Pakistan has long struggled with low levels of financial inclusion, with only a small fraction of the population having access to formal financial services. According to the World Bank’s Global Findex, for 2021, just 21% of adults in Pakistan are financially included, compared to a global average of 69%. Women in particular have been left behind, with the gender gap in financial inclusion remaining stubbornly wide.

However, there is some cause for optimism. The recent Karandaaz Financial Inclusion Survey (K-FIS), which tracks access to financial services in Pakistan, shows a remarkable growth in the financial inclusion of women. For the first time in the history[1] of this survey, the level of female financial inclusion has gone into the double digits, reaching 13%.

Figure 1: Women Financial Inclusion in Pakistan (2014 to 2022)

Source: Karandaaz Financial Inclusion Survey (KFIS)

As Figure 1 shows, the level of financial inclusion almost doubled between 2020 and 2021. This increase comes mainly from a sharp rise in the adoption of mobile money wallets among women, with the percentage of adult women using mobile money increasing from 2% in 2020 to 6% in 2022. There was also a substantial increase in the number of bank accounts held by women, with the percentage rising from 5% in 2020 to 8% in 2022.

Figure 2: Financial Inclusion in Pakistan – Male vs Female – 2014 to 2022

Source: Karandaaz Financial Inclusion Survey (KFIS)

However, this increase in the registration of bank accounts and mobile money accounts was not limited to women, as men showed an even greater increase in adoption. As Figure 2 shows, the level of financial inclusion for men rose from 36% in 2020 to 47% of the male population in 2022.

Figure 3: Pakistan’s Gender Gap in Financial Inclusion – 2014 to 2022

Source: Karandaaz Financial Inclusion Survey (KFIS)

This spectacular rise in male accounts has nullified any potential gains in the bridging of the gender gap[2], which has remained at the same level in 2022 as it was in 2014, as shown in Figure 4. The bridging of gender gap is essential for reaching any country’s financial inclusion goals. This makes intuitive sense – if half the population is under-represented on a measure, it will reflect on the overall national level estimates.

Figure 4: Financial Inclusion and the gender gap in financial inclusion – 2021

Source: Global Findex Survey – 2021

This is also true for Financial Inclusion in Pakistan. As Figure 4 shows, higher gender gaps are correlated with lower levels of financial inclusion. Pakistan, with the second-highest gender gap in 2021, also has one of the lowest levels of financial inclusion in the world, higher only than Lebanon, Iraq, Afghanistan, and South Sudan.

The onset of COVID-19 and the imposition of lockdowns resulted in additional costs for transacting in cash. The Financial Inclusion Insights survey of 2020 created a panel dataset, in which the first phase of the survey was conducted in March 2020, while the follow-up survey with the same respondents was conducted in December 2020. During this time period, Pakistan went through COVID-19 lockdowns as well as an extensive awareness campaign about social distancing. These new restrictions could explain the spike in mobile wallet registrations, as they went from 9% in March 2020 to 16% in December 2020.

Khan and Jaffar (2021) [3] highlight that the financially excluded who opted for financial accounts during this period had a higher level of readiness when compared to the overall financially excluded. This higher level of readiness was manifested in a higher level of awareness about the functions of financial products, higher levels of trust in mobile money services as well as mobile money agents, and a higher level of comfort with using mobile phones.

For this blog the analysis from Khan and Jaffar (2021) is recreated to measure these aspects for K-FIS 2022. It is important to mention here, that these indexes are part of Karandaaz’s upcoming Financial Inclusion Index, but we will use them here to estimate the gender gap between their various sub-indexes.

Figure 5: Index scores of the Financially Excluded – 2022

Source: Karandaaz Financial Inclusion Survey (KFIS)

Figure 5 shows the index values[4] on the level of awareness about mobile money functions, trust in mobile money providers and agents, and the levels of digital literacy. As the figure indicates, all these estimates are for the financially excluded. The estimates show that financially excluded women are far less prepared for adopting mobile money wallets when compared to financially excluded men, thus indicating a significant gender gap.

Figure 6: Index scores of the Financially Excluded – 2022

Source: Karandaaz Financial Inclusion Survey (KFIS)

The relevance of these indicators becomes apparent when these gender gaps are estimated for mobile money wallet owners. As Figure 6 above shows, among the mobile money wallet owners these gender gaps are much smaller, and in the case of digital literacy, there is a reverse gender gap, where female mobile money wallet owners reported a higher level of comfort with operating their phones when compared to male mobile money wallet owners.

In conclusion, the recent rise in female financial inclusion in Pakistan is a positive development, however, the equally significant increase in male financial inclusion levels means that the gender gap remains unchanged. Addressing the gender gap is crucial to increase the level of financial inclusion in Pakistan, and addressing the gaps in readiness towards adoption of mobile money wallets is a critical step towards this goal.

[1] The Karandaaz Financial Inclusion Survey (K-FIS) was preceded by the Financial Inclusion Insights (FII) Surveys for Pakistan. These surveys were conducted for 2013, 2014, 2015, 2016, 2017 and 2020.

[2] Gender gap is defined as the difference between male and female account registration as a proportion of male account registration. The value of the gender gap ranges from -1 to +1, where +1 represents a situation where men have 100% account ownership while women have zero, vice versa for -1

[3] Imran Khan, Dr. Karrar Hussain Jaffar (2021). “Searching for the Binding Constraint to Digital Financial Inclusion in Pakistan: A Decision Tree Approach” Center for Global Development. https://www.cgdev.org/sites/default/files/Pakistan-decision-tree.pdf

[4] The index values for all these indexes range from 0 to 1, with 0 representing the lowest levels of awareness about mobile money products, trust in mobile money services, and digital literacy, while 1 represents the highest value.