Pakistan achieved significant gains in financial inclusion in 2017, but growth is limited by the exclusion of women.

In 2017, Pakistan achieved real gains in financial inclusion, driven by bank account use and increasing mobile money adoption. InterMedia’s 2017 Financial Inclusion Insights (FII) Pakistan data found that financial inclusion increased by 5 percentage points, from 9% of adults in 2016 to 14% in 2017. This gain is the first statistically significant change in five years of annual surveys (see figure below).

Mobile money registration drove the increase. In the year from 2016 to 2017, more unregistered, over-the-counter (OTC) users of mobile money converted to registered use than in any previous year. This conversion was driven by invigorated enforcement of the State Bank of Pakistan’s (SBP) regulations on the use of biometric verification for all transactions, which made OTC transactions more difficult.

Access to mobile money grew 4 percentage points, from 9 percent of adults in 2016 to 13 percent in 2017. Registered users of mobile money also increased significantly, from less than 1 percent of the population in 2016, to 4 percent in 2017. Additionally, nearly all of those who had a registered mobile money account in 2017 used their account actively on a 90-day basis.

Despite progress, the growth in financial inclusion between 2016 and 2017 disproportionately favored men. The gender gap in the registered use of formal financial services remains an enormous barrier to women’s financial inclusion and economic empowerment; 20% of men were financially included compared to 7% of women. The lack of women-owned physical capital, as well as cultural norms that limit women’s economic empowerment are major constraints to financial inclusion. FII data shows the gender gap has only grown wider since 2014, with the financially included share of the male population far outpacing growth in financial inclusion among women (see figure below).

Additionally, considerable gender gaps in two important indicators of digital readiness also limit women’s ability to adopt and use digital financial services (DFS). In 2017, data showed the gap in mobile phone ownership was just over 40 percentage points. That is, phone ownership was enjoyed by 80% of men versus only 39% of women. The top reasons for not owning a mobile phone among women were a lack of necessity, lack of permission from a spouse, parents or family members, and lack of money to buy one (reported by 52%, 45%, and 41% of respondents, respectively).

Readiness to adopt digital financial services is also much higher among men than it is for women. SIM card ownership among men was double that of women in 2017. The ability to text – a key indicator of readiness to adopt mobile money – is also twice as prevalent among men; 68 percent of men versus 34 percent of women had ever sent/received a text message.

Women’s progress on the customer journey, a series of progressive stages through which individuals become active users of more sophisticated financial services, is associated with higher levels of economic empowerment and greater influence over how household income is spent. Fewer female nonusers (26%) agreed they have most/almost all influence on final household spending decisions compared to female advanced users of financial services (42%). Female advanced users were more than twice as likely as female nonusers to be somewhat/very involved in choosing the financial services they use (54% versus 25%). Addressing the gender disparity in DFS readiness is necessary to advance access and usage of financial services among women.

Government policies and initiatives focused on eliminating the gender disparity in DFS readiness is critical to advancing access and use of financial services among women in Pakistan. Creating an environment where more women can become economically empowered, will, in turn, increase financial inclusion overall.

For more information regarding the FII team’s research in Pakistan, read the 2017 Pakistan Annual Report, or contact Samuel Schueth, Program Lead, Financial Inclusion Insights. If you are interested in seeing additional information about the factors that affect financial inclusion in Pakistan, we encourage you to visit the Data Fiinder at finclusion.org.

Financial Inclusion Insights is an ongoing research program funded by the Bill & Melinda Gates Foundation and designed to build meaningful knowledge about how the financial landscape is changing across eight countries in Africa and Asia (Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Tanzania and Uganda).