Women make up majority of 800m unbanked Muslim population

DUBAI: Women make up the majority of the 800 million global Muslim population who are unbanked (people without a bank account), according to a digital banking firm, leaving them without basic financial services, and putting their social rights at risk.

Zeiad Idris, the CEO of UK-based digital banking platform Algbra, told Arab News that it is common in Muslim communities for men to take charge of the household’s finances. “In our (Muslim) communities it’s not uncommon for the male member of the family to hold the bank account in their name and control the family’s finances,” he said, adding that empowering women by giving them ease of access to financial services would lead to enhanced economic development.

Research published by the World Economic Forum has found that gender inequality is higher in countries that have low GDPs. According to Algbra, 29 percent more women are unbanked in Bangladesh compared to men, while in Egypt the difference is 11 percentage points.

Abbas Basrai, partner and head of financial services in the lower Gulf for finance giant KPMG, also says that financial independence is vital for women.

“Discriminatory inheritance legislation in many countries, as well as women’s vulnerability to abuse, makes it particularly critical that they can access their own finances to safeguard their independence, safety and quality of life,” Basrai said.

The misinterpretation of Islamic law and a lack of knowledge about inheritance rights are major hurdles to improving women’s independence, experts said.

Co-author of a report on women and land in the Muslim world, Rafic Khouri, said that “inheritance rights are often misinterpreted,” leading to women being excluded from inheritance.

In Islamic law, a woman’s inheritance share is generally half that of a man, although in some rare cases they might get an equal or larger share than a male relative, the report said.

Daisy Khan, the founder of Women’s Islamic Initiative in Spirituality and Equality (WISE), a global network of Muslim women committed to peacebuilding and gender equality, argued that discouraging women from having an equal say in the finances is a denial of their human rights.

“If a woman is completely dependent on others for her financial future, her life is regulated, preventing her from leading a life of fulfilment,” the award-winning speaker, author and activist said.

The World Bank claims that the Middle East and North Africa – which has Muslim majority populations – has the widest gender gap in bank account ownership with only 35 percent of women having bank accounts compared with 52 percent of men.

Having more women incorporated into the economy would also have an impact of GDP, according to research by the International Finance Corporation. The research quoted findings by McKinsey that “if women participated in the economy on the same basis as men, it would add $12 trillion, or 11 percent, to the 2025 annual global GDP.”

The World Bank also states that basic financial services and a strengthening women’s role in finance is one of the keys to boosting economic growth.

Khan claimed that robbing women of their financial independence “does grave disservice to Muslim nations for no nation can truly be built without the participation of all its citizens, both men and women.”

When it comes to figures regarding the unbanked population in the world, it is not just Muslim women who are at a disadvantage, it is Muslims in general as they are the biggest group globally left without banking services. This is despite the growth in Islamic finance, which has been forecast to be worth $3.8 trillion by 2022.

Muslims account for 47 percent of the world’s 1.7 billion adult unbanked population. According to Algbra, 12 of the 15 most underbanked countries in the world are either Muslim-majority or have a significant Muslim population.

In the Arab world in 2018, 52 percent of men had a bank account and only 35 percent of women, according to the World Bank.

With the widespread use of smartphones, the fintech wave could help bring Islamic finance to a larger market, including women.

“In an increasingly digitalized world, banks allow for greater accessibility and enhanced operational efficiencies, with account holders benefiting from the ability to make different forms of payment and move towards a cashless society,” Gulf KPMG head Basrai said.

However, many Muslims limit their use of financial services due to the market’s failure to provide services that comply with the “faith-based requirements of those consumers,” the co-founders of Algbra said.

Around 34 percent of adults in Afghanistan and 27 percent in Iraq and Tunisia said religious concerns have prevented them from accessing financial services, a 2018 Thomson Reuters study found. A World Bank report published in 2017 said that 13 percent of those in Pakistan cited religious reasons, while in Turkey it was 19 percent.

Offering Shariah-compliant loans helped to boost application rates from 18 to 22 percent in Muslim majority countries such as Jordan, US think-tank Brookings said in 2017, citing a study by Dean Karlan, professor of economics at Yale University.

“Ensuring the population is banked enables economies to quickly process the unimaginably large volume of transactions that transpire in goods, labor, and capital markets,” Basrai said.