Prove It: Measuring Gender Performance in Microfinance
As Nancy Lee articulated in the opening post of this series, women entrepreneurs face significant barriers accessing financial services. Recognizing that this exclusion has negative implications for women’s businesses, households and communities, the microfinance industry has thus held helping women overcome these barriers as a key part of its mission. Indeed, an analysis of MIX data has found that most microfinance institutions (MFIs) claim to target women (74%) and just over half declare women’s empowerment or gender equality as an objective. Yet, if we are going to have a meaningful discussion around gender and finance, we must have the ability to hold ourselves accountable to the financial inclusion and empowerment principles we advocate.
Photo Credit: Supriya Biswas
In 2011, Women’s World Banking launched the Gender Performance Initiative (GPI) to evaluate how effectively MFIs are serving women, to demonstrate the benefits of financial inclusion for women, and ultimately, to build the business case that women are valuable customers and employees, as well as catalysts for social and economic change.
To do this, we developed a set of indicators to measure what we call “gender performance.” We first defined priority areas that women value, based on Women’s World Banking’s extensive qualitative research on the needs and behaviors of women clients. These priority areas include product design and diversity that address women’s specific life-cycle needs and goals, as well as service quality and client protection. We also looked at the diversity of staff and management at MFIs, because we believe that in order to be the best place for women customers, an institution should be the best workplace for women employees and women leaders. Finally, we wanted to understand how serving women contributes to institutional financial performance, as well as outcomes for women and their households.
The full framework of indicators was piloted with three of our network member institutions: Finance Trust in Uganda, Fundación delamujer in Colombia and Ujjivan Financial Services in India. Over the past two years, an extensive analysis was performed on each institution’s client database, and interviews were conducted with key staff members throughout the institutions to assess the practicality of collecting, aggregating and reporting on the indicators.
At Finance Trust, we saw the value of good data, as well as the insight gender disaggregated information can yield. For example, Finance Trust’s women clients exhibited lower portfolio at risk than men at all loan sizes, except the large commercial loans. Women are generally viewed as reliable repayers, however it is critical to test these assumptions. By analyzing their portfolio by product and gender, Finance Trust was able to truly understand the drivers of risk.
Fundación delamujer, an institution with a long-standing commitment to serving women, saw the value of incorporating social performance measurement throughout the institution (including Commercial, Risk and Marketing departments). For example, through the pilot we found that product uptake for agricultural loans was 31% for men - but only 12% for women. After researching the causes for this low uptake, it was determined that some of the product attributes were not responsive to women’s needs. Fundación delamujer thus developed and recently launched new rural products nationwide – with the support of the Multilateral Investment Fund (MIF), the Government of Germany (BMZ), Hivos and Irish Aid - that are specifically focused on women. Through the analysis, we also found differences in retention rates - 62% for men compared to 68% for women – providing evidence to support the hypothesis that women are more loyal clients than men. This type of data not only allows MFIs like Fundación delamujer to assess client satisfaction with products, but also contributes to the “business case” for serving women.
The GPI pilots also revealed the potential for tracking and analyzing social indicators to demonstrate outcomes for clients. For example, Ujjivan collects data on the age and education of their clients’ children, and determined that 27% of their clients with children aged 9 to 15 had at least one child out of school. This information is being tracked over time and could enable Ujjivan to measure family well-being, as well as create education-related products and services.
As a result of these pilots, Women’s World Banking has launched a comprehensive tool for financial institutions to track - and improve - gender performance. We hope that institutions will use these indicators and the resulting analysis to build a strong understanding of how well they are serving women, and how these women clients contribute to the financial goals and social mission of the organization.
The role that robust gender data can play is a potentially transformative one. This is the first step toward accountability because if a financial institution is serious about serving women, they must collect and analyze data that supports this commitment. Only then can institutions make operational decisions on outreach, product design and service that will actually benefit women clients. On a higher level, this intelligence will also enable us to better understand the barriers faced by low-income women, and ensure that financial services are more than accessible – they are helping women to build security and prosperity. Now that’s what I call proving a commitment to women.
Mary Ellen Iskenderian is the President and CEO of Women’s World Banking.