Comment view | المنتدى العالمي المعني بالأمن الغذائي والتغذية

السيد Getaneh Gobezie

consultant

إثيوبيا

31.12.2022

Dear colleagues

Thank you very much for this important discussion on – Reducing inequalities for food security and nutrition. …. One of the key resources to reduce inequality in access to food and nutrition is expanding access to finance to marginalized section of the population like rural women, youth, persons with disabilities, etc. As highlighted in the report, the challenge still remain!!

In many African countries like Ethiopia, the access to (formal) financial services (credit, savings, insurance, payments, etc) has been expanding for the last couple of decades -- particularly since the introduction of microfinance following the issuance of microfinance regulation 40/96 by the National Bank of Ethiopia (NBE). Yet the recent Global Findex database (World Bank) suggests that the percentage of adults (15+) with an account with a bank is just 35%. Only 11 % adults could borrow from a financial institution, and only 18% of adults reported being able to raise emergency funds from savings; others would turn to family and friends, or sell their assets. Though the agricultural sector, mostly represented by smallholder farmers, makes up a significant share of the Ethiopian economy, the sector represents only 11% of loan portfolios of financial institutions

In fact, the regulatory environment has been increasingly relaxed allowing especially MFIs to offer increasingly larger (and longer period) loans demanded by companies with the potential to create employment opportunities for others, including the introduction of alternative collaterals (movable collateral), agent banking, lease financing, etc,. Yet, institutions have been quite slow in adopting such modalities as they still enjoy a huge, untapped market, using their traditional (often group lending) modalities.

Business women are more likely to be affected since they are less likely to own properties which can serve as collateral, and enjoy much less connections with financial service providers, thus leaving the potential benefit from banking with them in-terms of unleashing their potential contribution to the economy, improving household welfare (including those of women) and their bargaining power. The youth also continue to have very little access as they (especially those from poor families), could not afford the material collateral, nor can they benefit from the mainstream Grameen style ‘’group lending’’ as they (especially those unmarried!!) enjoy the least social capital in many communities.

The focus of financial institutions has been largely on ''credit'', assuming that ‘’every one is a potential entrepreneur’’. As a result there has been scant attention to services like insurance and saving, otherwise valuable services for poor people leading vulnerable livelihoods. Evidences suggest that services like saving can be as important as (or even more important than) credit services for poor people. Especially for women facing ‘’patriarchal risk’’ safe and convenient saving devises can provide a secure mechanism to control income; and in fact such women who are not sure of controlling their hard-earned income could be reluctant to apply for an income generating loan – even when such services are available nearby, and easily accessible!!

There seem to be a lot of work to be undertaken at policy level, and making sure that well-intentioned policies are implemented on the ground). Strategies are also needed to work on patriarchal norms, which often dictate what are expected, valued and allowed for men/women, or boys/girls, as well as gender relations within the household. This requires more collaborative interventions among stakeholders.