More than 1.3 billion people globally live in poverty; the majority of them are women. The United Nations International Labour Office reports that women face substantially lower employment rates, have very little control over property and resources, are more prone to working in the informal sector with lower earnings. Women, by virtue of being poorer and having fewer assets are more likely to be excluded from the financial sector. It is clear that in order to ensure the poor have access to financial services, we must reach women. Not only do they represent a large share of people who should be incorporated in to the working population, but they are also an attractive segment for risk management and returns. Women are more reliable borrowers because they often follow a more conservative investment strategy which, in turn, results in lower default rates for MFIs. And on a larger scale, how can we expect to be a productive society if half of the population is excluded from the economy? There is clear evidence that those countries with the greatest disparity in economic opportunity between men and women lag in GDP growth.
There are significant multiplier effects to serving women. The poorer a household, the greater the likelihood that the family will rely on the woman’s earnings as its most important source of income.[1] Throughout the developing world, women are responsible for the well-being of their families, and research has shown that women are also more likely to invest additional earnings from their businesses in ways that have a longer-lasting and deeper impact on the lives of their families, such as health, improved housing, children’s education and the nutritional status of the family[2]. With access to financial services, women are more likely to be able to send their children to school for the first time, feed all family members three meals a day, or make seemingly small home improvements that can actually have a significant effect on the health and well-being of a household— such as replacing a mud floor with a cement floor. The impact of a woman’s access to financial products and services is felt outside of her immediate environment and can extend to her family, community and society.
Beyond the tangible economic benefits for women when they have access to financial services, there are empowerment outcomes. For women who have been shutout of the formal economy, the opportunity and the tools and means of production makes them for the economic agents for the first time. The positive effects on women’s confidence and skills, their expanded knowledge and the formation of support networks through group meetings and market access can lead to enhanced status for all women in a community. In some societies where women’s mobility is constrained and there is little opportunity to meet women outside their immediate family, there have been significant changes. Women who have been able to build strong businesses gain respect in their households and may then act as role models for others, leading to a wider process of change in community perceptions and increasing men’s willingness to accept change.
At Women’s World Banking we are committed to providing access to financial services for both financial and personal empowerment outcomes. We work with institutions to create products that have the greatest financial and social impact possible by creating products that work for women. We have to design product offerings in a way that takes into account women’s needs. For example, opening a savings account may be the first time a client has assets in her own name. We know from our research that women value confidentiality in a savings account. Men and women often have different financial priorities and, it can be in women’s best interest not to share the amount they have saved with their husbands. For this reason, plastic debit cards may be preferred to pass books that show activity and balances.
We also proudly work with network members to develop marketing materials and forms that illiterate women can understand so they don’t have to ask a family member or neighbor for help. Marketing materials are designed so that women who can’t read can still understand how much they need to deposit each week to save for school fees or home improvements and understand the power of compounding interest.
Expanding women’s property rights can provide tremendous empowerment effects. Inequality of property distribution is marked—women make up approximately 52 percent of the world’s population but own only one percent of the world’s land.[3] Research in Southern India found that the rate of domestic violence against married women dropped from 49 percent for non-owners of property to 18 percent and 10 percent respectively of those who owned either land or a house. In some countries, when a woman is widowed the family takes the home or land, leaving her with no shelter, no way to generate income for her family. MFIs can work with women to help get their name on the title as a condition of a housing loan.
As the microfinance sector has continued to evolve, we have recognized that true empowerment requires more than just access to loans. Women must be able to build and protect assets and do so in their own names. They need access to savings accounts, pensions and insurance. This is our vision of financial inclusion – the ability for women to build a secure financial future.
Women’s World Banking provides financial services through a network of 39 high-performing microfinance institutions all committed to serving women. Collectively, we reach more than 26 million low income people, 80% of them are women. We are committed to helping MFIs move away from providing only loans toward providing a broader array of financial products and services, including savings and insurance, that help the poor build financial safety nets.\
[1] 11 S. V. Sethuraman, 1998, “Gender, Informality, and Poverty: A Global Review” (draft). World Bank, Poverty Reduction and Economic Management Department, and WIEGO, Washington, D.C.
[2] A number of studies in Africa, Latin America and South Asia have shown that women spend a greater proportion of their income than men on household well-being. For discussions of studies of the relationship between women’s assets and household well-being, see Chant (2003); Gammage (2006); and Quisumbing and McClafferty (2006). 5 See, for example, Kantor (2000); Mayoux (2000); Hofstede, Contreras and Mayta (2003); and Richardson, Howarth and Finnegan (2004)
[3] Joni Seager, 1997, The State of the Women of the World Atlas, Penguin Books, London.
