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.
I confirm that social
I confirm that social inclusion cannot possible without financial inclusion. I'm project coordinator fo Ifad Project in Madagascar.
Thanks for bringing a very good issue in to a discussion. Hope micro fiance institutions will surely develop and design to prove that they are really serving women for their empowerment and inclusion.
Much is made of the superior
Much is made of the superior female repayment rates, as somehow "proving" that women are benefitting from microfinance. This is a logical non-sequitur. However, less attention is paid to factors such as client retention by gender. To a measurable extent female retention rates are greater than male rentention rates, thus an MFI may find an increasing proportion of women in later cycles. Such cycles naturally enjoy lower delinquency (self-selection), but are also generally for higher loan amounts, and repeat loans are less operationally expensive than new loans (client acquisition costs). More sophisticated measurement of such phenomena adds credibility to the broad generalisations made about female clients, and adds genuine support to the business case for lending to women. I applaud this initiative to get objective data on such phenomena, which will enable MFIs to tailor their products accordingly.
However, we need to complement such analysis with formal impact analysis. Mere repayment, even repeat repayment of successive loans, may or may not imply the client has become better off in the process - we cannot conclude this one way or another without taking this additional step of measuring impact. And to be more rigorous, we need to consider possible negative impacts on non-clients. If a woman takes five successive loans, successfully repays all of them, and is tangibly better off as a result, but in the meantime drove two non-client competitors into bankrupcy, we need to consider this negative (albeit unintended) consequence as well as the positive impact on the client before we can conclude that microfinance is eliminating poverty, as some claim. For this reason the evidence from the RCTs is so useful, although there are issues surrounding this methodology also.
In the State of the Campaign Report 2013 Larry Reed makes two important points: “For many years, the indicators used to measure microfinance performance have focused on numbers of clients and the sustainability or profitability of the institutions that reach them. These indicators tell us little about whether we are achieving the real aim of microfinance”. However, he proceeds with a sobering warning: when MFIs start measuring actual poverty reduction they “often find that the number of the poorest that they are serving is less than they originally estimated”.
However, in general, as we improve data collection and consider the actual impact of microfinance more thoroughly, and retain objectivity in the process, this can only improve the effectiveness of microfinance. As the sector faces something of a backlash currently, never before has this been so important.
really serving women for
really serving women for their empowerment and inclusion.
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