Credit score systems limit women's economic empowerment
A woman uses a laptop. UN study says that although women’s labour participation is higher in Africa than anywhere else in the world, only 20 per cent of African women receive a salary.
What you need to know:
- A new UN study says credit scoring systems have been found to discriminate against women.
- It highlights that digital finance can disproportionately benefit African women.
- Although women’s labour participation is higher in Africa than anywhere else in the world, only 20 per cent of African women receive a salary.
Credit scoring systems used by various entities have been found to discriminate against women, according to a new UN study.
The United Nations Economic Commission for Africa (Uneca’s) latest report on Digital Finance Ecosystems – Pathways to Women’s Economic Empowerment in Africa found that only 33 per cent of African women have a formal financial account compared to 43 per cent of African men.
Speaking during a virtual media briefing last Thursday, Syed Ahmed, the lead author of the three-year study conducted jointly with the Graca Machel Foundation, highlighted that digital finance can disproportionately benefit African women who have been locked out of conventional banking systems.
Mr Ahmed however noted: “Most digital lenders use credit scoring that undermines gender and financial inclusion owing to design limitations and a lack of foresight in programming. This can influence the supply of, and demand for financial products and services made available to women in general,”
According to the report, credit scoring algorithms that consider financial, residential, employment and marital status, among other factors, often lead to bias against women.
Credit worthiness
“Although women’s labour participation is higher in Africa than anywhere else in the world (approximately two-thirds of all women work), only 20 per cent of African women receive a salary. Most of those who are working are either self-employed or underemployed in informal jobs. This significantly reduces many women’s credit worthiness,’’ reads part of the report.
Further, the study found that married women may be misrepresented as financial dependents in cases where they own joint accounts with their husbands.
Chief of the Gender Equality and Women’s Empowerment Section at Uneca Keiso Matashane-Marite, said the algorithm bias is a result of poor representation of women in the technology teams that develop digital banking platforms.
Gender dimensions
“Gender inequality gaps in science, technology, engineering and mathematics (Stem) fields have an impact on the gender dimension of the design and development of credit reporting systems, and the subsequent algorithms used by credit reporting service providers across Africa,’’ she said.
Her statement was made against the report's findings that African women only accounted for 30 per cent of employees in research and development globally.
Going forward, the UN think-tank recommends the increase of women in decision-making at the highest levels, and setting industry targets for women’s representation.
