CFI Blog

G2P and Gender: When Will Pakistani Women Be Able to Withdraw Their Own Money?

The state of financial inclusion has improved a lot over the past few decades due to the cumulative effort of many countries and international organizations around the globe. In fact, there are many institutions that are working on a global scale to identify critical regions that need to increase their rate of financial inclusion and major innovations that can solve the problem of financial inclusion. 

Financial inclusion is important for marginalized groups like cultural minorities, lower-income sections of society, and women. The implications of financial inclusion are huge in improving living standards, alleviating poverty, and reducing the gender gap in the financial sector. One of the key drivers towards financial inclusion is the microfinance industry.

In this article, we will discuss how G2P payments and the microfinance industry help in reducing the gender disparity in the world of finance using the case study of Pakistan. 

Gender Gap in the Finance Industry of Pakistan: Can G2P Payments Help With the Situation?

Gender Gap in the Finance Industry of Pakistan: Can G2P Payments Help With the Situation?

Women have been traditionally excluded from participating in the financial matters of the household. For this reason, they have avoided using services from financial institutions for a long time. But the importance of managing one’s own finances is becoming more evident over time. Women who are self-employed, or employed with an established organization need to have the tools and methods to control their finances or if they have to rely on another person for this they will have limited say in how their hard-earned money is spent. 

The gender gap between men and women in terms of financial activity is still extremely wide with fewer women engaging with the available financial services and products as compared to men. This figure can be improved by judicially using certain tools. In many countries, a well-designed financial product was the difference between financial exclusion and financial inclusion.

For example, in order to improve the financial inclusion of refugees Al Majmoua in Lebanon has done extensive market research to develop relevant, useful products and services. One of the major drivers for the financial inclusion of women can be G2P payments. Government-to-person or G2P payments which are largely targeted towards women have huge potential to reduce the gender gap by encouraging their beneficiaries to make the most use of their financial accounts. 

Understanding the Relationship Between G2P Payments and their Beneficiaries in Pakistan

A study conducted by a collaborative team from the Center for Financial Inclusion Fellows Program, Microfinance Opportunities, Pakistan Microfinance Network, and Centro de Formacion Empresarial de la Fundacion de Mario Santo Domingo in Columbia was designed to understand the relationship between Government person payments and promoting financial inclusion of women. 

This study was robust in its data collection as it analyzed both the data collected from a  global survey and the data collected from field research conducted in Pakistan. The field research was conducted in order to understand two viewpoints: the perspective of the beneficiary and the type of transactions conducted at the shops of agents responsible for the distribution of payments to the beneficiaries. 

Pakistan was perfect for the study as it has a huge gender gap in participation in financial matters and it has a well-established G2P program known as the Benazir Income Support Group (BISP). 

The government of Pakistan started the BISP program to provide financial assistance to lower-income families and through this process encourage them to be more financially active. Through this program, cash payments of about $10 a month per family are distributed to poor families with lower incomes. The main aim of BISP is outlined as follows:

  • Helping women to learn how to use the bank as they receive payments from BISP only in their bank accounts. 
  • Providing women a safe place to store their money (bank accounts) as opposed to storing their cash at home.
  • Women will be able to make payments more conveniently directly through their bank accounts. 

Drawbacks of BISP

Although the BISP program is well-intentioned, it is not always well-received by the people. There are a few setbacks that make the efforts of the Government of Pakistan and BISP futile. In order to design the perfect product that can meet the needs of the people and be easy to use, one needs to understand the difficulties faced by both the distributor and the beneficiary in a G2P payment system. The challenges faced by the BISP are as follows:

1. High Rates of Illiteracy Among the People 

The major barrier to the inclusion of the poorest section of the community is illiteracy. As many people are uneducated they lack the technical skills to understand the benefits of using financial services and refrain from using them. Also, the people who are willing to use the available financial services do not know how to use the more complicated products, fill in the required documents or use technology to help them in this process. In fact, financial illiteracy is also a problem for other groups which is why financial literacy for professional athletes, rural communities, etc. is extremely important. 

2. Lack of Trust in the Formal Financial Services

As BISP payments were irregular and the people were uninformed as to why these irregularities were occurring, the BISP payments failed to gain the trust of the people. Although the women were grateful for the payments, they realized this source was unreliable.

3. Growing Dependency on Others

Due to unfamiliarity with the product and lack of literacy, the women have to depend on their husbands or others who can help them withdraw their money. Due to this, they have less autonomy and privacy regarding their financial matters leaving them vulnerable to the person helping them. 

4. Lack of Digital Facilities

In many cases, digital solutions like the use of mobile payments have proved to be invaluable. But the use of mobile phones to conduct financial transactions was not an option for women living in remote areas of Pakistan. As most of them did not own a mobile phone, they did not even know how to use one. So, mobile banking is less likely to be useful in this case. 

The State of Gender Equality in the Financial Industry in Pakistan

In Pakistan, it was observed that most transactions related to BISP were either conducted by men alone or along with the beneficiary. However, it was interesting to note that while the men usually approached ATMs or the agent to receive BISP payments, the actual transaction (putting the debit card in the machine and punching in the PIN) was often completed by the agent or a security guard at the ATMs. While this was not the case when women themselves came to collect their payments. In cases where women alone came to receive their payments, they completed all the steps of the transaction by themselves. 

So, the women in Pakistan are capable and quick learners but only a small fraction participates in the financial transactions. Even after calling all innovations in financial capability, the empowerment of women financially will be limited if they are not accessing or engaging with the financial product themselves. In most cases, the men withdraw the cash for the households and consequently have more say in how the money is spent regardless of the fact the BISP program is specifically targeted to empower women financially. 

How have G2P Payments Improved the Financial Condition of Women in Pakistan?

How have G2P Payments Improved the Financial Condition of Women in Pakistan?

The payments received from BISP are crucial for women in order to smoothly function in their day-to-day lives. Since these payments are so valuable for the women, they willingly learned how to operate devices like mobile phones and ATMs so that they can withdraw money at their own discretion. In fact, the survey showed how most women were quick to learn new methods for withdrawing cash which reduced their dependency on their husbands or agents or anyone else who earlier had to help them in the process.

As it is difficult to reach women in remote areas simply through the use of physical banks, G2P payments are conducted through the use of various distribution methods like digital payments, banks, agents, post offices, and many others. Thus, G2P payments also facilitate the financial capability of people by familiarizing them with different kinds of financial services. Among all of these options, post offices fill financial inclusion gaps most effectively as they can reach across a wider geographical location at a fraction of the cost. 

In fact, the women realized the importance of banking to manage their financial matters and were more than willing to learn how to properly use the facilities. With the efforts of the BISP program, people are being taught the different ways they can use the financial services of banks to their benefit. Thus, G2P payments have greatly pushed for the financial inclusion of women, especially in rural areas. The BISP program has the potential to be more successful in the future if it adapts its product and delivery according to the requirements of the people.

Adapting G2P Payments to Meet the Requirements of the People

The international organization CGAP (Consultative Group to Assist the Poor) conducted research to understand the effects of G2P payments on financial inclusion in Pakistan. They used applied product innovation techniques to understand the hurdles that need to be overcome in order for G2P payments to effectively increase the financial inclusion of the country. 

Upon analyzing the results of this study they proposed four improvements to the existing design to be more effective. These are as follows:

  • The lack of trust in BISP payments is due to the irregular payment schedule. So, in order to evoke faith, the BISP payments need to follow a regular schedule and in case of delays, they should let the recipient know the exact reason for this delay.
  • Providing clear photographic instructions which are easier to understand to teach the BISP beneficiaries how to use an ATM or agent.
  • Making every transaction transparent and well-documented. This can be achieved by providing receipts for withdrawals and deposits so that the beneficiaries can track and manage the amount of money they have in their accounts.
  • Along with being a distribution center to distribute social payments, BISP should also provide the recipients with simple options for savings products and loan products that will help them familiarize themselves with financial services and help them manage their money more efficiently. 

Frequently Asked Questions (FAQs)

Q1. What is G2P in banking?

G2P refers to the government to personal banking. This includes payments done by the government to individuals such as social payments like pensions, salaries, etc. Governments of Many countries with lower income complete this transaction using banking services. This encourages everyone to open a bank account to receive payments and pushes the country to become more financially inclusive while improving the condition of the poor people.

Q2. How does G2P work?

Historically, G2P payments were conducted in cash. The distribution of the social payments was done from a specific institution on a preassigned date and time. However, this method proved to be inconvenient for the recipients who had to travel great distances sometimes to collect their wages, pensions, etc. Now the government is gradually switching to digital methods. In this new form of payment system, the due amount is directly transferred to the recipient’s mobile phone or debit card.

Here there is only one requirement for the recipient which is to open a bank account. However, to ease this transition, governments mandate that financial institutions provide recipients with their base-level account which is usually a simplified savings account. Sometimes, the social payments are also transferred into a pooled account that the financial institution holds and ultimately distributes among the people. 

Q3. Is it allowed for women to have bank accounts in Pakistan?

In Pakistan, women can have bank accounts but the percentage of women who have bank accounts is much lower compared to the percentage of men who have bank accounts. The gender gap in the financial sector in Pakistan is huge and it needs to be reduced. In addition to fewer women holding accounts to their name, the women who actually have accounts do not regularly interact with their accounts. The women generally open a bank account for some reason but they do not use it later on for any of the financial services they offer such as savings, investments, insurance, or credits.

Final Thoughts

G2P programs have been very successful in nurturing a financially inclusive society in Pakistan. However, financial inclusion cannot be the endpoint of their efforts. They need to make efforts to ensure that women continue to engage with their financial service providers and that they have the knowledge to adapt to the changing innovation and new financial tools that are being introduced.

This is what it means to be financially capable. In order to understand what is financial capability, you must understand that there are still people who are technically financially included but who lack the skills to operate and make complete use of the financial tools available to them. 

The cumulative efforts of international organizations and the governments of concerned countries are already showing improvements in the financial inclusivity and capability of women around the globe. And, this figure is likely to improve further when the efforts are targeted towards reducing specific problem areas. 

Author Profile

Jonas Taylor
Jonas Taylor
Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.

Leave a Comment