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Women entreprenurs and microfinance
1. Women and microfinance
Net Impact
IE Social Responsibility Forum 2011
Guadalupe de la Mata
Innovationfor Social Change
www.innovationforsocialchange.org
2. What is microfinance?
• The extension of small loans to entrepreneurs too
poor to qualify for traditional bank loans.
• An effective and popular measure in the ongoing
struggle against poverty, enabling those without
access to lending institutions to borrow at bank
rates, and start small business.
• The global microfinance sector has nearly reached
US$30 billion in asset size reaching 130 million
clients worldwide
3. How doesitwork?
The availability of
Small amounts of Short processing repeat loans in higher
loans and savings periods amounts for clients
who pay on time
No collateral is
Simple application
required contrary to
Short loan terms forms which are easy
formal banking
to complete
practices
Payment schedules
Easy access to the
featuring frequent High interest rates on
microfinance
instalments (or credit
intermediary
frequent deposits)
5. Why Target Women?
Evidence that improved gender
- Only 19 % of the world’s
equality is a critical component of any
parliamentarians Gender and
Development development strategy.
- 1/3 of all women are
subjected to violence
Women Are the
Empowering
Poorest of the
women
Poor
- 60% of the world’s poorest
- 2/3 of the world’s illiterate
women’s repayment records
and cooperativeness. Women Spend
Efficiency and More of Their
Sustainability Income on Their
Families
6. Microfinance and women empowerment:
The three ‘virtuous spirals’
SOCIAL AND POLITICAL
EMPOWERMENT ECONOMIC EMPOWERMENT
•greater confidence and sense of self-
•start their own economic activities /
worth
invest more in existing activities
•expanded knowledge / skills
•acquire assets
•formation of support networks
•raise their incomes or their control of
through group activity
their own and household income
•enhanced status / gain respect /
•raise their status in household
become role models
economic activities through their
•=> process of change in community visible capital contribution
perceptions
HOUSEHOLD WELL-BEING
•play a more active role in household
decision-making
•decrease their own and household
vulnerability
•increase investment in family welfare
7.
8. Gender-based Obstacles in Microfinance
and Microenterprises
Wider community/
Individual Household
national context
Women’s lack of assets, Men's control over cash Perception of men as controllers of money
skills, knowledge, income
Financial experience and/or Men's expenditure patterns
confidence to engage with
formal financial sector
Women undertake Gender division of labour Stereotypes of appropriate roles for women
activities which produce Unequal access and control of in the economy
low returns land, labour and inputs Women underpaid for equal work
Economic Women have a heavy Unequal control of joint Lack of access to markets for inputs and
domestic work load household produce and outputs if women’s mobility is constrained
income stream from this by social norms
Women not literate or Limited role for women in Banks often do not view women as a
educated; girls’ education household decision making potential market
not prioritised Polygamy can result in Women's mobility and market access may
Social/ Women’s lack of self- conflict or competition be constrained by social norms
cultural worth between wives Women face disproportionate levels of
Health risks associated Violence towards women physical vulnerability
with pregnancy and
childbirth
Lack of confidence Women lack legal rights to Women lack legal rights to land (both
among women to claim jointly-owned household traditional and formal)
political and legal rights assets Women's legal rights to household assets are
Political/
undefined or not useful for collateral
Legal
purposes
Few women in policy-making or legislative
positions to influence appropriate laws
9. Equality in access to (micro)finance?
Table: Percent of Women Borrowers
2008
Year: 2005 2006 2007
60.0
All MFIs 62.6 64.4 63.4
Bank 47.6 50.2 48.5 43.5
Credit Union 44.8 51.3 45.7 45.1
NBFI 54.5 53.5 53.9 54.2
NGO 78.1 80.6 75.5 79.1
Rural Bank 46.9 68.5 70.6 45.3
Individual 51.5 51.3 49.7 46.2
Individual/ Solidarity 65.0 67.4 66.4 64.9
Solidarity 100.0 99.3 99.3 98.7
Village Banking 95.0 96.4 94.0 86.3
Africa 60.0 64.0 62.9 57.2
Asia 99.4 99.0 99.4 93.8
ECA 46.8 46.5 45.1 43.1
LAC 60.0 61.8 61.4 59.6
MENA 71.8 69.5 67.9 65.4
Source: MicroBanking Bulletin 2005-2008 Benchmarks
10. Lessonslearned
Involve all stakeholders
Incorporate new
Introduce specific
participatory approaches
Propose Actions to
increase the opportunities
for gender-sensitive
microfinance at all levels
11. Stakeholderanalysis
• National and local government officers
Macro • Ministries: agriculture; finance; trade and
commerce…
level • Central Bank
• International bodies and agencies; (EU; IMF; WB,
UN, donors)
• Informal finance sources: money
Intermediate lenders; rotating savings and credit
associations - RoSCAS, etc.
• Formal finance sources:
level banksMFIs, NGOS, Credit Unions, co-
operatives
• Women or men
Field level entrepreneurs and
grassroots organisations.
12. Proposed Actions to increase the opportunities
for gender-sensitive microfinance
• Analyse policy linkages to increase gender sensitivity
• Encourage gender-sensitive policy implementation
Macro • Ensure policy implementation is linked to
entrepreneurial activities at the field level
• Link policy implementation to the operation of MFIs
• Facilitate networking on policy issues
• Set gender-sensitive objectives
• Ensure gender-sensitive MFI staff
• Collect information on the needs of clients
Intermediate • Evaluate programmes in terms of gender issues
• Establish networking &lobbying to ensure that
gender issues are considered in financial policy
• Learn from best practices of other MFIs
• Provide non-financial services
• Hold a client stakeholder meeting
to discuss their access to financial
services
Field • Identifying client's needs
• Institutionalize participatory
feedback from clients in any
microfinance activity.
13. Incorporate new participatory approaches
Practitioners should look to mainstream
empowerment approaches into microfinance
institutions through increased
participation from stakeholders PARTICIPATORY LEARNING
•Methodologies for participatory
learning at grassroots level
•Ways of integrating empowerment
into program-level monitoring and
evaluation
PARTICIPATORY
PARTICIPATORY ACTION MANAGEMENT
•Most effective methods of •Innovative structures for
gender lobbying, advocacy participatory management
and inter- organizational •Most effective methods of
networking on gender and gender awareness training for
empowerment issues men, women and staff and
organization to bring about
change
GenderanddevelopmentResearch indicates that gender inequalities in developing societies inhibit economic growth and development. For example, a recent World Bank report confirms that societies that discriminate on the basis of gender pay the cost of greater poverty, slower economic growth, weaker governance, and a lower living standard of their people. The UNDP found a very strong correlation between its gender empowerment measure and gender-related development indices and its Human Development Index. Overall, evidence is mounting that improved gender equality is a critical component of any development strategy.Microfinance has come to play a major role in many of these donors’ gender and development strategies because of its direct relationship to both poverty alleviation and women. As CIDA recognizes in its gender policy, “Attention to gender equality is essential to sound development practice and at the heart of economic and social progress. Development results cannot be maximized and sustained without explicit attention to the different needs and interests of women and men.” As part of its poverty reduction priority, CIDA supports programs that provide “increased access to productive assets (especially land, capital, and credit), processing, and marketing for women.” By giving women access to working capital and training, microfinance helps mobilize women’s productive capacity to alleviate poverty and maximize economic output. In this case, women’s entitlement to financial services, development aid, and equal rights rests primarily on their potential contribution to society rather than on their intrinsic rights as human beings and members of that society.It is generally accepted that women are disproportionately represented among the world’s poorest people. In its 1995 Human Development Report, the UNDP reported that 70 percent of the 1.3 billion people living on less than $1 per day are women. According to the World Bank’s gender statistics database, women have a higher unemployment rate than men in virtually every country. In general, women also make up the majority of the lower paid, unorganized informal sector of most economies. These statistics are used to justify giving priority to increasing women’s access to financial services on the grounds that women are relatively more disadvantaged than men. Although many scholars and development agencies have noted an apparent trend toward the “feminization of poverty,” measuring the extent to which this is occurring presents many challenges. Because most methods of measuring poverty assess the level of poverty of the household as a whole, it is likely that poverty experienced by women as a result of discrimination against them within their households is underreported to a great extent. In addition, Baden and Milward note that “Although women are not always poorer than men, because of the weaker basis of their entitlements, they are generally more vulnerable and, once poor, may have less options in terms of escape.” By providing access to financing for income-generating activities, microfinance institutions can significantly reduce women’s vulnerability to poverty. A reduction in women’s vulnerability can sometimes also translate into empowerment if greater financial security allows the women to become more assertive in household and community affairs. Women have been shown to spend more of their income on their households; therefore, when women are helped to increase their incomes, the welfare of the whole family is improved. In its report on its survey findings the Special Unit on Microfinance of the UNCDF explains, “Women’s success benefits more than one person. Several institutions confirmed the well-documented fact that women are more likely than men to spend their profits on household and family needs. Assisting women therefore generates a multiplier effect that enlarges the impact of the institutions’ activities.” Women’s Entrepreneurship Development Trust Fund (WEDTF) in Zanzibar, Tanzania, also reports that “women’s increased income benefits their children, particularly in education, diet, health care, and clothing.” According to a WEDTF report, 55 percent of women’s increased income is used to purchase household items,18 percent goes for school, and 15 percent is spent on clothing. In her research on the poverty level of female-headed households, Sylvia Chant, a researcher at the London School of Economics, cites a number of studies on Latin America that lend credibility to the commonly held belief that women spend a greater percentage of their income on their households than do men. She writes, “In Guadalajara, Mexico, for example, Gonzalez de la Rocha notes that men usually only contribute 50 percent of their salaries to the collective household fund. In Honduras, this averages 68 percent, and from my own survey data in the Mexican cities of Puerto Vallarta, Leon and Queretaro in 1986, the equivalent allocation is 67.5 per cent. Women, on the other hand, tend to keep nothing back for themselves, with the result that more money is usually available in women-headed households for collective household expenditure.” And NailaKabeer writes, “there are sound reasons why women’s interests are likely to be better served by investing effort and resources in the collective welfare of the household rather than in their own personal welfare.” But Kabeer also cautions that it is important to recognize that those incentives may change when women become empowered and have new options. Women who are empowered will have the power to make the life choices that are best for them, and although many empowered women will choose to invest in their families, development organizations must be prepared for the possibility that some will not.
