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The digitization of cash transfers has emerged as an attractive policy solution for countries seeking to expand social assistance to alleviate the economic hardships created by COVID-19 and to advance financial inclusion. Indeed, countries with advanced G2P payment ecosystems are able to move quickly.

Chile, India, and Thailand, for example, were able to leverage digital ID systems to support the unique identification of eligible beneficiaries and facilitate direct deposit payments to accounts linked to trusted ID credentials. Such digital approaches can also contribute to expanding program coverage, while generating efficiencies and cost savings through reduced leakage.

There remain many challenges, however, to ensuring that digitization does not exacerbate the exclusion of women and girls. For countries that are facing economic collapse and soaring poverty, as well as potential social unrest, there is a premium on speed and rapid response.

Yet even where programs are targeting women, the risks of exclusion are significant. In a three-country 2019 assessment of women’s experience of cash transfer programs in India, Pakistan, and Tanzania, women were often unaware of their benefit entitlements, the timing of disbursements, what money was available in their accounts, and how to use the accounts.

Digital Cash Transfers in Times of COVID-19: Opportunities and Considerations for Women’s Inclusion and Empowerment from The Bill & Melinda Gates Foundation, the World Bank Group, CGAP, and Women’s World Banking, offers insights on five common barriers need to be addressed in order to design and implement the most inclusive and effective cash-based COVID-19 digital responses.

1. The Gender Gap in Financial Access

It is difficult to rapidly introduce and scale up G2P digital payments to women where there are large barriers to financial inclusion, particularly in countries where the appropriate regulatory framework, payment infrastructure, and digital financial services are not yet established.

The number of people excluded from the formal financial sector fell from 2.5 billion worldwide in 2011 to 1.7 billion in 2017. But more than half, or 56 percent, of those still excluded are women.

There has been a persistent gender gap in financial inclusion in developing countries, standing at 9 percentage points since 2011, despite significant progress in several countries such as India, where the financial inclusion gap fell from 20 percentage points to 6 percentage points between 2014 and 2017.

In several cases, the gap has worsened. In Bangladesh, overall financial inclusion rose from 31 percent to 50 percent between 2014 and 2017, but the gender gap widened from 9 percentage points to 29 percentage points over the same period.

Accumulating evidence points to key barriers to women’s financial account ownership. These include:

• Lack of trust in banking institutions,
• Discriminatory practices and rules,
• Women lacking documentation to open an account,
• insufficient funds,
• The cost of owning a financial account.

Adverse social norms that restrict women’s work outside the home also can be a major barrier to women earning an income and saving enough money to open an account. For example, almost three quarters of Pakistani men do not think it is acceptable for women to work outside the home if they want to.

Norms around care responsibilities often mean that women need to stay at home or must work fewer hours or for lower pay. In hard-to-reach or rural settings, there frequently are few bank branches, ATM machines or mobile money agents, limiting women’s ability to both open accounts and access funds.

2. The Gender Gap in Official IDs.

Identification (ID) is often required to enable identity verification for social protection programs and for meeting know-your-customer (KYC) requirements for opening financial accounts. When people are unable to access official IDs or cannot reliable prove who they are, they can face difficulties in accessing government programs that they would otherwise be eligible for.

Lack of trusted identification can also block people from accessing the financial system when KYC requirements for digital identity verification are restrictive. Women can face a combination of legal, procedural, economic, and social barriers to obtaining official IDs.

In some countries, women need to present more documents than men to obtain an ID, or even be accompanied by a male relative. In Benin and Pakistan, for example, a married woman cannot apply for a national ID in the same way as a married man.

Women are also often less able to afford fees for identity documents, or they have neither the time nor resources to travel to distant registration points, making the ID process too onerous and costly for them.

Data from the 2018 ID4D Global Dataset indicate that an estimated one billion people do not have an official proof of identity. The data suggests a gender gap in low-income countries, where close to 44 percent of women lack ID, compared to 28 percent of men.

3. The Gender Gap in Mobile Phone Ownership.

While mobile is not the only way to make digital transfers, it is one of the most widely used digital account channels and is an increasingly critical/utilized means of communicating program and payment information. It is more difficult for women who do not have access to cell phones and where restrictive regulations limit the operation of mobile operators.

Gender gaps and exclusion from mobile phone ownership across 150 countries show that almost 500 million women were not connected in 2017. The largest gender gaps were in South Asia (20 percent), Sub-Saharan Africa (13 percent), and the Middle East and North Africa (10 percent).

This digital exclusion has been traced to lack of identification, lack of affordability of phones, and adverse norms. With SIM registration now mandatory in over 150 countries, lack of government-recognized identity documents can pose a significant barrier.

In low-income countries, lack of identification is strongly negatively correlated with mobile ownership, even after controlling for characteristics such as income, age, and rural residence. Normative constraints can also be severe. They operate as a key driver of gaps in Bangladesh, where 87 percent of men own a phone compared with only 67 percent of women.

While gender gaps in mobile ownership have narrowed over time, women remain less able to access vital information from the government and health services. The report suggests that there is a significant risk of exclusion for women without cell phones, when the delivery of information, applications, and the assistance itself is increasingly digital.

4. Program Design Failing to Close Gender Gaps

Overlapping disadvantages of lower levels of literacy and numeracy and higher levels of informality and economic exclusion often mean that fewer women than men are able to apply for and access benefits or understand how to open and use financial accounts.

Program design needs to account for the likelihood that women are not in paid work, are more likely to work in the informal sector, are much more likely to take on the role of main caregivers, and are often mobility constrained by social norms, rather than default to a program that works for men.

Examples of the latter include requiring beneficiaries to appear in person to meet various program requirements and using the mobile phone as the sole means of communication about program benefits. Program designs often lack strong capacity-building components that support women’s skills to successfully manage their accounts.

5. Insufficient Gender Data and Analysis

Gender data gaps – specifically, the collection and analysis of empirical (quantitative and qualitative), sex-disaggregated data – weaken our understanding of the constraints facing and needs of women and girls, and can lead to ineffective program design, inadequate benefit levels, and insufficient monitoring and feedback loops.

This will illuminate such basic questions as the profile of poverty and livelihoods, and COVID-19 impacts thereon. Do poor women have their own financial accounts, and do they own cell phones?

These diagnostics identify barriers that need to be addressed as part of program development. For example in Tanzania, the Financial Inclusion Tracker Survey revealed that 70 percent of poor women did not have a financial account, neither bank nor mobile money.

Data are also needed to inform program operators about how to mitigate unintended adverse consequences, especially the risk that cash transfers to women can worsen the risk of violence against women in the home.

Current data gaps mean that we often only have a partial snapshot of the lives of women and girls and the constraints they face. Readily accessible ways to cast light on critical questions need to be applied through use of existing data and the types of rapid assessments recommended in Appendix 2.

These can illuminate the risks, needs, and hardships faced by women, and inform program design and reforms that support women, such as making adjustments in benefit size and the timing of disbursements.