Is the priority of financial inclusion in action evident across Canada? For women, the answer is no

While attending a Financial Alliance for Women Summit conference that convened finance sector champions from over 60 nations to discuss women’s economic empowerment a few years ago, Canada was touted as a leader in women’s entrepreneurship and economic development. As the leader of a women’s banking strategy in Alberta and one working to advance Canada’s women’s entrepreneurship strategy, the accolades came with a sense of pride. But as I listened to global leaders talk about their commitment to closing gender finance gaps and developing financial solutions that address financial inclusion, I felt embarrassed by the lack of forward momentum in Canada compared to our global counterparts. It is estimated that 10 to 20 per cent of Canadians are underbanked. More often than not, these individuals are from low-income households—including Indigenous Peoples, racialized people, people with disabilities and newcomers to Canada. Many are women. I stand by my belief that Canada is a leader in women’s entrepreneurship. Our whole-of-government approach and $9-billion investment into the women’s entrepreneurship strategy is without question unlocking new opportunities for women to succeed in their business pursuits. But the hard truth remains: women and diverse people don’t have equal access to the full range of needs-based financial services. Globally, the credit gap for formal women-owned SMEs is estimated at USD$287-billion, leaving approximately 70 per cent of women-owned SMEs without the financing they need. Over the past several years, Canada has seen a number of women’s banking and investing programs enter the market; however, there is anecdotal evidence that current programs do little to address or eliminate structural barriers associated with women’s access to capital. In fact, many call the initiatives pinkwashing, where capital targeted at women is solely for marketing purposes. According to the report, The State of Women’s Entrepreneurship in Canada 2022, more than 80 per cent of women rely on self-financing. That number increases when you account for intersecting identities. The Indigenous Business Survey on Indigenous Women Entrepreneurs, released in 2021 by the Canadian Council for Aboriginal Business, found that 47 per cent of Indigenous women-owned businesses report no current lending relationships with any financial institutions, compared to almost one-third of male-owned businesses. Rise Up: A Study of 700 Black Women Entrepreneurs, led by the Black Business and Professional Association, Casa Foundation, de Sedulous Women Leaders, and Women Entrepreneurship Knowledge Hub (2021), revealed that only 17 per cent of Black entrepreneurs used credit from financial institutions. If Canada truly is to be a visionary leader in women’s entrepreneurship and prosper from an inclusive economy, financial inclusion must be prioritized. That means more commitment and collaboration between all actors with the goal that all women have access to useful and affordable financial products, and can maximize the benefit of their use. The federal government plays a key convening role in making financial inclusion a reality. And while this is a multi-layered issue, there are pathways forward. Collectively we can choose to move into action by identifying key levers such as: Calling upon the financial sector to collect sex-disaggregated data to inform policy and financial services; Mandating training in the financial sector to break down biases and address ongoing issues of colonialism, racism, and patriarchy; Increasing transparency in financial services through voluntary codes to track credit and capital; Redesigning processes and policies used in funding decision making to identify structural and systemic barriers; Making low-interest credit facilities available to counter predatory lenders; Directing increased funds through developmental lenders and investing through a gender lens; Increasing the number of women in banking, angel investing and venture capital; and Including diverse women in the creation and delivery of financial services products. Entrepreneurship can be a great equalizer, and Canada is primed to be a home for inclusive entreprise. But only when we address the barriers to financial inclusion and act on solutions that close the gender finance gap can we say we’re truly leading the way. Shannon Pestun is a proud Cree Métis woman entrepreneur who was one of the first women in the country to lead a women’s banking strategy, and one of seven women appointed to serve on Canada’s women entrepreneurship expert panel. She is the CEO of Pestun Consulting and co-founder of The Finance Cafe. She is also a senior adviser to the Diversity Institute which leads the Women’s Entrepreneurship Knowledge Hub. The Hill Times

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Is the priority of financial inclusion in action evident across Canada? For women, the answer is no

It is estimated that 10 to 20 per cent of Canadians are underbanked, and many of these people are from low-income households.

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