Boosting Financial Inclusion for Women Entrepreneurs

Discover how the Rasta Project highlights the importance of digital financial literacy in enhancing financial inclusion for women entrepreneurs in Pakistan. Learn about the challenges faced and the opportunities for growth and empowerment.

RURAL FINANCE

Tahira Sadaf, Nazia Tabasam & Neelam Rana

7/15/2026

Women entrepreneurs are increasingly contributing to Pakistan’s economic development through their participation in trade, services, manufacturing, and home-based enterprises. Their businesses generate income, create employment opportunities, and improve household welfare. Despite their growing economic role, women continue to face substantial barriers in accessing and utilizing formal financial services. Limited financial knowledge, restricted mobility, inadequate access to technology, and socio-cultural constraints often prevent women from fully participating in the formal financial system.

Recognizing the importance of financial inclusion for sustainable economic development, policymakers and development organizations have invested heavily in expanding banking infrastructure and digital financial services. However, access alone does not guarantee inclusion. The ability to understand and effectively use financial products has become equally important, particularly in an era where financial transactions are increasingly conducted through digital platforms. Digital financial literacy is therefore emerging as a critical factor in determining whether individuals can benefit from the opportunities created by financial technology.

To better understand these issues, a comprehensive study was conducted under a RASTA Project funded by the Pakistan Institute of Development Economics (PIDE), Islamabad. The project examined financial literacy, digital financial literacy, and financial inclusion among entrepreneurs in Punjab, with a particular focus on understanding the challenges faced by women entrepreneurs and identifying pathways for improving their participation in the formal financial sector.

Why Financial Inclusion Matters

Financial inclusion refers to the access and effective use of affordable financial products and services, including savings accounts, credit facilities, insurance products, and digital payment systems. For entrepreneurs, access to financial services is often the difference between business stagnation and business growth. Financial inclusion enables enterprise owners to manage cash flows, accumulate savings, access investment capital, and cope with economic shocks.

Globally, significant progress has been made in expanding financial inclusion. According to the World Bank’s Global Findex Database, account ownership among adults increased from approximately 51 percent in 2011 to 76 percent in 2021. However, Pakistan continues to lag behind many comparable economies, particularly in terms of women's participation in formal financial systems. The challenge is even more pronounced among women entrepreneurs, many of whom continue to depend on informal savings mechanisms and family-based financing arrangements.

Key Findings from the RASTA Project

The RASTA project surveyed 237 entrepreneurs in Faisalabad District, including 137 male entrepreneurs and 100 female entrepreneurs, to assess their levels of financial literacy, digital financial literacy, and financial inclusion.

Women Entrepreneurs Face Significant Financial Literacy Gaps: One of the most important findings of the study was the existence of a substantial gender gap in financial literacy. Male entrepreneurs achieved an average Financial Literacy Index score of 54.4, compared with only 42 among female entrepreneurs. The results indicate that women entrepreneurs possess comparatively weaker knowledge of banking products, savings instruments, credit management, inflation, risk diversification, and financial decision-making.

The study further revealed that more than one-third of female entrepreneurs fell into the low financial literacy category, compared with fewer than one in ten male entrepreneurs. This gap suggests that many women are entering and operating businesses without access to the financial knowledge required to make informed business decisions.

The Digital Divide Remains a Major Challenge: The largest disparity observed in the study was in digital financial literacy. Male entrepreneurs achieved an average Digital Financial Literacy Index score of 66.9, whereas female entrepreneurs recorded an average score of only 34.6. This finding highlights a significant digital capability gap. Many female entrepreneurs reported limited familiarity with mobile banking applications, digital payment systems, online financial transactions, and cyber-security practices. While digital financial services are expanding rapidly across Pakistan, women are not benefiting equally from these opportunities because many lack the skills and confidence needed to use digital platforms effectively. The results suggest that the challenge is no longer merely access to technology but also the ability to use technology productively and safely.

Financial Inclusion Remains Lower Among Women: The study also documented significant gender differences in financial inclusion. Male entrepreneurs achieved a Financial Inclusion Index score of 0.758, compared with 0.593 among female entrepreneurs. More than 91 percent of male entrepreneurs were categorized as financially included, compared with only 65 percent of female entrepreneurs. Women were less likely to own formal financial accounts, use banking services regularly, access formal credit, or utilize digital financial products. These findings indicate that financial exclusion remains a major obstacle to the growth and sustainability of women-owned enterprises.

Digital Financial Literacy is the Strongest Driver of Financial Inclusion: Perhaps the most important finding of the RASTA project emerged from the logistic regression analysis examining the determinants of financial inclusion. The analysis showed that digital financial literacy was the strongest predictor of financial inclusion among entrepreneurs. An increase in digital financial literacy substantially increased the likelihood that an entrepreneur would use formal financial services. The influence of digital financial literacy was stronger than that of traditional financial literacy, age, enterprise type, and business experience. This finding carries important policy implications. It suggests that efforts aimed solely at expanding banking infrastructure or opening new accounts may not be sufficient. Meaningful financial inclusion requires individuals to possess the knowledge and skills necessary to use financial services effectively, particularly in an increasingly digital environment.

Development Implications: The findings of the RASTA project demonstrate that financial exclusion among women entrepreneurs is not simply a banking issue; it is fundamentally a development challenge. When women are excluded from formal financial systems, their businesses operate below potential, investment opportunities are lost, and household economic security is weakened. Improving digital financial literacy can generate benefits that extend far beyond financial transactions. Financially empowered women are better able to expand their enterprises, create employment opportunities, increase household incomes, and invest in education and health. Consequently, strengthening women’s financial capabilities contributes directly to poverty reduction, inclusive growth, and community development. The results are particularly relevant for Pakistan’s efforts to achieve the Sustainable Development Goals (SDGs), especially SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). Closing gender gaps in financial capability and financial inclusion can accelerate progress toward all three goals simultaneously.

The Way Forward

The evidence from the RASTA project suggests that future policy interventions should place digital financial literacy at the centre of financial inclusion strategies. Training programs designed specifically for women entrepreneurs should focus on practical skills such as mobile banking, digital payments, online business transactions, financial planning, and cyber-security awareness.

Financial institutions should also develop products that reflect the realities and needs of women-owned enterprises. Greater collaboration among banks, fintech companies, educational institutions, and government agencies can help create an ecosystem that supports women’s participation in the digital economy. At the same time, investments in affordable internet connectivity, digital infrastructure, and consumer protection mechanisms are essential for ensuring that women can confidently engage with digital financial services.

Conclusion

The RASTA project provides clear evidence that digital financial literacy is a critical pathway for improving financial inclusion among women entrepreneurs in Pakistan. While access to financial services has expanded considerably in recent years, significant gender disparities persist in both financial capability and financial participation. Women entrepreneurs continue to face disadvantages in financial knowledge, digital skills, and access to formal financial services. The study demonstrates that enhancing digital financial literacy can help bridge these gaps and unlock new opportunities for enterprise growth, income generation, and economic empowerment. As Pakistan moves toward a more digital economy, investing in women's financial capabilities will be essential for building a more inclusive, productive, and equitable future. The findings underscore a simple but powerful message: financial inclusion is not achieved merely by providing access to financial services; it is achieved when individuals have the knowledge, skills, and confidence to use those services effectively.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writers are affiliated with the Institute of Agricultural and Resource Economics, University of Agriculture, Faisalabad, Pakistan and can be reached at tahira.sadaf@uaf.edu.pk

Boosting Financial Inclusion for Women Entrepreneurs

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