MICROFINANCE PAPER WRAP-UP: “Women are Useful to Microfinance: How Can We Make Microfinance Be More Useful to Women”, Workshop paper at 2011 Global Microcredit Summit

By Dr. Linda Mayoux, Consultant for Hivos and Oxfam Novib UK, November 2011, 20 pages, available at: http://www.genfinance.info/documents/MyPubs/Women%20are%20Useful%20to%20Microfinance_final.pdf

This report introduces methods for promoting women’s empowerment as a strategy for increasing the long-term financial sustainability of microfinance institutions (MFIs). It introduces points of entry for gender equality and empowerment as well as innovation in policies, product design, non-financial services, customer protection, regulations and gender indicators in social performance management and management information systems.

According to the author, women’s empowerment is important to MFIs since women in many countries have more business initiative than men. For this reason, Dr Mayoux sees market potential in reaching underserved women. The author also argues that women create more effective saving groups than do men, reducing the cost of small loans. Third, various studies indicate that the economic growth of countries that are putting gender equality efforts into action is soaring.

Nevertheless women’s access to finance is often restricted to small savings- and group-based products. Supporting financial services for men can lead to an increase of existing gender inequalities and create new ones. However, simply targeting women may not necessarily bring about their economic and social empowerment. The report indicates that product design can increase women’s income and control over assets without additional costs. Specifically, the author cites the following as ways of mainstreaming empowerment in product development (1) ensuring access to mobile technology and Automated Teller Machines (ATMs) to women, (2) access to a graduated progression to larger loans for very poor women and (3) designing products for large and medium-sized enterprises. Examples of empowering products include the sponsorship of competitions promoting female entrepreneurship in non-traditional arenas, pensions and long-term savings as well as products encouraging men to save for girls’ education and assets.

Dr Mayoux argues that even though commercial actors have often ignored women’s empowerment strategies or treated them as add-ons, there is a new trend in the sector whereby some firms see the targeting of women as way of increasing long-term profitability. The activities of two microfinance institutions, WEP-Nepal and FINCA-Peru, are cited as examples of business training and financial literacy trainings for women increasing client satisfaction and consequently financial return for the institution. Some of the cost-effective non-financial services promoting empowerment include providing women with technical training regarding new crops and technology, encouraging men to take up trainings usually targeted at women, referring clients to legal services offered by local women’s organizations and redesigning application processes to promote empowerment.

The report points to Gender Action Learning System (GALS), a combined market research and financial literacy methodology of Dutch foundation Oxfam Novib and partners, as an innovation with the potential to increase the number of new reliable clients. Based on GALS, the Financial Action Learning System a program of Oxfam’s WEMAN effort enables illiterate people develop livelihood plans. Individuals use these simple diagrams to teach other household members, which becomes a self-replicating means of recruiting new clients. Moreover, such tools provide a foundation for financial education increasing its effectiveness and reducing costs.

Claiming that integrating gender indicators into social performance management and management information systems is a key element in gender mainstreaming, the author provides a list of such indicators. The report highlights creating a women-friendly organizational culture as the most cost-effective method for boosting gender equality. The promotion of successful female entrepreneurs and farmers can change attitudes towards women’s participation in market activities. For this reason, MFIs wanting to reach towards a larger and more profitable market should include gender awareness in recruitment criteria, recruit female staff in all business areas and include gender training into general training programs.

The author claims that MFIs can also access a larger market by supporting gender advocacy to address discrimination against women. One example is the Nigerian arm of Switzerland-based non-profit CARE, which helped women candidates in local elections by developing their leadership skills.

Finally, Dr Mayoux suggests that donors, governments and networks can mainstream gender interventions by facilitating financial literacy programs, information and fund networks as well as incorporating gender justice into regulatory frameworks, advocacy strategies and value chain development.

By Emilia Akonom, Research Associate

Sources and Additional Resources:

Women are Useful to Microfinance: How Can We Make Microfinance Be More Useful to Women http://www.genfinance.info/documents/MyPubs/Women%20are%20Useful%20to%20Microfinance_final.pdf

MicroCapital.org story, March 26, 2012, MICROCAPITAL BRIEF: “Istanbul Declaration” Proposes Discussion of Income Inequality, Woman’s Empowerment, Environmental Sustainability at United Nations (UN) “Rio + 20” Conference in Brazil in June https://www.microcapital.org/microcapital-brief-istanbul-declaration-proposes-discussion-of-income-inequality-womens-empowerment-environmental-sustainability-at-united-nations-un-rio-20/

MicroCapital.org story, March 6, 2012, MICROCAPITAL BRIEF: WEMAN Global Launches Gender Finance Resources, Promotes Gender Mainstreaming https://www.microcapital.org/microcapital-brief-weman-global-launches-gender-finance-resources-promotes-gender-mainstreaming/

MicroCapital.org story, August 5, 2011, MICROCAPITAL BRIEF: Economist Angela Luici Argues Microfinance can Empower Woman in Non-Financial Arenas, Fight Discrimination https://www.microcapital.org/microcapital-brief-economist-angela-luci-argues-microfinance-can-empower-women-in-non-financial-arenas-fight-discrimination/

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