FROM MICRO TO SMALL AND MEDIUMENTERPRISE: CATERING TO THE EVOLVINGNEEDS OF FEMALE CLIENTS - Roshaneh Zafar, Managing Director Kashf Foundation For the 2011 Global Microcredit Summit November 14-17, 2011 – Valladolid, Spain
The Need for Women’s Participation in the Economy The losses of not involving women in the economy translate into billions of dollars in lost opportunities Economic growth would have been 37% higher if women had been fully engaged in the financial sector Economic agency of women catalyzes intergenerational benefits, i.e. increase in the average age at marriage, lower fertility rates etc. Economic Participation diminishes the triple burdens of reproductive, productive, and social responsibilities for women. An increase in the contribution by women towards household income increases access to/control over household resources and decision-making power.
The Role of Microfinance in Women’s Economic Participation (1/2) Individual Household MF Strategies to address these constraintsFinancial Women lack Men control cash • Designing pro women strategies thatBarriers access to income, men have reflect the concept of agency and banks/ financial specific removes the need for physical collateral. services in own expenditure • Building group mechanisms that allow right patterns procuring loans in proximity to the community • Promoting and providing affordable and accessible savingsEconomic Women undertake Gender division of labor, • Introducing graduated lending schemes that involve aBarriers activities which unequal access and feel-good approach and also cater to conflicting produce low control of land, labor demands on women’s time returns; and inputs unequal • Providing business development services Women have a control of joint • Helping create value chains heavy domestic household produce and workload income stream (from the produce)
The Role of Microfinance in Women’s Economic Participation (2/2) Individual Household MF Strategies to address these constraintsSocial/ Women not Limited role for • The group lending approach overcomesCulturalBarriers literate or women in many of these aspects by coalescing educated; girls household associative strength. education not decision making; • Broadening the suite of products being prioritized violence towards offered to female clients especially savings women and financial education.Political/ Women lack Women lack legal • Linking products to women’s rights toLegalBarriers confidence to rights to jointly property e.g. housing loans. claim owned • Savings products especially designed to political/legal household target women rights assets.
Gender Significant Outcomes At the end of 2009 there were around 128.2 million microfinance users around the world, 81.7 percent or 104.7 million out of which were women. The growth in the number of very poor women reached has gone from 10.3 million at the end of 1999 to 104.7 million at the end of 2009. There has been a 919 percent increase in the number of poorest women covered in microfinance programs from December 31, 1999 to December 31, 2009.
Targeting & Retaining Women under a For-Profit Paradigm The Issue: While transformation is primarily meant to induce growth at the institutional level, in a majority of cases it is leading to reduction in the retention of female clients The Influencing Factors: Commercialization demands that MFPs expand their existing portfolios by increasing loan size and penetrating industries/entrepreneurs with higher credit absorption capacity. Both these factors put pressure to diverge away from small scale enterprise (predominantly female) with low debt absorption capacities towards medium enterprises with higher debt absorption capacities.
Learning from CARD MRI (Philippines) & Kashf Microfinance Bank Limited (Pakistan)CARD MRI has been able to successfully Kashf Microfinance Bank has beenprevent mission drift, post able to successfully develop atransformation, in terms of reduced strategy for targeting female clientsfemale exits from the program via: after transformation through: Ensuring product optimization to client Making front-end investments to needs create and market a savings Establishing mutually re-enforcing culture institutions catering to the holistic Optimizing a pro-woman savings needs of the client base strategy and piloting a Incorporating feedback of clients into branchless banking model the policies of the company via concerted and sustained linkages Continuing mission orientation with the client base and good governance through the Board of Directors. Maintaining representation from the former NGO board after transformation.
Lessons Learnt for Womens Inclusion under the For-Profit Paradigm Clarifying the overarching vision for transformation and ensuring it is completely and fully embedded in all aspects of the transformation process is key to retaining women post transformation A continued focus on sustainability and affordability is pivotal so that the institution can demonstrate a strong business case for investing in women’s enterprise and financial development. Continuous and on-going research and development for product design and understanding women’s needs is vital in formulating strategies and action-plans that prevent mission drift. The role of the board in maintaining a focus on women’s retention is another very important aspect.
Conclusions and a TO-DO list for Womens Inclusion (1/2) UNDERSTANDING the dynamic context of women’s economic participation that needs to be contextualized to different societies KNOWING that there is no one path to transformation and hybrid and innovative solutions can work in strengthening the mission and vision of retaining female clients ARTICULATING a clear rationale and vision for the need to transform and conducting stress tests of it in light of retaining female clients BUILDING buy-in at the board level for promoting women’s access and retaining women clients DEMONSTRATING a model that is scalable, replicable and profitable while being women led EMBEDDING the concept of front end investments to promote women’s economic empowerment through financial education, enterprise development etc.
Conclusions and a TO-DO list for Womens Inclusion (2/2) LEARNING that women’s empowerment is a long term strategy and that women require products beyond credit ENGAGING with female clients at all levels through a continuous research and development process SELECTING investors that are committed to promoting women’s access and ensuring that the original NGO (parent) is involved in governance structures ENSURING lessons learnt in the past by the NGO (parent) a key driving force for the transition process. BUILDING a team that believes and espouses a commitment to retaining and sustaining female clients SEGMENTING the women’s market to highlight the needs of female clients and offer solutions that address these needs LEVERAGING on networks and building collaborations with other entities to retain female clients.