed to three key factors: religious beliefs, the resilience of Islamic finance during global financial crises, and the availability of a diverse range of financial products that present a credible alternative to conventional banking. Add to that the Islamic advantage to the digital landscape and we come up with profound ways to address these challenges and promote greater financial inclusion among women.
Raqami, as the first Islamic digital bank, is dedicated to promoting women’s financial inclusion through a multifaceted approach. Primarily we aim to have a 50% male-to-female ratio in our workforce as well as in the leadership.
Financial products and services are being tailored to the specific needs of women, ensuring equal opportunities, providing educational resources and tools, opportunities for entrepreneurs, and all with Islamic-compliant financing options and support programs, geared towards encouraging and assisting women in establishing or expanding their financial footprint.
According to a World Bank survey covering more than 135 countries and territories, Pakistan ranked fourth lowest in terms of female financial inclusion. Among Asian nations, it stood as the third lowest, above only Afghanistan and Yemen. Beyond Asia, only South Sudan reported a lower level of account ownership among women[i]. Top of FormBy leveraging technology, these initiatives aim to overcome geographical and social barriers, making banking services more accessible and inclusive for women across diverse backgrounds.
The dedication to gender equality goes beyond mere representation; the organization is committed to addressing systemic barriers that hinder women’s access to financial services, such as social norms and limited ownership of mobile phones.
The State Bank of Pakistan has introduced a gender equality policy that is in the process of being adopted by all financial institutions. This policy aims to create a more inclusive and equitable workplace environment by ensuring equal opportunities and treatment for all employees, regardless of gender. The banking industry must collaborate for the productive utilization of this opportunity and invest in products that can enhance the impact.
Islamic digital banking is grounded in the belief that by prioritizing gender equality and empowering women, a more inclusive and prosperous society can be created for all. Through targeted initiatives and strategic partnerships, Islamic digital banking is actively working towards a future where women have equal opportunities to participate in the economy and realize their full potential.
The article is written by Umair Aijaz. He is a seasoned banker, with insights into the changing financial dynamics and rising Islamic digital platforms.
