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Women’s financial inclusion: From access to economic empowerment
Economic development accomplished by woman entrepreneurs ignites positive changes as it will instantaneously develop the welfare of society, the economic settings of women, and heighten women's education and intensify awareness of gender equality in the business world.
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She means business: Lismukrindun, one of the women taking part in the Wonder Women program in Bojonegoro, East Java, prepares her emping waluh (pumpkin crackers) on Aug. 12, 2020. The program aimed to promote women micro-entrepreneurs in the country. (Courtesy of Kopernik/Rudy Susilo )
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ndonesia’s chairmanship of ASEAN this year raised three strategic pillars, one of which was “Accelerating Inclusive Digital Economy Transformation and Participation”. One of the translations of that pillar is accelerating digital financial literacy and inclusion to support inclusive economic growth, as reiterated at the 43rd ASEAN Summit in September.
The summit also reaffirmed the commitment to strengthening women’s empowerment, which is also supported by the 2030 Sustainable Development Agenda and the 2025 ASEAN Community Vision that makes women’s empowerment one of key priorities for the region.
Notwithstanding the commitment, women across ASEAN countries, including in Indonesia, face more challenges than men, in initiating or expanding businesses. Women entrepreneurs experience low return on investment, stagnant growth, early exit and business failure due to several barriers.
Among others, effective access to finance or financial inclusion remains one of the most persistent obstacles faced by women entrepreneurs. The restraints on women’s access to finance are a result of the incapacity to formulate a business plan and inadequacy of business training and apprenticeship schemes rooted in insufficient financial knowledge and skills.
Financial literacy as a set of skills and knowledge that enables individuals to make appropriate business decisions is a critical factor in encouraging financial inclusion in developing businesses led by women entrepreneurs, including micro, small and medium enterprises (MSMEs). Statistics Indonesia (BPS) data show that in 2023, about 37 million out of 64.2 million, 64.5 percent, of MSMEs in Indonesia are women-owned and have limited access to financing. MSMEs contribute 60.51 percent to Indonesia's gross domestic product (GDP) and absorb 96.92 percent of the workforce.
This conveys that MSMEs are the strength of the Indonesian economy and women’s economic empowerment is the key to it. With two-thirds of Indonesia’s female population in the productive age group of 15-64 years old, there is immense prospective for accelerating growth by eliminating impediments to their economic participation (World Bank, 2021).
Improving women’s economic empowerment in Indonesia is an opportunity for both the private and public sectors and could add US$135 billion to the economy each year (McKinsey Global Institute, 2018). Effective approaches that allow practical implications in supporting woman entrepreneurs are essential. Financial literacy is an efficacious step for enhanced women’s financial inclusion that enables them to develop businesses and ultimately achieve economic empowerment.
