Women’s Financial Literacy Benefits Everyone—Here’s How

  • African women face barriers to starting and growing businesses that must be overcome to ensure equitable growth
  • 76% of Africans, including many women, see entrepreneurship as a good career choice
  • Togo has some of the most financially literate women in Africa, and the whole country benefits from their work

As early as the 1940s, and despite myriad challenges, Togolese women built and ran successful businesses.

While walking through the streets of Lomé, the bubbling Togolese capital, it is not unlikely that we will cross paths with a Nana Benz. Dressed to perfection, they stand in their shops, filled to the brim with colorful fabrics, hawking their wares and managing their business. Taking their names from a combination of “na” meaning “mother” in the Mina language, and “Benz” for the Mercedes Benz cars they love to drive, these women have long been an illustration of female resilience and ingenuity. .

Immense progress is being made around the world in the inclusion of women, and perhaps most importantly, women now have better access to education. But when you look at the performance of female-led businesses, they still lag behind their male counterparts.

These tenacious women lack neither motivation, nor perseverance, nor competence, so why this gap?

Financial Literacy Among African Women

In theory, African women can start a business. But in practice, they are not as well equipped to grow and secure their businesses over the long term. It has a lot to do with the fact that women consistently score lower than men on measures of financial literacy.

Financial literacy, or the ability to understand and effectively use financial tools, is key to making informed financial decisions. It helps individuals make smart investments, save for retirement, and build resilience to economic shocks, like the one experienced globally during the COVID-19 pandemic.

Instead of living hand to mouth and therefore incurring higher costs, people with financial literacy are able to plan strategically for the long term. As such, a lack of financial knowledge prevents women from accumulating wealth and ultimately prevents them from securing their future.

These barriers not only affect women’s financial well-being, but also have larger-scale consequences. In Africa, for example, the path to entrepreneurship attracts much of the continent’s dynamic and growing young population. Nearly 80% of Africans see it as a good career choicethe highest rate in the world, and Africa is the only region where women are more often independent than men.

The African entrepreneurial generation

With the rise of female entrepreneurship and the increasing participation of women in the workforce, improving women’s financial literacy is more important than ever. When these women unleash their economic potential and gain access to equal opportunities, they contribute to the development of their community and participate in the country’s economic growth.

A virtuous circle then sets in: women entrepreneurs are much more likely to employ women than their male counterparts. In fact, approximately 75% of their workers are women, while this figure drops to 20% in male-owned companies.

By ensuring inclusive access to financial education, we can make the most of a vibrant and promising youth and provide public resources that promise a positive impact for society as a whole. As such, women’s financial literacy is not only key to helping them realize their potential, but a key driver of economic growth and vital to Africa’s future.

This is why the national financial inclusion strategy developed by the Togolese Ministry of Financial Inclusion and the Informal Sector places so much emphasis on the financial education of women.

In 2020, Togo recorded its highest financial inclusion rate ever recorded (81.5%) between the countries of the West African Economic and Monetary Union. Its National Fund for Inclusive Finance, targeting women and youth, has benefited over 832,000 women. Over the past eight years, they have constituted 71% of the total number of beneficiaries and received 59% of the funds available.

Benefits of financial education

The women have transformed their small businesses into large successful initiatives.

Take the case of Zata Amamatou, a former peanut pancake peddler with a 5th grade education who received two micro-loans. Two of her children have now successfully completed high school, her business is changing and she is transforming into a spice wholesaler.

Women are increasingly knowledgeable and, endowed with their commendable courage and perseverance, are now successfully navigating and taking advantage of the financial tools at their disposal. Over 70% of Togolese women entrepreneurs have borrowed money for their businesses – this is above Nigeria’s 60% and South Africa’s 45%.

Togo understands and acts on the knowledge that supporting women is vital – and it shows. According to a World Bank report, Togo is the only country in the West African Economic and Monetary Union where microenterprises run by women generate more profits than those run by men.

Financial literacy is not a magic bullet for economic growth, and it must go hand in hand with a robust financial system and an effective regulatory environment – ​​but it is the necessary starting point on a road to prosperity. long-term.

The challenge for the country’s public and private sectors now is to invest in financial education that will enhance the impact of financial inclusion. The sooner we come together to close the gender gap in financial literacy, the sooner Togo and every other country following suit will see a real difference in global financial well-being – a benefit that entrepreneurs enjoy. , the women and men they employ and their families.

Togo is the only country in the West African Economic and Monetary Union in which businesses run by women earn more money than those run by men.

Togo is the only country in the West African Economic and Monetary Union in which businesses run by women earn more money than those run by men.

Image: World Bank

Sarah J. Greer