Regulatory obstacles hinder credit access to women

KARACHI: The International Monetary Fund (IMF) on Monday attributed the subdued access of women to credit in Pakistan to absence of any law in the country that stops discrimination based on gender in delivering financial services.

IMF released the results of its annual financial access survey (FAS) that showed women borrowers constitute only eight percent of total borrowers in the country since there is no law that prohibits discrimination by creditors based on sex or gender in access to credit.

IMF’s data showed that high-income economies – such as Denmark and Poland – where the percentages of female borrowers are 48 and 51 respectively have laws in place to check discrimination in access to credit.

“The FAS data suggests that there are major disparities in the use of financial services between men and women, especially in low- and lower middle-income countries,” the Washington-based lender said in the ‘FAS 2019 Trends and Developments’ report.

“In countries such as Pakistan, Uganda, and South Sudan, less than 30 percent of borrowers at commercial banks are women,” the Fund said. “In contrast, the high-income countries in Europe, including Denmark and Poland fare better, with close to 50 percent of borrowers being women.”

The FAS covers 189 countries spanning more than 10 years. The key FAS indicators include numbers of automated teller machines, bank branches, depositors, borrowers, mobile agents, mobile accounts, outstanding deposits and loans, and value of mobile money transactions.

IMF data showed that overall number of borrowers from commercial banks per 1,000 adults has not been significant either during the last six years. In fact, number of borrowers considerably fell to 16.74 / 1,000 adults in 2018 compared to 25.02 a year earlier, 20.63 in 2016, 21.11 in 2015, 22.79 in 2014 and 23.40 in 2013.

Number of bank depositors per 1,000 adults was comparatively highest at 360.90 last year as against 350.41 in 2017, 326.58 in 2016, 318.47 in 2015, 288.23 in 2014 and 274.68 in 2013.

Number of bank branches per 1,000 adults was 10.18 in 2018, 10.07 in 2017, 9.83 in 2016, 9.51 in 2015, 9.16 in 2014 and 8.89 in 2013.

Access of small and medium enterprises (SME) sector to credit has been lurking below two percent of GDP despite its 30 percent contribution towards the economy.

Outstanding loans to SMEs by commercial banks stood at 1.21 percent of GDP last year as opposed to 1.55 percent in the previous year – the highest in last six years. In 2016, the ratio was 1.35 percent, 1.11 percent in 2015, 1.14 percent in 2014 and 1.22 percent in 2013, IMF data showed.

Outstanding loans from banks, in terms of GDP, increased to 21.6 percent last year compared with 17.80 percent in 2017, 17.09 percent in 2016, 15.96 percent in 2015, 16.12 percent in 2014 and 16.41 percent in 2013.

Branchless banking has been growing at a faster pace over the last six years as mobile phone penetration is on an upward trend, according to the IMF’s survey findings.

In 2018, value of mobile money transactions, in terms of percent of GDP, shot up to 10.64 percent compared to 8.77 percent in 2017, 7.46 percent in 2016, 6.82 percent in 2015, 5.37 percent in 2014 and 3.59 percent in 2013.

Number of registered mobile money accounts per 1,000 adults surged to 340.18 last year as opposed to 28.15 in 2013. Likewise, number of registered mobile money agent outlets per 1,000 square kilometre expanded to 551.58 from 162.19 during the six-year period, IMF data showed.