Supporting Women’s Livelihoods - Microfinance …...Supporting Women’s Livelihoods: Microfinance that Works for the Majority A Guide to Best Practices by Deena M . Burjorjee ,

Supporting Women’s Livelihoods:Microfinance that Works for the Majority

A Guide to Best Practices

by Deena M. Burjorjee , Rani Deshpande and C. Jean We i d e m a n n

United Nations Capital Development FundSpecial Unit for Microfinance

January 2002

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Acknowledgments

This study was inspired by the USAID-funded Growth and Equity through Microenterprise Investment(GEMINI) Project of the early 1990s and its pioneering work in examining the issues of gender andmicrofinance in the development field. What began as an update of C. Jean Weidemann’s 1992document, “Financial Services for Women: Tools for Microenterprise Programs,” has been expandedto reflect the last decade of change and development within the microfinance industry. As the sectorhas matured, so has its understanding of the complex ways in which women use financial services tosupport their multiple social roles, highlighting the need for innovative solutions to help women meettheir many obligations. This guide presents experiences of practitioners and donors working toexpand the frontier of appropriate services to female clients, with the aim of improving the livelihoodsof the world’s poor women.

The authors are grateful to those who provided feedback during the developmental stage of the proj-ect, and who took the time to comment on an earlier draft of the study: Helen Binns, Jo Woodfin,Graham Wright, Jennefer Sebstad, and Beth Rhyne. The authors are particularly grateful to HeatherClark for her substantial contributions, comments, and improvements to the final draft. Special thanksgo to all the practitioners who responded to requests for information. Their contributions helped illus-trate points in the text by offering examples from the field. In shaping and presenting that text, theeditorial and layout work of Nancy Berg, Adam Rogers and Mary Tiegreen was also invaluable.Finally, this project would not have been possible without the support of the U.N. Foundation, whichfunded the research and development of this publication.

The views and conclusions expressed in this document are entirely those of the authors, and shouldnot be attributed in any manner to UNCDF or the U.N. Foundation.

Photo credits

cover: J. Van Acker/FAOtitle page: L. Sparenth/FAOpp.iv, 16 & 24: Eric Duflosp.vi: FAO archivepp. vii, 8, 30 & 42: Adam Rogers/UNCDFp.2 G. Bizzarri/FAOp.4: R. Jones/FAOp.10: Peytong Johnson/FAOp. 38: R. Faidutti/ FAO

Table of Contents

Introduction 1

Part I: The Benefits of Microfinance for Women 3

Part II: Supporting Women’s Productive Role 9

Part III: Supporting Women as Risk Managers 17

Part IV: Effective Service Delivery Mechanisms 25

Part V: Nonfinancial Services 31

Part VI: Role of Donors 39

Summing Up 43

Endnotes 44

Bibliography 46

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From the Executive Secretary of UNCDF

UNCDF has been working in the field of microfinance for the last 20 years as one of its two main pil-lars of development cooperation. Through supporting microfinance institutions that provide services tomarginalized communities, particularly poor women who traditionally lack access to financial servic-es, UNCDF has long been involved in the struggle to close the gender gap. While considerableprogress has been made over the last two decades in terms of general access for women, continuedefforts are needed to better understand the demands of women as a particular client group in orderto maximize the benefits they derive from these services.

As part of UNCDF’s ongoing commitment to gender equity and the empowerment of women, we havedrawn from the experiences of our partners to share some of the lessons learned and commonlyaccepted best practices with regard to gender and microfinance. This publication, which was pro-duced by our colleagues in UNCDF’s Special Unit for Microfinance (SUM), presents a range of expe-riences from donors and practitioners working to improve the livelihood of poor women through theprovision of microfinance services. It is hoped that it will serve as a useful guide for others as theyattempt to address gender issues in their own microfinance initiatives.

Normand LauzonExecutive Secretary,UNCDF

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From the Executive Director of the United Nations Development Fund for Women

On behalf of UNIFEM, I would like to take this opportunity to congratulate UNCDF for putting togetherthis publication, which should serve as an important guide for UNDP, other UN agencies and otherorganizations that are trying to address gender issues in microfinance programming. Through thispublication, UNCDF is making a valuable contribution towards promoting gender equality in the fieldof microfinance. Aside from its hands-on work in the field, UNCDF’s Special Unit for Microfinance isconstantly engaged in finding and sharing new approaches to ensure that financial services get tothose who need it most.

While much attention has been paid to the issue of increasing women’s access to financial services,much needs to be done to ensure women are actually empowered. We need to pay attention towomen’s control over the use of loans, the nature of their investment activity, their access to markets,to social and business support services and to new technologies. By focusing on women’s empower-ment, credit for the majority of women borrowers becomes much more than access to money. It isabout women having access to new opportunities. It is about women achieving economic and political empowerment within their homes, their villages and their countries. Ultimately, it is aboutwomen changing their lives and the lives of those around them.

Again, we congratulate UNCDF for this valuable contribution to the field and look forward to our continued collaboration.

Noeleen HeyzerExecutive Director,UNIFEM

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Preface

n the early 1990s, the GEMINI project of the United States Agency for International Developmentbrought new impetus to a microfinance community interested in exploring how this small slice ofdevelopment assistance could unlock the potential for millions of poor and low income households.

Microfinance programs would realize this goal by providing women with access to financial serv ices,thus increasing their incomes. One of those GEMINI researchers was Dr. C. Jean Weidemann, whoexplored how gender limits access and how organizations can surpass those limits by designing services to tap a vast market for microfinance. Her publication, “Financial Services for Women: Toolsfor Microenterprise Programs,” presented practical, cost-effective tips for gender-focused programdesign. With seemingly few changes in their existing operations, most microfinance programs andinstitutions could attract large numbers of women as customers simply by paying more attention totheir preferences and designing products and services to meet them.

Today in many parts of the world microfinance has come of age. There are still passionate debatesabout targeting and commercialization, and confusion about microfinance as a substitute for socialwelfare. However, the microfinance industry is beginning to apply the basic principles of treating“clients” as customers.

In the decade since Weidemann’s guide was first published, microfinance institutions have developedinnovative product designs and delivery systems that cater to women customers, either exclusively oras part of a broader customer base. This study shows that many institutions are simultaneously mak-ing progress toward gender-sensitive service delivery and spurring the larger society, at least in themicrocosm of financial services, to re-examine traditional ideas about access to services, decisionmaking within the household, ownership of assets, and the value of women’s work.

This study is the brainchild of Deena Burjorjee of UNCDF’s Special Unit for Microfinance and of RaniDeshpande, an energetic new researcher who we were fortunate enough to distract from her gradu-ate studies at Columbia University. Produced under the SUM Learning Agenda, this guide is part ofan ongoing effort to document good practices and innovations in UNCDF’s microfinance programs.This guide draws from the experience of a variety of microfinance institutions, technical advisors, anddonors. It aims to provide practical guidance for those of us working in the field of microfinance whoare attempting to translate concepts of gender equity into all aspects of our work.

Heather ClarkDirector, Special Unit for Microfinance (SUM)UNCDF

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n the field of microfinance today it is widely acceptedthat women are good credit risks and enthusiastic cus-tomers for both credit and savings facilities.

Moreover, experience has shown that increasingwomen’s access to microfinance has wide-ranging ben-efits, not only for women’s well-being but also for thewelfare of the family and the health of the larger econo-my. The result has been an increasing donor reliance onmicrofinance programs for women as a way to meet themultiple economic and social development objectives ofpoverty alleviation strategies.

A large number of microfinance institutions (MFIs) havealready identified women clients as their primary marketniche. For many this is rooted in an institutional man-date to promote women’s empowerment through the pro-vision of financial and other related services. For others,it has been a more pragmatic decision tied to women’stypically higher repayment rates and a desire to ensurefinancial sustainability. For these MFIs, the focus onwomen has necessitated an understanding of the waywomen’s needs have been translated into an effectivedemand for financial services, and of the constraintswomen face in gaining access to traditional financialservices.

This technical reference guide aims to provide practicalguidance for donors and practitioners in all regions ofthe world who wish to reach and serve women throughtheir microfinance programs. It recognizes that microfi-nance can play an important role not only in financingwomen’s income-earning activities, but also in helping toreduce the vulnerability of their families by supplyingresources that can be invested, borrowed against, orused as insurance to mitigate economic risk. The guideis organized as follows:

Part I explains the rationale for taking gender consider-ations into account in microfinance programs, including:

• The need for assistance for women;• Potential benefits of microfinance for women,

their families, and their communities;• Why these benefits cannot be assumed; and• The compatibility of sustainability and gender-

sensitive microfinance.

Part II examines women’s productive role and howmicrofinance can support it, by describing:

• Gender-related constraints on women as microen-trepreneurs;

• Resulting features of women-led businesses; and• Implications for best practice in microenterprise

lending.

Part III discusses the ways in which microfinance canenhance women’s effectiveness as household risk man-agers, examining:

• Types of risk faced by poor women;• The risk management strategies they employ; and • Microfinance services that can strengthen these

strategies, including programs for savings, insurance, emergency assistance, and asset-building loans.

Part IV highlights methods that have proven successfulin enabling MFIs to reach women clients, and discussesbest practices in outreach and service delivery.

Part V reviews nonfinancial services that complementthe benefits of microfinance lending.

Part VI considers the role that donors can play in sup-porting expansion, innovation, and research in this field.

Although much progress has been made, questions andknowledge gaps still remain in the field. While experi-ence has shown that women’s access to microfinancecan produce certain benefits, there is much less certain-ty around the particular circumstances that determinewhether it will or will not produce benefits among theclients of a given institution. Furthermore, there areregions and types of institutions in which women stilltend to be under-represented as clients.

For those who believe in the potential of microfinance toimprove the quality of women’s lives, the challenge nowis to create ways of better leveraging the impact ofmicrofinance activities beyond the financial sphere.Assistance from supportive donors will be crucial toenable practitioners to push past current limits of exper-imentation in terms of the types of services offered andthe kinds – and gender – of clients served. This guideaims to help donors and practitioners alike reinforcetheir knowledge and expand their vision of this kind ofinnovative microfinance: one that works better for themajority.

Introduction

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P A R T I

omen’s use of financial services can increase their income and eco-nomic security, enhance their independence, reduce the vulnerability

of their families, and stimulate local economies. However, neitherwomen’s access to financial services nor the benefits of those services areguaranteed. Although microfinance is seen by some as synonymous with“women’s finance,” in some parts of the world women remain marginal-ized as microfinance clients. And even where women’s access to microfi-nance has been established, the virtuous spiral of access and empower-ment for women is not automatic. Making financial services available towomen clients, without adapting those services to the special constraintsand coping strategies that arise from women’s multiple social roles, miss-es the opportunity to achieve both significant outreach and economic andsocial empowerment. As financial sustainability continues to be a priorityfor donors and MFIs struggling to meet their double bottom line, it isextremely important to find cost-effective methods of ensuring linksbetween availability, accessibility, and impact for women.

Benefits for Women: the Overlooked MajorityWomen’s economic disadvantage and concerns about simple humanequity constitute perhaps the most fundamental reasons for looking at theeffect of gender in microfinance interventions. Of the 1.3 billion peopleliving in poverty, 70 per cent are women. Although women perform agreat proportion of the world’s work, they tend to reap fewer rewardsfrom it than men do. Data on time use by women and men in 31 coun-tries show that women work longer hours than men in nearly every coun-try.1 However, their earnings average only 50-75 per cent of men’s earn-ings. Inequality of property distribution is even worse; the gender thatmakes up approximately 52 per cent of the world’s population owns onlyone per cent of the world’s land.2

Nor is the picture improving significantly; over the past two decades, thenumber of rural women living in absolute poverty has risen by nearly 50per cent.3 At the same time, economic contraction around the world hasincreased women’s participation in the labour force. Since many womenentering the labour force do so through microenterprises,4 the continuedgrowth of the informal sector in most developing countries has beenaccompanied by an increase in the number of women who work.Documented participation rates of women in the informal sector rangefrom 41 per cent in the Republic of Korea, to 65 per cent in Indonesia, to72 per cent in Zambia.5

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The Benefits of Microfinance

for Women

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As women’s labour participation rate continues to grow, so will their need for support services such asmicrofinance. Financial services enable a woman to maximize the benefits of cash income by trans-forming it into a “usefully large lump sum” – an asset that can be invested, borrowed against, or usedas insurance.6 Microfinance programmes are also particularly useful in increasing women’s economicoptions, because women tend to have less access to sources of informal credit than men. This mayexplain women’s generally high rates of repayment in programmes around the world.7 For example,in USAID-funded microfinance programmes, which served 3.5 million clients with $1.3 billion in activeloans in 1998, a client base of 84 per cent women maintained repayment rates of 95 per cent.8

Participation in savings and credit programmes has been shown to help empower women by increas-ing their contribution to household income and by exposing them to contexts outside the domesticrealm.9 Just as increased income gives women more bargaining power within the household,increased social and political awareness puts them in a better position for negotiating or for func-tioning in the public sphere. Thus increases in self-esteem and a sense of self-worth have been notedas a further result of women’s participation in microfinance programmes.10

Benefits for the Family

The poorer a household, the more likely it is to rely on women’s earnings as its most important sourceof income.11 Female entrepreneurs are more likely to be widows, female heads of households, oryounger, childless women who are either the sole income earners for their families or sources of much-needed supplemental income. By turning income into assets, financial services can increase the rangeof strategies these women have to choose from in managing the family’s resources, thus shoring upprecarious household security.

Moreover, increases in women’s income tend to have a more positive effect on family welfare thanincreases in men’s income. Research on three microcredit programmes in Bangladesh, for example,demonstrated that household consumption expenditure increased by 18 taka for every 100 taka bor-rowed by women, versus 11 taka per 100 borrowed by men.12 The same pattern was seen in a studyof urban households in Ghana, which found that women allocated a greater share of their income tobasic needs for themselves and their children, despite earning less money than men.13 A study inJamaica also found that the presence of a female decision maker generally raises the share of thehousehold budget spent on children and family goods. There is evidence as well that women investin their husbands’ enterprises, further reinforcing the family’s earning potential and increasingwomen’s status within the household as a major economic contributor.

Supporting Women’s Livelihoods: Microfinance that Works for the Majority


Benefits for Society

Women’s expenditures on the health and education of their families enhance the human resourcebase, thus contributing to national development goals. Women’s businesses also strengthen localeconomies through their involvement in retail trade and marketing activities. In West Africa, for exam-ple, women control the distribution channels for most foodstuffs, and in the Caribbean they areresponsible for nearly all local marketing. By servicing the local market, and, in the case of womenengaged in small-scale manufacturing, using local inputs, women’s businesses strengthen local pro-duction and consumption linkages.14

The income women derive from these businesses often acts as the economic safety net that govern-ments in poor countries cannot provide. During periods of structural adjustment or economic contrac-tion, the number of female-owned businesses in the informal sector tends to expand, as householddependence on income from women’s enterprises rises. Women’s participation in the labour force isthus crucial to easing the economic stress associated with declines in husbands’ wage-earning employ-ment in the formal sector.15 By increasing women’s incomes, microfinance can therefore enhance asociety’s resilience in the face of economic crises. At the same time, the strengthening of women’sgroups integral to many microfinance methodologies has the potential to strengthen civil society moregenerally by increasing women’s participation. Microfinance programmes can also move the largersociety to re-examine traditional ideas about access to services, decision making within the house-hold, ownership of assets, and the value of women’s work.

Benefits Cannot Be Assumed

On multiple levels, the potential benefits of women’s access to microfinance are enormous. However,simply making microfinance services available does not mean that theseservices will be accessible to women. Despite high rates of female par-ticipation in microfinance programmes in many parts of the world, thereare still regions where women’s access remains limited. For example, aWorld Bank study of microfinance programmes in seven Middle Easterncountries revealed an average female participation rate of only 36 percent.16 Figures from the MicroBanking Bulletin also put average participa-tion rates for women between 29 and 47 per cent among MFIs with abroad range of loan sizes in Latin America, Africa, and Eastern Europe,especially for large- and medium-sized institutions.17 According to the same survey, MFIs targetingsmall (as opposed to micro-) enterprises with loans of at least 250 per cent of per capita GDP hadsome of the smallest proportions of female clients. The fact that low female participation rates are notunique to any particular region or type of institution challenges the notion that this is a marginal phe-nomenon, and highlights the need for continued efforts to understand why women are not fully rep-resented at higher rungs on the lending ladder.

Even when women do enjoy access to financial services, their empowerment as a result of those serv-ices is not guaranteed. Several studies have shown that the impact of microfinance programmes onincome and consumption correlates strongly with the clients’ initial asset endowment;18 women’s lowerlevel of asset ownership works against them in this regard. Attempting to integrate female clients intomicrofinance programmes designed without an understanding of how women’s needs affect demandfor financial services is certain to yield suboptimal benefits. If, on the other hand, efforts are taken tounderstand these gender differences, the resulting innovations can play a significant role in ensuringthat the availability of microfinance translates not only into real access for women, but also into widerbenefits for the women, their families, and communities.

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Simply making microfinanceservices available does not meanthat these services will be accessible to women.

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Benefits and Sustainability

In recent years, financial viability has come to be almost universally recognized as crucial in provid-ing stable, long-lived financial services to poor clients. However, one of the issues triggered by thissustainability imperative has been that maintaining a commitment to poor women clients (let aloneinvesting in innovations to benefit them) will become increasingly difficult for the majority of MFIs try-ing to minimize costs. There is a concern that the push for financial returns may shift the focus of theseinstitutions away from poor women onto clients with more loan absorption capacity and perceivedstability. The possibility exists that MFIs, to contain costs, will be unable to introduce or continue poli-cies and procedures designed to maximize benefits for poor women clients, such as hiring womenloan officers or offering nonfinancial services.

Fortunately, examples from around the world demonstrate that achieving the twin goals of gender sen-sitivity and financial sustainability is possible provided that MFIs are guided by a strong, strategicvision for both. A commitment to serving poor women and to finding cost-effective innovations forreaching this market can ensure that neither goal is achieved at the expense of the other. A review ofdata collected by the MicroBanking Bulletin shows that:19

• The financially self-sufficient MFIs in the survey had a client base that was, on average, 61 percent female. This is comparable to the proportion of active female clients found in the total pop-ulation of MFIs surveyed (62 per cent). Further, the two MFI peer groups20 with the highest prof-itability21 had proportions of women clients (68 and 82 per cent) well above the average forall MFIs surveyed.

• The average number of active female clients served by each MFI in the most profitable peergroup is approximately 1.4 million. This dwarfs the average numbers of female clients servedby MFIs in any other peer group, which range from 20,000 to 500 per institution.

• The two most profitable MFI peer groups have an average depth of outreach22 that is greaterthan the average for all the MFIs surveyed by the Bulletin, but lower than the average for allprofitable MFIs in the survey.

The above data clearly indicate that financial sustainability can be maintained while serving both sub-stantial numbers of women clients and achieving significant depth of outreach.


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COMMERCIAL OPERATIONS AND A FOCUS ON WOMEN: MUTUALLY EXCLUSIVE?

Among the potential pitfalls faced by MFIs wishing to launch or transform into a commercial bank is theoften-cited threat of “mission drift”: the tendency to make larger loans to more stable, usually male entre-preneurs, shifting the target market away from poor women. Fortunately, examples abound of sustainablefinancial institutions – and NGOs that have transformed into such institutions – that remain true to theirmissions. SEWA Bank in India was launched as a registered financial institution, and has achieved bothprofitability and stability while serving only poor female clients. The Kenyan NGO K-REP actually saw itspercentage of women clients increase (from 46 per cent in 1997 to 58 per cent at the end of 1999) afterit spun its microfinance operations off into a commercial bank. K-REP staff indicate that the bank’s abilityto mobilize savings, due to its new legal status, was a key factor in enhancing its attractiveness for poorfemale clients.

Further, a global survey by the World Bank found that the average proportion of female clients amongregistered microfinance banks was about 55 per cent – less than that of NGOs but well ahead of creditunions. A CGAP study of transformed Latin American institutions also showed that commercialization doesnot necessarily lead to an increase in loan sizes out of line with natural portfolio maturation. Nor do com-mercial operations mean that these institutions ignore their clients’ nonfinancial needs. SEWA Bank, forexample, works closely with other branches of the SEWA movement providing nonfinancial services.Effective flow of information between the different institutions helps all of them gain access to clients andlearn about their needs in order to design new products.

Sources: World Bank n.d.; Christen 2000; Joussen, Krauss, and Verhagen 2000; Charitoneko, Fruman,and Pederson 1998; Campion and White 1999; http://www.bellanet.org/partners/mfn/stats1299.htm;SUM research.


In conclusion, why should we be

concerned about microfinance services for women?

• Women make up a disproportionate percentage of the poor, with the poorest householdsrelying more heavily on women’s income.

• Women’s access to microfinance not only benefits women but also their families and communities, by generating:

–Increased income, awareness, and bargaining power for women;–Increased resources available to the family for investment in nutrition and education; –Growth in local economies through local increases in women’s spending; and–An expanded view in the larger society of social and economic norms that relate to women.

• Women’s multiple roles mean that their goals, needs, and constraints are often distinct from men’s, translating into distinct patterns of loan use, repayment, and saving, thus requiring different services.

• Women’s access to microfinance is not automatic; nor are the benefits they can derive fromit. Both necessitate gender-sensitivity and innovation in the design and delivery of microfi-nance products and services.

• Sustainability and gender sensitivity are compatible goals. MFIs can design programmes that reach significant numbers of women (as well as men) in a sustainable manner.

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he nature of women’s informal business activities has often pro-duced certain misconceptions regarding their overall contributionto the local economy. Because many women are engaged in low-

productivity and low-return activities, some observers have been led to clas-sify women’s work as subsistence activity with limited growth potential, andthus to minimize their contribution to economic growth and family welfare.However, increased documentation of informal sector activities in generaland of women’s economic activities in particular has helped to countersome of the negative notions about providing financial services to women.These include myths that women use financial services strictly for short -termconsumption and that their businesses are not good credit risks.23 It is nowgenerally recognized that economically active women contribute signifi-cantly to both economic growth and household well-being.

Research has shown that women’s economic contributions are part icularlyimportant to poorer households; as the poverty of a household increases,so does its reliance on women’s income to ensure survival. Thus, for manyyears, the main method of supporting women’s livelihoods through micro-finance was by providing them with small loans for the purpose of incomegeneration. Consequently, a great deal has been learned about women asmicroentrepreneurs, the characteristics of their businesses, and the con-straints they face. Gender-differentiated access to assets, income, and edu-cation interact in complex ways to influence the types of activities womentend to engage in, the scale and legal status of their businesses, and thekinds of technologies they employ. This in turn gives rise to different, usu-ally more formidable, obstacles that women must overcome in their searchfor information, markets, and capital necessary to succeed in business.

This section details the gender constraints faced by women microentre-preneurs and analyzes their effect on the nature of women’s businesses. Itthen highlights best practice methods that have been developed by MFIsover the last 20 years to address these constraints, and to maximize thebenefits of microcredit for their female clients. Finally, industry-wide learn-ing through market-oriented approaches and innovations that seek to pushthe frontier beyond minimum best practice standards are discussed.

Constraints on Women as Microentrepreneurs

Women have a narrower set of business opportunities than men dobecause they must overcome such barriers as cultural norms, mobility con-straints, and limits on free time. Such structural inequalities affect their levelof education and training, the levels and types of risk they can bear, andmarket sectors and potential investments open to them.

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P A R T I I

Supporting Women’sProductive Role

The triple burden. The need to balance productive, reproductive, and community roles can limit awoman’s physical mobility and the time she has available to invest in remunerative activities.24 Thisin turn, has important consequences for the size and scope of the enterprises she can undertake, thekinds of loans she can obtain, and the way she repays these loans or saves her money. These con-straints also have important implications in determining the market sectors in which women are con-centrated and the information available to them. In a SUM survey of 29 microfinance institutions,women’s lack of time due to domestic chores and lack of family support in carrying out those choreswere cited almost as often as lack of capital as major obstacles to their self-employment.25

Low literacy and numeracy. The proprietor’s educational level has been shown to be one of thekey predictors of high profit levels in microenterprises.26 However, women’s literacy rates in devel-oping countries still lag as much as 30 percentage points behind those of men.27 Lower literacy tendsto impede women’s access to information and to limit women’s interaction with formal institutions. Thisin turn hampers their ability to gain access to capital from formal financial establishments as well asto support services provided by the government.

Low levels of asset ownership. Women’s typically low level of asset ownership is a reflectionof cultural and sometimes legal conditions. In certain countries, laws prohibit women from havingproperty under their names, and where women do hold title to land and property, the value ofwomen’s holdings is often lower than that of men’s. In addition, women’s assets are likely to be innonliquid forms, such as jewelry or household furnishings. Although these assets may be accepted ascollateral by moneylenders and pawnbrokers, they do not meet the collateral requirements of formalfinancial institutions.

Prevailing notions of acceptable women’s work. Gender roles that prescribe what kind ofwork women may do, and where and how they may do it, have far-reaching consequences for the prof-itability and growth potential of their enterprises. Aside from facing potential social stigma for enteringnontraditional industries, women must also often overcome systemic barriers such as training and exten-sion systems that are oriented toward men. Women in the labour force also often find themselves receiv-ing less pay for equal work compared with men in the same jobs, increasing their chances of indebt-edness and further eroding their capacity to build assets.

Resulting Characteristics of Women-led BusinessesGender constraints have been commonly observed to produce certain shared features in microenterprisesrun by women. These constraints limit the profitability and growth potential of women-led businesses, andthus have significant implications for the design of financial services that address women’s needs.

Informal. Women’s lack of access to formal sector institutions and impediments to the growth of theirbusinesses mean that women-led enterprises are more likely than men’s to start in the informal sectorand stay there. This can subject them to harassment by legal authorities and further reduce prospectsfor business growth if national economic policies favor the formal sector.

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THE TRIPLE BURDENIn most low-income households, women’s responsibilities include:• Reproductive work: unpaid functions of childbearing, child care, and household management

that enable household members to accomplish productive work;• Productive work: activities in the formal or informal sectors for monetary or in-kind earn ings;

and• Integrative or community management work: unpaid maintenance of community

networks and the provision of scarce resources that are collectively consumed, such as water,housing, and health care.


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CULTURAL NORMS AND ASSET ACCUMULATION

The Small Business Development Center (SBDC) of the Jordanian Hashemite Fund for HumanDevelopment provides financial services, training, and awareness raising to Jordanian womenentrepreneurs. In a recent impact assessment, the SBDC found that cultural norms regardingwomen’s work have profound effects on clients’ ability to accumulate assets. Even when a womantakes a loan in her name to operate a business, the business itself is often registered in her hus-band’s name. This makes her extremely vulnerable in case of divorce or abandonment, when shemay find herself saddled with debts for property legally belonging to her husband. Conversely,legal ownership of a business or other property can protect a woman in times of family conflict,as it did with an SBDC client whose husband married a second wife when she was unable tobear children.

SBDC therefore encourages women to register their businesses in their own names, and has suc-ceeded in getting 77 per cent of its clients to do so (compared with the 69 per cent of women’sbusinesses in Jordan that are not registered at all). Ironically, SBDC has found that even whenwomen’s businesses are registered under their own names, women often use their husbands’names on advertising and signs. In the words of one client, “Women are not taken seriously ascapable business owners in our society. In the community, everybody thinks that the husband isthe real owner and the force behind the business.” However, while the study suggests that cul-tural norms still dictate that women’s successes remain invisible or be attributed to their men, theydo not diminish the benefits of women’s covert ownership.

Source: Al-Khaldi 2001.

Home-based and sometimes ambulant. Women are more likely to keep their businesses closeto home to minimize conflict stemming from their multiple roles as wage earners, mothers, and home-makers. In certain countries, female seclusion leaves little other option. Consequently, the limits onavailable space and the distraction of domestic tasks can keep a woman’s business at the level of anincome-generating activity rather than a full-time business.

Concentrated in low-return sectors. The existence of barriers related to capital, technology,and notions of women’s work means that, in countries as diverse as Nigeria, Indonesia, and Egypt,women entrepreneurs are overwhelmingly concentrated in the commercial and service sectors.Women in production are likely to be found in light industries, such as the manufacture of apparel,leather goods, and handicrafts, where profits are lower than in heavier industry. In rural areas, femalefarmers tend to produce low-return food crops, whereas men are more likely to be in remunerativecash cropping. Not only are profit margins in these sectors slim to begin with, but because there aretypically few barriers to entry into such activities, intense competition and limited markets act to fur-ther suppress profitability.

Conservative growth orientation. Women’s reproductive role often gives them substantialresponsibility for managing the scarce resources of poor households. The livelihood bias thus imposedon women can be seen in their investment patterns, which tend to be more survival-oriented and riskaverse than men’s. Research has shown that women’s portfolios are more likely to grow via investmentinto a variety of businesses, either their own or those belonging to their husbands or others, whereasmen are more likely to plough earnings back into a single business. In addition to lowering risk inwomen’s portfolios, women’s investment in their husbands’ businesses can be particularly beneficialto the household if it is the main source of family income. However, such diversification also tends tolower the overall growth rate of women’s enterprises, and may thus affect their repayment capacity.28


Small scale. For the reasons described above, women’s businesses tend to besmaller than men’s are, with fewer assets and employees. For example, inurban areas of Lesotho, Swaziland, and Zimbabwe, the average number ofworkers in men’s firms ranges from 1.55 to 6.6. By contrast, female-ownedfirms had an average of between 1.13 and 2.33 workers.29

Part-time and seasonal. Women’s businesses are usually part-time andoften seasonal in nature in order to accommodate other responsibilities relatedto childcare or agriculture. Dividing up their time between different economicactivities also represents an important strategy for risk reduction in women’seconomic portfolios.

Low-tech. Limited education, capital, and contact with the formal sector ham-per women’s access to improved technology, thus depressing their productivity.In some cases, lack of capital may restrict women’s ability to afford tools orequipment; in others, the technologies are ill designed for women. Rather thaninvesting in equipment and machinery, women are more likely to hire workersto increase productivity. Among ADEMI borrowers in the Dominican Republic,women who owned medium-sized textile firms were more reluctant to purchasemachinery and equipment than were men. In the larger firms, the tendency of

women owners to hire labour as a growth strategy resulted in lower output than in firms owned bymales.30

These features are the product of strikingly similar obstacles faced by women microentrepreneursaround the world. These gender-based obstacles are related and can be mutually reinforcing; togeth-er, they work to limit the profitability of women’s enterprises by building constraints to information,markets, and capital into the very structure of women’s businesses. Constraints on information aboutsources of commercial loans can hamper women’s access to capital; similarly, capital and informa-tion constraints can make it even harder for women to gain access to expanding markets. However,the upside of these linkages is that strategic interventions targeting one of these constraints can reduceother types of obstacles as well. While microcredit programmes have a direct effect on the capitalconstraint, they also have the potential to help women overcome information and market constraints– for example, by helping them get access to the training or technology necessary to enter new indus-tries or diversify their products. The following section will discuss techniques of microcredit deliverythat have helped successful MFIs make that link.

Implications for Microfinance Institutions: Best Practices

For MFIs, creating products and services that take women’s special needs and constraints into accountnecessitates four basic steps:

• Understand the unique needs of female clients through techniques including surveys, focusgroups, and interviews, as well as feedback mechanisms built into the structure of the institu-tion;

• Develop products and services that respond to these needs;• Design a delivery system that enables women to gain access to these products and services

given their particular responsibilities and constraints; and• Control costs so that these products and services can be delivered at prices that the women can

afford but that also enable the microfinance institution to be sustainable.31

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FIGURE 1Constraints on women as

microentrepreneurs

Special characteristics inwomen’s enterprises

Market, information, and capital constraints on women’s businesses

INNOVATIVE SOLUTIONS FORCREDIT DELIVERY

produce

resulting in

whichrequires


In an attempt to address these issues, the microfinance industry has developed a set of best practicesdesigned to attract more female clients and better serve their need for credit.

Matching loan terms to women’s business cycles helps them maximize the benefitsof microcredit. The trade and service sector, where many women are concentrated, is often char-acterized by rapid turnover and slim margins. Loans whose term length and repayment schedulesmatch these criteria are most likely to increase women’s access to and benefits from credit, maximiz-ing the chances of successful repayment by minimizing the stress and risk that repayment imposesupon the woman. In diverse parts of the world, small working capital loans with frequent (weekly orbiweekly) repayments have proven especially popular with female clients.

Simple formalities make credit accessible to semiliterate or illiterate customers. Thedaunting paperwork in application and disbursement procedures for formal sector loans has tradi-tionally excluded those with limited literacy and education. As female literacy rates are far inferior tomen’s in many countries, this obstacle marginalizes women in particular. To actively include womenin their potential client base, successful microfinance programmes have streamlined loan applicationand disbursement procedures to make them easy to understand. Loan officers assisting women withlimited literacy must also be trained to help them understand and complete any required formalities.

Nontraditional collateral compensates for women’s low levels of asset ownership.Many of the most successful microfinance programmes accept nontraditional forms of collateral toguarantee loans. The most common form is the mutual guarantee that accompanies solidarity grouplending. Other types of character references or an analysis of business viability are also sometimesaccepted as loan guarantees.32 Some MFIs that still use property-based collateral accept forms ofproperty that women are more likely to have access to and control over, such as jewelry, cooking uten-sils, and other household goods.

Allowing women to sign for their own loans reduces institutionalized genderinequities. When possible, gender-sensitive microfinance programmes allow women to sign for theirown loans, without requiring the signature of husbands or male relatives. Often, current practices ofnoncollateralized individual lending require guarantees from government employees or formal sectorworkers. In the Middle East, where these positions are occupied predominantly by men, this require-ment effectively reinforces gender-based inequities present in society.

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CIRCUMVENTING THE COLLATERAL CONSTRAINT IN PPAKISTAN

In Pakistan, Network Leasing Corporation Limited (NLC) is using microleasing to alleviate the col-lateral constraint that often hampers women’s access to credit. Instead of offering loans forincome-generating activities, NLC purchases income-generating assets – such as sewingmachines, refrigerators, computers, and buffaloes – and leases them to its clients for a period ofthree to five years. Repayment terms are simple: each month, NLC’s clients pay a fixed rentalamount calculated on the basis of the asset price. The model is commercially viable because NLCcharges market-based lease rates, enabling it to earn an annual profit of approximately 10 percent on equity. Title to the asset rests with NLC during the lease period, after which ownership istransferred to the client. This not only eliminates the need for collateral, but also assists the clientin building her own asset base.

Source: NCL website (http://members.nbci.com/microleasing) and SUM research.


Enlarging the scope of activities forwhich women can obtain loans and serv-ices opens up credit access. Eliminatingrestrictions that specify the activities for which aloan must be used opens women’s access to cred-it, and is especially important given women’s ten -dency to diversify their portfolio of economicactivities. Likewise, making unregistered business-es eligible for loans, or assisting women toacquire business licenses if required by law, willincrease participation of female entrepreneurs.

Flexibility should govern decisions onwhether to lend to groups versus indi-viduals. Solidarity or joint-liability groups, self-help groups, and village banks constitute the threemain types of group methodologies currently inuse; the groups vary in size, structure, and serv-ices offered. Groups carry two advantages. Thefirst flows out of the mutual guarantee mechanism,which enables asset-poor women to obtain credit

and provides an effective and cost-effective method for encouraging repayment, benefiting both theMFI and its clients. Second, groups can serve as efficient vehicles for awareness raising and socialintermediation. Many NGOs therefore pair their group lending activities with training and awarenessraising around other social issues.

However, not all women are in a position to take advantage of group lending. For women on boththe lowest and the highest ends of the poverty spectrum, the transaction costs involved can prove toogreat. The poorest women often lack the social networks required to enter a mutual guarantee group,and, once in, are more likely to experience severe pressure to exit the group during times of repay-ment difficulties. Conversely, women on the higher end of the spectrum may find it more efficient toseek larger amounts of credit elsewhere, especially if they can provide more traditional forms of col-lateral. Whether they have outgrown the loan sizes offered in group lending schemes or have creditrequirements that are too high to begin with, such women often prefer more streamlined, individuallending methodologies.

Therefore, the decision of whether to use group lending should be made based on the realities of theparticular context. While standardization and ease of administration are important considerations forthe MFI, flexible lending methodologies – allowing women as well as men to graduate to larger orindividual loans as they become older, more established clients – will go far in meeting challengingclient demands.

In brief, the following characteristics of enterprise lending maximize benefits forwomen. Many are standard best practices that apply to both men and women entrepreneurs, andcan be key determinants of their access to financial services.

• Loans are available for trade and service activities, as well as manufacturing;• Loan forms are simple and have rapid approval processes;• Loan officers are trained to help semiliterate and illiterate customers complete applications;

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THE CASE OF THE IDENTITYCARD IN CAIRO

ADEW, a Cairo-based NGO that works with womenentrepreneurs, identified the lack of identity cards asa major constraint on their clients’ economic activi-ties. Without an official identity card, these womencould not obtain the business licenses that wouldenable them to formalize their enterprises and com-pete in wider markets. ADEW therefore started alegal advice programme, which has helped 1,200women obtain identity cards over the last threeyears. This not only helps clients grow their busi-nesses beyond subsistence level, but also opens thedoor for those wishing to access to larger sources ofcommercial funds through the formal sector.

Source: SUM research



• Loan amounts and repayment periods fit the business cycles and capital flows of women’sbusinesses (in other words, short-term working capital);

• Alternatives to traditional collateral, such as solidarity groups or character references, areaccepted;

• Women are allowed to sign for their loans themselves without requiring a male cosigner orintermediary; and

• Women with unregistered businesses are eligible for credit.

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S U P P O RT I N G WO M E N ’S L I V E L I H O O D S : M I C R O F I N A N C E T H AT W O R K S F O R T H E MA J OR I T Y

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ne of the most important distinctions affecting how men andwomen use microfinance is that women must juggle family care

and community management roles in addition to their productivework. A crucial part of women’s reproductive work in many poor house-holds is managing income and assets in order to protect the family fromthe risk of economic shocks. When possibilities for asset building are lim-ited, the role of such risk management may be as or more important thanincome-generation in preserving a household’s standard of living.Consequently, for the poorest households, the protective function of micro-finance may be more important than its promotional function. Yet, in thepast there has been a “narrow definition of financial services for the pooras inputs for financing production rather than broadly defined financingfor all aspects of household investment.”33 This section describes how anexpanded vision of microfinance is seeking to better support women’s roleof risk manager in the household, using both specially tailored credit prod-ucts as well as innovative new types of financial services.

Types of Risk

There are many sources of risk that women must consider in the dailymanagement of their households, from structural factors such as seasonaleffects, inflation, and the vagaries of weather, to emergencies includingthe sickness of a family member, loss of employment, fire, or theft. Lifecycle events such as births, marriages, and deaths are also sources of riskbecause of the high financial costs associated with them in many soci-eties. Finally, risk can come from operating a business or from the act oftaking a loan itself, because of the associated liabilities.34

Women are often particularly vulnerable to risk because of the structure ofgender relations in their societies, which shapes access to and controlover resources and the existence and robustness of other coping mecha-nisms. For example, although both men and women face changes in theprice of food, rainfall shortages, and periods of low consumption, studiesin India have shown that these factors affect the nutrition levels and deathrates of girls more than they do boys. The legal structure governing mar-riage in parts of South Asia, Africa, and the Middle East also exposeswomen to the potential loss of assets and livelihood in the event of thedeath of their husbands. In most societies, men do not face any equiva-lent risks.35

Supporting Women as Risk Managers

P A R T I I I

O

Strategies for Mitigating Risk

The strategies poor people typically employ to minimize the risk of economic shocks fall into two maincategories: income smoothing and consumption smoothing. Income smoothing refers to measurestaken to reduce the probability of income shocks before they occur, and includes strategies like diver-sifying income sources; making low-risk production and employment choices; building up physical,human, and social assets; and ensuring good financial management.

Consumption smoothing, on the other hand, is aimed at protecting consumption patterns from theimpact of shocks, and can take effect either before or after their occurrence. Post-shock responsesinclude modifying consumption, raising income by mobilizing labour or selling assets, drawing oninformal or formal sources of savings, or activating claims on informal insurance mechanisms.

Microfinance has a role to play in both these types of strategies. Before economic shocks occur, finan-cial services can be used to generate income and transform it into assets, which can be sold as need-ed to meet consumption needs. This reduces the need to resort to strategies that are more damagingto long-term economic security, such as withdrawing children from school or borrowing from money-lenders. It can also make it unnecessary for women to mobilize even more of their labour to deal witha crisis, a strategy women tend to resort to more than men even though they already work longerhours.36 The ability to contribute into savings facilities and insurance schemes in good times canincrease households’ ability to deal with crises when they occur, while emergency loans can speed ahousehold’s recovery afterwards. Asset building can also improve clients’ creditworthiness, whilesimultaneously reducing an MFI’s exposure to risks affecting a large number of its clients, as their assetbases become larger and more diverse.37

Microfinance can also reduce gender-specific risks for women by helping them increase their deci-sion-making power and control over assets.38 This dynamic was illustrated by a study of female par-ticipants in BRAC’s microlending programme in Bangladesh. This programme revealed that women’scontrol over assets increased with their access to larger loans, and that greater loan sizes were asso-ciated with higher scores on knowledge variables, such as awareness of the legal way of divorcingor of local officials’ names.39 These findings confirm that participation in microfinance programmescan help women increase their knowledge of the outside world, enhancing their bargaining powerand assisting them in building and strengthening social networks. All these dimensions of women’sempowerment reduce their vulnerability to economic (and sometimes noneconomic) threats.40


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RISK MANAGEMENT STRATEGIES ROLE O F MICROFINANCEIncome Smoothing Promotional role• Income generation • Provision of credit for income-generating activities• Asset creationConsumption Smoothing Protective roles• Contributions to insurance • Microinsurance schemes

mechanisms• Saving • Savings facilities• Modifying consumption

• Savings withdrawals or insurance proceeds to fulfill immediate consumption needs

• Borrowing • Emergency loans

Table 1: Risk Management Strategies and the Role of Microfinance


Microfinancial Services that Mitigate Risk

Any discussion of how MFIs can help clients manage risk must begin by emphasizing the criticalimportance of the institution’s own financial stability in this task. The deposits with which poor clientsentrust MFIs have coping, risk-mitigating, and income-generating functions that bear a degree ofimportance far beyond the deposits of better-off households. Poor women in particular can ill affordto lose their deposits due to the collapse of an MFI. These deposits should therefore be safeguardedby institutions that are at least as structurally sound as mainstream financial institutions, and that com-ply with regulations ensuring adequate levels of transparency and accountability in management.

After achieving a track record of financial viability in their lending operations, many MFIs have diver-sified into new types of products that offer their clients an expanded range of risk management strate-gies. Recent innovations in this realm have come about mainly in two major categories, savings andinsurance, and several have been designed specifically to meet the needs of women clients. Two otherservices that address risk management are emergency assistance and asset-building loans.

Savings Services: Best Practices

Some poor women judge the risk involved in taking loans from MFIs to be too high, and place morevalue on the ability to prepare for economic shocks in advance. Savings mobilization is one of themost effective ways of providing access to such protection, if products and services are designed tomatch the ways in which poor women can and wish to save. Well-conceived savings services can alsopresent substantial advantages over loans in terms of the accessibility, security, return, and divisibili-ty of funds that they offer.41

The demand for well-designed savings services has been evi-denced by the numbers of women participating in such pro-grammes around the world, and by the volume of savings thusmobilized. As of the end of 1998, for example, the UgandaWomen’s Financial Trust had mobilized $621,605 in voluntarysavings from 34,363 women, only 8,022 of whom borrowed fromthe institution.42 CARD Bank, an all-women’s bank in thePhilippines, also mobilized more than $600,000 in savingsdeposits in 1999.43 And the clients of FINCA Peru, 97 per cent ofwhom are women, had deposited more than $1.2 million in sav-ings with the institution as of October 2000.44

Building the following features into the design of MFIs’ savings facilities can help ensure that they willdeliver maximum benefits to the greatest number of women possible.

Ensure that savings are safe and private. One of the greatest obstacles that poor womenencounter in their attempts to save is the lack of a place where funds will be both physically secureand safe from the many claims made on them by others.45 Women’s need to protect their income fromappropriation by their husbands was among the motives behind the establishment of SEWA Bank inIndia, which in 1999 held deposits from 93,000 women savers.

Make savings conveniently accessible. At the same time, to maximize their consumption-smoothingbenefits, savings must be readily available to their owners, especially in emergencies.46 Women’stime and mobility constraints imply that MFIs may have to decentralize operations and bring depositfacilities to savers, rather than the other way around. Although this may be a new practice for finan-cial institutions, it is a time-tested strategy employed by informal financial intermediaries such as the tontiniers of West Africa. The popularity of these ambulant deposit takers is due in part to their dailyvisits to customers, who are willing to bear a negative rate of interest in order to save with them.

19

Some poor women judge the riskinvolved in taking loans from MFIs tobe too high, and place more value on the ability to prepare for economic shocks in advance.

Ensure that borrowers have the ability to save small, variable amounts frequentlyand conveniently. The variability of poor people’s income can exclude them from traditional sav-ings opportunities like rotating savings and credit associations (ROSCAs), most of which demandfixed contributions.47 To fill this market gap, MFIs should offer poor clients the opportunity to savewhatever amount they have on hand, when they have it on hand. This feature can be especially impor-tant to women because it matches the income streams produced by their often low-return commercialand service activities.

Delink savings from loans. Providing women who do not borrow from an MFI the opportunityto save with it benefits both the clients and the institution. While offering voluntary savings opens thisopportunity up to women – often among the poorest of the poor – for whom taking loans is too risky,it can simultaneously broaden an institution’s financial base by generating loanable funds. The expe-rience of BURO-Tangail in Bangladesh shows that voluntary savings facilities can generate more netsavings per client than compulsory schemes.48

Design savings facilities with clients’ liquidity and illiquidity preferences in mind.Liquidity is often key to mobilizing local savings, but in many circumstances the poor also express astrong “illiquidity preference.” There may be instances where women actually prefer compulsory sav-ings because of their income-sheltering effect.49 Clients may wish to place savings in accounts that arerestricted in some way to protect earnings from the demands of relatives and community members,and eliminate the possibility of withdrawing funds for unplanned or unnecessary expenditures.50


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SAFESAVE’S EXPERIMENT WITH FLEXIBILITY AND DISCIPLINE

In the slums of Dhaka in Bangladesh, the MFI SafeSave is experimenting with a new type of sav-ings service. In order to give clients maximum flexibility in transforming small pay-ins into largepay-outs, SafeSave’s combined savings and credit product does not stipulate any fixed contri-bution amounts or payment terms. Instead, it allows clients to save as much or as little as theywant to, at any time. Similarly, clients can borrow any amount up to Tk.2,000 over the amountof their savings and take as long as they like to repay, provided they keep up with monthly inter-est payments.

While flexibility of this product has made it popular even among the very poor, SafeSave hashad to contend with the risk that this very flexibility would undermine the savings and repaymentdiscipline of its clients. But the MFI has incorporated a delivery mechanism into its product thatit believes will minimize this risk. Everyday, sometimes twice a day, SafeSave sends Collectorsto the doorsteps of its clients to collect any savings or disburse any advances that the client maydesire. In this way, SafeSave is testing whether frequent and convenient opportunities to pay incan encourage as much payment discipline among clients as fixed payments terms and grouplending methodologies, which sacrifice flexibility. Early results from this experiment are promis-ing: in its first five years of operation, SafeSave has grown to serve more than 5,000 clients,over 60 per cent of whom are women.

Although its strategy was not deliberately designed for women, SafeSave has met the needs ofthis client group by bringing banking to their homes, thus getting around the time and mobilityconstraints that often hamper women’s access to financial services. Flexible savings opportuni-ties and repayment terms are also particularly suited to the variable nature of cash flows frommany women’s businesses. Lastly, while SafeSave Collectors are encouraged to recruit men,women, and children as clients, part of the reason for their particular success with women is thatthey are all women themselves.

Source: Rutherford 1999 and SUM research.


Diversify savings opportunities. Poor womensave for diverse reasons, and MFIs can attractwomen clients by designing savings products tai-lored to these specific needs. For example, someMFIs are currently offering savings products for lifecycle events, such as marriages or births; othershave created contractual savings products that offerhigher interest rates than current accounts. Suchinnovations are made possible when MFIs adopt ademand-driven approach to product development,which necessitates a thorough knowledge of clients’goals and habits in saving.

Insurance and Mitigation of Risk

While savings have the ability to cushion consump-tion from some economic shocks, they can be inad-equate to cover expenses and lost income due toserious calamities, such as the death of a bread-winner or a natural disaster. Insurance schemes canbe especially important for women because theiraccess to resources is mediated largely by their hus-bands. The death of a husband can leave a house-hold doubly burdened: not only is it deprived ofwhat is often the main source of income, but thewife may not have the option of upgrading her income to replace that of her spouse. In some cases,the husband’s family may also strip a wife of all household assets owned in the husband’s name afterhis death, undermining or destroying her ability to recover from the shock financially.51 Conversely,insurance can also protect the client’s family and the MFI in the event of her death, by repaying heroutstanding loan balance. These “credit life” policies are the type of insurance product most com-monly offered by MFIs.52

Women regularly undergo periods of financial need resulting from more predictable events in theirlives as well; in many cultures, expenses related to the birth and marriage of children or the death ofparents can represent a substantial proportion of a woman’s annual income.53 MFIs have recentlybegun offering a range of insurance products that give women the opportunity to protect themselves

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SAVING FOR LIFE CYCLE NEEDS

The Union Regional de Apoyo Campesino (URAC),a Mexican MFI whose clients are 88 per centfemale, has diversified its savings products to helpthem provide for a variety of life cycle needs. It pro-vides special “events accounts” that carry an inter-est rate slightly higher than the rate on regular sav-ings accounts. Although these were originally intro-duced as “pregnancy accounts” designed to helpparents save for the arrival of a new baby, they nowprovide for a range of needs including family feasts,pilgrimages, baptisms, marriages, and other reli-gious obligations. The MFI also has two productsdesigned to help clients pay for children’s schoolexpenses: one type of educational savings accountthat can be withdrawn from at will, and another thatcan only be withdrawn from at predetermined dateswhen school fees are paid. URAC’s diverse productline responds to the variety of needs expressed byits predominantly female clients, who are the onesresponsible for making these household manage-ment decisions.

Source: Alfonso Castillo, Coordinator, UnionRegional de Apoyo Campesino.

“MARRIAGE INSURANCE”

In southern India, many Christian families enroll their daughters in a marriage fund. The parents contributea fixed amount to the fund every week, and when the girl marries, the fund pays out an amount worthtwice the value of their total contributions. In the meantime, contributions are available to members in theform of short-term loans. At pay-out, the fund is able to double members’ contributions because the aver-age time that members pay in is long enough to bring the return down to a level that can be covered byinterest on the loans.

Anecdotal evidence indicates that in some cities, 90 per cent of Christian girls are enrolled in marriagefunds. The popularity of such schemes would suggest that they provide an important source of assistanceto families in dealing with financial risks that are tightly bound up with gender, and may provide a modelfor replication by MFIs.

Source: Rutherford, 1999 and 1996.

from such shocks. These products take their cue fromcommercial insurance as well as from informal systemsset up by poor people themselves. In one popularmodel, the MFI acts as an agent for a commercial insur-ance company, which benefits all three part iesinvolved. While clients gain access to a formal insur-ance plan, insurance companies gain access to a newmarket niche. As for the MFIs, they earn commissionsfrom the insurance company while placing the actuari-al analysis and much of the administrative work in thehands of an experienced provider.

FINCA Uganda, which acts as an agent for two carri-ers offering life and health insurance, is one well-known MFI that has experienced success with the part-ner-agent model.54 The partner-agent model is alsoadvantageous in that it eliminates the need for the MFIto implement complex insurance schemes before it hasdeveloped the institutional capacity to deliver a quality,well-managed product. Insurance is a very differentbusiness from microcredit and savings mobilization,and one that MFIs should not enter without a thoroughunderstanding of the costs, risks, and institutional chal-lenges of responding to these types of customer needs.

MFIs wishing to design products to help clients meetunplanned expenses should keep in mind the impor-tance of matching the type of insurance mechanismoffered to the predictability of the event covered.Products structured as long-term savings accounts may

be more appropriate for events, such as marriage or maternity, whose exact timing is unknown butwhose occurrence is fairly certain. True insurance products, where risk is pooled over a large groupof people with different risk profiles, are more appropriate for events that occur with a relatively lowlevel of certainty (for example, accidental death). This is because, in risk pooling, the client pays apremium roughly equivalent to the average costs incurred by the individuals in the pool.55 As thechance of each individual incurring a loss gets closer to 100 per cent, either premiums must increaseor coverage must decrease in order to keep the scheme financially solvent.

Emergency Assistance

Because women often bear primary responsibility for managing household resources and risk, theymay sometimes be obligated to use loans meant for productive activities to meet household con-sumption needs instead. This is especially true when the households are short of cash in emergencies.Conversely, women have been known to retain a portion of loan funds for use in emergencies, thusreducing the productive potential of the loan and therefore the client’s repayment capacity.56 SomeMFIs, such as CARD Bank in the Philippines and BRAC in Bangladesh, have attempted to prevent thisby offering specially designed loans for emergency assistance. The findings of field surveys conduct-ed for the World Development Report 2001 revealed that CARD, whose emergency loans are avail-able within a day, was one of the few MFIs whose customers did not routinely turn to sources of infor-mal credit – instead of to the MFI – for funds to deal with a shock.57

Like other loans, emergency assistance must match women’s needs in terms of size and cost. In orderto reduce a woman’s risk level, repayment amounts and cycles for these loans must fit her income


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DESIGNING INSURANCE FOR WOMEN

SEWA Bank in India offers one of the moststriking examples of insurance tailored towomen’s needs. Initially, SEWA developed acombined package of health, life, and prop-erty insurance for its women clients. However,it soon realized that only providing life insur-ance for clients provided little protection to theclients themselves, leading it to extend option-al coverage to clients’ husbands. CertainSEWA insurance clients also enjoy maternitybenefits – a first in India – in the form of alump sum grant for each pregnancy.

SEWA has also developed a pension schemeto address women’s financial needs later inlife. This product allows clients to save regu-larly for a period of 10, 15, or 20 years, withthe option of receiving monthly income fromthe interest or withdrawing the entire balanceat the end of the term. The product’s popular-ity may be due to the fact that it actuallyserves a double purpose: while many clientsuse it as a pension for their old age, manyalso find it useful for saving up to buy a house.

Source: Joussen, Krauss, and Ve rhagen2000; McCord 2001.


flows and repayment capacity.58 An example from Bangladesh demonstrates the general principle.After the 1998 floods there, BRAC allowed its clients to take up to 50 per cent of their current loanas a new loan and to extend repayment by six months. “The idea of issuing 50 per cent of currentloans as fresh loans was based on the assumption that whatever cash in hand households had at thetime of the floods was used up for immediate consumption needs. The extra liquidity was intended fordaily expenses during the crisis, as well as for productive investment.”59

Loans for Asset building

Loans for asset building rather than income generation can also play an important role in helpinghouseholds manage risk. The Grameen Bank’s housing loans, described in the box below, demon-strate how such products can simultaneously decrease women’s specific levels of vulnerability.

In summary, savings services can help minimize risk for MFI customers, particular-ly female clients. Savings services should:

• Make savings private, safe, and accessible;• Delink savings from loans, making savings voluntary and open to nonborrowers

and nonmembers;• Enable clients to save small amounts frequently and conveniently;• Consider the liquidity and illiquidity requirements of clients when designing savings

products;• Offer diversified savings opportunities, possibly including contractual savings products or sav-

ings accounts for specific life cycle needs; and• Manage accounts with transparency and accountability within financially healthy and struc-

turally sound financial institutions, which are governed by effective regulatory structures.

Other services that minimize risk include insurance provision, emergency assistance, and loans forasset building.

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HOUSING LOANS BUILD SECURITY THROUGH ASSETS

Grameen Housing Loans exemplify how microfinance products can be designed to achieveboth economic and social empowerment goals for women. The loans are extended to con-struct permanent, cyclone-proof houses that can also withstand normal levels of flooding, arecurring and often devastating phenomenon in Bangladesh. Borrowers who have been ingood standing with the Grameen Bank for at least three years are eligible to borrow betweenTk.7,000 and Tk.25,000, repayable over 10 years at an interest rate of 8 per cent (the nor-mal rate on Grameen Bank loans is 20 per cent). What gives this product its unique charac-ter, however, is the requirement that the woman of the household be the legal owner of theland on which the house is to be built.

This endows the woman with a very special type of asset. Besides providing physical securi-ty, houses often function as workshops, storefronts, and general headquarters for women’sbusinesses. A house of her own can therefore enhance a woman’s income-generating capac-ity; in addition, it can increase her social security by discouraging divorce. While a husbandcan divorce his wife unilaterally in Islam, registering the house in the woman’s name reduceshis incentive to do so by obliging the man to leave the home instead of the woman.

Source: Interview with Dipal Barua, General Manager, Grameen Bank.

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n MFI’s choice of delivery mechanisms plays a crucial role in deter-mining the numbers of women who gain access to its products.Even the best-designed financial services will not produce the

desired benefits for women if they cannot access them. Conversely, cer-tain methods of product delivery can work to maximize the benefits avail -able to women. This section examines outreach and service delivery meth-ods, citing best practices in these two critical areas for women clients.Whatever their core product, these methods can be used by MFIs toensure that product availability translates into accessibility and benefits forwomen.

Identify Women Clients

In the programmes most successful at reaching women borrowers, loanofficers are proactive; they seek out women clients in marketplaces, neigh-borhoods, the street, clinics, religious gatherings, and low- income resi-dential areas. They talk to other entrepreneurs or people in the neighbor-hood to discover likely candidates. Because the highest percentages ofwomen are found in commercial and service enterprises, many of whichare based in homes, loan officers must look beyond areas with high con-centrations of manufacturing enterprises to locate women entrepreneurs.60

Ensure that Institutions Are Conveniently Located withSuitable Hours of Operation

Financial service transactions for women should take place near theirhomes or businesses and be completed quickly. Women tend to have lessfree time than men do, and to be less mobile. Responsibilities such as fam-ily meal preparation and child care tie women to the home for much ofeach day and leave little opportunity for travel to distant financial institu-tions. Women also have less cash for transportation and less likelihood ofowning transport. In some situations, cultural and religious barriers furtherinhibit their mobility. Security issues, both for the MFI and the women trav-elling to and from it, should also be considered when MFIs determinebranch locations and hours.

Communicate with Women about Financial Services

In most countries, female communication channels are different from thoseof men. Women tend to be less literate and are therefore less likely tolearn of programmes through written media. Radio and television arealternatives. Visits by loan officers to neighborhoods, homes, and gather-ing places can prove highly successful, particularly in settings where reli-giously rooted suspicions of such programmes are prevalent. Loan officers

Effective Service Delivery Mechanisms

P A R T I V

A

should speak with potential clients in women's organizations, ROSCAs, the marketplace, or the streetin the case of ambulant vendors, rather than relying on the written word. Any training should stressvisual materials to overcome lower literacy rates and should be as participatory as possible, usinggroups to reinforce the learning.61

Encourage Female Extension Officers and Gender Sensitization

The choice of male or female loan officers is highly dependent on local conditions. Female promotersare necessary in conservative Islamic areas such as Pakistan, parts of the Middle East, and Africanenclaves where seclusion is strictly observed. In less conservative Islamic countries, such asBangladesh or Morocco, female promoters may be desirable but not essential. In some cases, espe-cially in high-crime urban areas, the safety of female loan officers is an issue because they often visitborrowers in the evening.

Some in the microfinance industry see the hiring of female staff as a point of tension between the twingoals of gender equity and financial sustainability. They are concerned that certain factors, such asthe demands of maternity or women’s potential inability to work in certain areas or at certain times,raise personnel costs. It is worth remembering, however, that female staff can dramatically expand-ing an institution’s outreach to female clients, increasing its client base and potentially enhancing itsfinancial performance. Gender-sensitive hiring policies are also an important element in building aninstitutional culture that supportsoutreach to women clients as wellas a gender-equitable workplace.


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BRINGING BANKING HOME

Instead of bringing customers to its branches, the National Bank for Development (NBD) inEgypt is bringing branches to its customers. In NBD’s mobile banking strategy, minivans carry-ing loan officers, tellers, and a driver-cum-security guard visit areas in Cairo where the bankdoes not have offices. These mobile branches collect repayments, disburse new loans, reviewapplications, and conduct all other business normally carried on in their regular branch offices.Mobile branches enable the bank to know its clients while combining the discipline of com-mercial banks with the outreach of NGOs. This strategy has the potential to help NBD greatlyincrease its outreach to women clients.

Source: Dhumale, Sapcanin, and Tucker n.d.

MFI VOICES ON FEMALE STAFF

A survey of fifteen MFIs conducted by SUM revealed thatinstitutions were committed to gender equity in their hiringpractices despite certain difficulties associated withemploying female staff. The majority of institutions thatresponded said they faced no constraints in identifying,hiring, or retaining women. Half also reported having poli-cies in place to actively promote the hiring of women staff.However, a few institutions did report facing obstacles inthis task, including a lack of female candidates with ade-quate education, women’s reluctance or inability to travelinto remote areas, and their increased likelihood of leav-ing jobs due to personal reasons such as marriage orpregnancy. Nevertheless, respondent institutions werealmost universally in agreement about the main advantageof hiring women loan officers: their access to and abilityto attract female clients.

Source: SUM research.


Consider Programmes for Both Genders

In the past, microfinance programmes have been specifically targeted to women for a variety of rea-sons. These include an intent to influence the welfare of the household and children; a desire to reachdirectly the poorest of the economically active; perceptions of women as more responsible financialservices clients; or concern that, in mixed groups, women would otherwise be left out.

Circumstances under which women-specific programmes may be appropriate and should be consid-ered include when:

• Women are in seclusion;• Cultural values inhibit women from participating; and• Women have been bypassed so consistently that action is required to compensate for unequal

access.

However, the ultimate goal, where culturally permitted, should be the full participation of both womenand men in mixed-gender programmes that provide equitable access to savings and credit facilities.Some organizations start by focusing on women and extend services to men once they have been suc-cessful in establishing permanent outreach to women in the community.62 In countries like Bangladesh,where there are more opportunities available to obtain microfinance for women than men, it is sus-pected that women frequently divert loans to their husbands. While this is not necessarily a negativephenomenon when viewing the household as an economic unit, it can be an extra burden for womenif they are held responsible for repayment without any say in the management or use of the funds.

Encourage Participation

Women clients can be involved in many levels of an MFI’s operations, often to the benefit of both theinstitution and the customer. Soliciting clients’ input in product design, for example, can enhance boththe accessibility and the impact of an MFI’s products and services, increasing its outreach. MFIs,donors, and researchers have developed myriad methods for obtaining such feedback, from the anec-dotal to the highly rigorous. The Union Regional de Apoyo Campesino in Mexico, for example, hasengaged in an informal process of monitoring client satisfaction through regular consultations betweenloan officers and clients, and has used the information gleaned from this process to design a rangeof tailored savings products. Such methods have the advantage of imposing minimal costs on the MFIsince they are built into everyday operations. A wide variety of formal market research tools, includ-ing focus groups and interviews as well as traditional survey methods, have also been developed togather data on client-level impact more systematically. If correctly integrated into management

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REACHING WOMEN THROUGH DEDICATED DIVISIONS

In a country where only three per cent of business owners are women, specialized outreachand delivery strategies have helped Pakistan’s Network Leasing Corporation (NLC) garner aclient base that is 22 per cent female. A dedicated Women’s Division with an all-female staffruns a three-tier programme that caters to the diverse needs of NLC’s female clients. This divi-sion provides services tailored to women with established businesses; to professional women,such as doctors, who need financing for professional equipment; to semiskilled women work-ing from home; to women who have recently graduated from vocational training pro-grammes; and to unskilled women who are new to any type of income-generating activity.NLC is also developing specialized training programmes focusing on the particular businessdevelopment needs of each of the latter two categories.

Source: NCL website and SUM research.

processes and information systems, this data can also be invaluable for discerning trends in customerdemand.

Another highly effective way of guaranteeing client input into all aspects of an MFI’s operations isdemonstrated by the Sri Lankan organization Janashakti. Janashakti is completely owned and man-aged by its all-female membership, which in 2000 counted over 27,000 women. A five-tiered feder-ation of regional and local women’s organizations, Janashakti has managed to achieve institutionalcoherency and continuity by establishing tight links between the different tiers and by perpetuallyrecruiting and developing leaders from within the ranks of its members. While this process gives grass-roots women the chance to gain skills and experience, thus achieving Janashakti’s social goal ofempowering of poor women, it also ensures that accurate information about the needs of the mem-bership base is constantly flowing to policy-making levels within the organization.63


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PARTICIPATORY PROGRAMME DESIGN: CASE ONE

The international Coalition for Women and Credit sponsored a Women and MicroenterpriseInitiative, which sought to facilitate the development of a permanent structure and culture that wouldinvolve microentrepreneurs in all processes of the institutions that serve them. Begun in 1998 inColombia, Nicaragua, and the Dominican Republic, the Initiative proceeded in four phases.

• Focus groups were held to discuss client satisfaction and their ongoing needs aswomen entrepreneurs, to be shared with MFI staff and management.

• A Report on the Present Situation of Women Microentrepreneurs was developed high-lighting information on relevant national legislation and regulations and statistics onthe informal sector, derived from the focus group discussions.

• Workshops were held using the Report as a framework for discussion for identifyingcommon needs and problems, and forming a consensus on the priority issues to befurther discussed.

• A Consolidation Meeting of the participating women entrepreneurs and MFIs was con-vened to build consensus on critical issues and strengthen national and regionalalliances, resulting in a Platform for Action for further awareness raising, policy work,and promotion of actions at the national and regional level.

The increased leadership capacity that this Initiative has generated was evidenced by the cre-ation of ANAMUMPE, a national businesswomen’s association organized by participants in theDominican Republic. Since its inception in July 1999, ANAMUMPE has helped to increase thevisibility of women in the micro and small enterprise sector and as such is valued as an impor-tant association. Members of ANAMUMPE have participated in different forums that addressissues that affect the micro and small enterprise sector, and they have developed and strength-ened their network with the microfinance sector as well as with representatives of the NationalCongress. The women members of ANAMUMPE have gained skills in public speaking, inorganizing and managing the Association, and in managing relationships with a range of insti-tutions. All of these accomplishments are contributing to an increase in their leverage as anAssociation representative of a large sector in the country.

Source: International Coalition on Women and Credit. 1999.


To sum up, the following service delivery mechanisms maximize the benefits ofmicrofinance for women. Implementers should:

• Adopt a market perspective so that client preferences are understood and products aredesigned to meet them. See women as clients or market segments, not beneficiaries of devel-opment projects;

• Decentralize operations so that banking is convenient for women borrowers, with convenientlylocated or mobile units;

• Actively seek out women clients in the areas where they live and work;• Advertise financial services through channels to which women have access;• Provide intensive practical training for developing a motivated cadre of workers and organizers;• Mainstream gender in the MFI through sensitization and the hiring of female staff;• Consider the appropriateness of targeting women only;• When possible, incorporate client participation in processes such as product design, monitor-

ing, and evaluation;• Reduce transaction costs for clients through efficient and streamlined operations;• Charge interest rates sufficient to cover the full costs of delivering the product; and• Employ banking rigor and disciplined operations.

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PARTICIPATORY PROGRAMME DESIGN: CASE TWO

The Internal Learning System (ILS) is a participatory impact assessment and planning system thatemploys pictorial diaries that are kept at various levels in an MFI’s structure: members, groups,area centers, and/or headquarters. Developed and field tested in India, the ILS diary allowsmembers of microfinance groups to track changes in their lives on a number of fronts, which theMFI or the members themselves can select. This data is then collected and analyzed by membersat the group level, and the aggregated information sent upwards to the next level, until it reach-es MFI headquarters. ILS users at each level are thus the first to learn about programme impactand performance, and, because ILS links impact assessment results to user-driven training andplanning, alter their operations accordingly. ILS is also useful in that it tracks changes over time,allowing users to establish a baseline against which to periodically measure progress. Andbecause ILS is flexible in terms of both structure and content, MFIs can tailor it for use accordingto their time and human resource capacities.

MFIs in India have used ILS to improve programme operations and better gauge client needs inorder to formulate appropriate programmatic responses. In one NGO, women were repeatedlyrecording diversion of their business loan to consumption use in their diaries, specifically pur-chase of school supplies and uniforms. The organization’s planning solution was to create a spe-cial savings instrument for members with school-age children that would be cashed in at thebeginning of the school term.

For women users, the ILS diary serves as a record of their living conditions. Women in India havetherefore been able to use it to lobby for eligibility for government asset programmes, electrici-ty, looms, housing and livestock grants and issuance of ration cards. Among ILS users trackingempowerment indicators, there has also been a marked decrease in the incidence of domesticviolence and male addictions and non-support, and a steady rise in the number of women speak-ing out in public meetings, approaching institutions and organizing other women.

Source: Helzi Noponen

31

art I delineated how microfinance helps women better fulfill theirproductive and reproductive responsibilities by easing capital con-straints and providing them with an improved set of options for

managing household resources. However, financial constraints representonly one category of the limitations under which women may labour.Minimalist MFIs believe in indirectly addressing these other constraints,such as lack of education and training, by helping women accumulate thefinancial means to address them on their own. Other institutions advocatedirectly addressing women’s nonfinancial constraints through supplemen-tary nonfinancial services, in areas such as literacy, health, technologytransfer, and business development. This section explores how three majortypes of nonfinancial services – social intermediation, business develop-ment services (BDS), and training – have been adapted to meet women’sgender-specific needs relating to both their income-earning and householdmanagement roles.

The delivery of financial versus nonfinancial services is a vital preliminaryissue. Many MFIs began as credit programs implemented by multipurp ose

Nonfinancial Services

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PA RTNERING TO FIGHT HIV/AIDS

MFIs across Africa are founding partnerships with other NGOs tocombat the HIV/AIDS pandemic, which places a double strain onwomen: once through infection, and twice through the burden ofcare for sick relatives and orphans. In response to requests bytheir clients, several institutions have invited health workers fromreputable care and counseling organizations to accompany theminto the field. FINCA Uganda, for example, works with theChurch of Uganda Doctors to conduct AIDS education seminarsduring Village Bank meetings. Clients request the seminars andcompensate the trainers for their time and travel. In Togo,ACOMB partnered with two hospitals that can train clients onbasic health and HIV issues, including how to take care of rela-tives with AIDS. The partnership received very positive feedbackfrom clients and has grown into a network of NGOs operating inthe area. Similar partnerships have been launched by MFIs inother parts of Africa in response to growing numbers of widowsand clients caring for orphans in their lending groups, as well asrising exit rates due to the resulting economic stresses.

Source: Parker, Singh, and Hattel 2000.

NGOs. However, virtually all microfinance programs that have successfully transformed into financial-ly sustainable MFIs have found it beneficial to separate the delivery of financial from nonfinancial serv-ices. In the case of NGOs that have transformed into licensed MFIs, the parent NGO often retainedresponsibility for providing training and other nonfinancial services not traditionally delivered on a fee-for-service basis. A viable alternative is the partnering of an MFI with an NGO specializing in nonfi-nancial services. Such a division of labour has several advantages. The part nership:

• Frees up resources for social programmes that, unlike microfinance, are not likely to fund them-selves;

• Avoids a drain of funds from microfinance programmes, improving their chances of achievingsustainability and for expanding their portfolios to serve more clients;

• Protects social programmes from the draining of management energy and attention that canoccur during rapid growth of the credit portfolio;

• Capitalizes on the substantially different skill sets of loan officers, business development spe-cialists, and health or social workers, encouraging high-quality delivery of both financial andnonfinancial services by allowing them to specialize in their respective areas of expertise; and

• Avoids the “institutional schizophrenia” that can result when an organization simultaneouslypursues charity- and business-oriented goals.64

Regardless of which organization undertakes delivery, effectively serving female clients dictates thatnonfinancial services recognize and accommodate women’s multiple responsibilities, not imposeadditional burdens on them. Women’s time, mobility, and educational constraints must be taken intoaccount when designing nonfinancial services, just as they are with financial products and services.

Social Intermediation 65

Social intermediation is a common component of group-based methodologies, and can be defined asthe investment and methods used to build social capital among group members. Sometimes, suchsocial assets are developed in order to prepare clients for formal financial transactions, which oftenentail the clients themselves taking on important management and ownership functions in the newfinancial institution. Village banking methodology uses this rationale. At other times, especially withclients from economically and socially excluded sections of society, social intermediation aims at build-ing their human and social assets in order to achieve broader social goals, notably women’s empow-


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A PRACTITIONER TALKS ABOUT INTEGRATED DELIVERY

“One should be very cautious in [delivering social and financial services] because you can spreadyour institution so thin, doing so many things, that it’s dangerous. One of the things that we havelearned is to separate not only the accounting of each programme, but also the responsibilitiesassigned to the person, or to the human resources. They have to be appointed with specific teams,with specific people that are doing specific things, and not all of them doing everything. That’s oneof the things that will keep your institution operating in a very efficient way. I am absolutely awarethat it would be easier for the institution to provide only financial services. But, due to the kind of peo-ple we are working with, [these other services] help our clients to overcome the exclusion in whichthey are living. They are very poor. They do not have easy access and do not know how to benefitfrom all the services that are in the field; we need to push them to have full advantage of the servic-es to which they are entitled.” – Carmen Velasco, co-founder of Pro Mujer Bolivia

Source: Microcredit Summit Campaign 2000.


erment. Such is the case with the Grameen Bank’s “Sixteen Decisions,” which aims to change mem-bers’ attitudes and outlook in order to enhance social empowerment. Other institutions perform socialintermediation through provision of social services such as health care, education, or business devel-opment. They may also serve as links between clients and government agencies or NGOs providingsuch services.

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SOCIAL INTERMEDIATION, SAVINGS, AND CREDIT FORADOLESCENT GIRLS

In 1998, Kenya’s K-REP and the Population Council, a U.S.-based NGO, launched “Tap and RepositionYouth” (TRY). TRY is an innovative project aimed at extending microfinance services to out-of-school ado-lescent girls and young women, to improve their livelihood opportunities. The Population Council and K-Rep were interested in exploring the feasibility and viability of such programmes, which extended micro-finance services to a relatively new constituency.

During the two-year pilot phase in Nairobi, over 100 girls participated in a group-based lending schemeand received training on basic business skills, group dynamics, life skills, and reproductive health. ByApril 2001, programme participants had taken loans totaling nearly US $19,000 and accumulated sav-ings of approximately $2,500. While some girls used the loans to set up hairstyling, vegetable selling,or tailoring businesses, others undertook ventures that are less traditional for women in Kenya, such asbattery charging, welding, and operating telephone bureaus.

The project recorded high repayment rates during the first six months following loan disbursements, buttook a downward trend thereafter. One contributing factor was the extended absence of a credit officerwhom the girls had grown to like and trust. Once K-Rep made a number of adjustments to the pro-gramme, including hiring another credit officer and organizing refresher training for new participants,repayment rates, group savings, and attendance at weekly meetings improved greatly.

A number of lessons regarding the design of savings and credit projects for adolescent girls have beenlearned from this experiment. First, the involvement of an experienced microfinance institution is critical.The few microfinance projects for adolescents that have been initiated in the region have not been suc-cessful, largely because they were implemented by organizations with little or no experience in microfi-nance. Because of the special needs of adolescents, however, project staff found that they also neededto be affiliated with professionals from the fields of health care, social work, and law. Teen participantsoften looked to credit officers for more than help in managing their money; such professional links helpedthe officers provide advice on psychological and social issues that were often outside their area ofexpertise. Supportive and comprehensive training were also found to be pivotal in satisfying partici-pants’ need for information on both financial and nonfinancial issues.

Due to the promise shown by this pilot, the Population Council and K-Rep are now in the process of expand-ing this programme to a larger number of girls and to rural areas. In India the Council is undertaking a sim-ilar livelihoods project for girls in conjunction with SEWA. The hope is that through increased social mobil-ity and the control of income, such inputs can assist young women in delaying marriage and childbearing,and give them increased bargaining power in future sexual, marital, and parenting relationships.

Source: Population Council.

Group-based methodologies give women opportunities to forge important social connections andobtain information and services, which are key goals of strategies aimed at increasing women’sempowerment and risk management ability. At the same time, groups may lower administrative costsfor MFIs.

Business Development Services (BDS)

BDS includes marketing, product development, quality control, organizational development, and train-ing in general business or sector-specific skills. Most of these services are considered either strategicor operational depending on how and to whom they are delivered. For example, improved sourcingmay be considered operational if it identifies cheaper, closer suppliers, but strategic if it focuses onbuilding broader backward linkages that allow development of new product lines. Similarly, qualitycontrol may be an operational issue for established businesses, but a strategic one for smaller enter-prises attempting to enter a higher-value market segment. The strategic or operational nature of anintervention may also depend on whether it is conducted at the level of an entire sector or an indi-vidual enterprise.

Increasingly, effective implementation means adherence to three core principles in the market devel-opment paradigm of BDS.66

• BDS should be demand-led. Like financial products and services, the market for these servicesshould be clearly defined and the services designed in response to the expressed needs of thismarket.

• BDS should be sustainable and cost-effective. Once the market for these services is sufficientlydeveloped, clients’ willingness to pay can be taken as both an indicator of the quality of theseservices and a rough proxy for impact.

• BDS should achieve significant outreach. Evidence indicates that customers show a greater will-ingness to pay for BDS when the services are customized to the needs of their particular firm.BDS products must therefore be flexible enough to be effectively tailored to serve clients withdiverse needs.


34

A SUBSECTOR APPROACH

The subsector approach starts by organizing workers (self-employed or otherwise) in a given subsec-tor and relying on them, rather than on statistics or external analysts, to identify interventions neededin their subsector. Organizations experienced in this method usually begin by assisting workers toovercome specific, practical obstacles, such as acquiring retail licenses or establishing transport sys-tems. They then move on to tackling more systemic, structural constraints, like lobbying for legal orregulatory changes benefiting workers in the subsector. This type of BDS thus aims not only at improv-ing workers’ economic prospects, but also at increasing their organizational and demand-makingcapacity.

The method’s participatory element is also particularly useful for identifying gender-based constraints.Two of the pioneers, SEWA in India and BRAC in Bangladesh, have organized women workers insectors including dairy, poultry, sericulture, and a number of trades. The approach has also been usedwith women active in cassava and shea nut processing in West Africa, fabric waste recycling in thePhilippines, and fruit export in Chile. In each case, the application of participatory methods to sub-sectoral work has allowed organizations to resolve a difficult dilemma: the identification of BDS thatare tailored and appropriate, yet capable of achieving scale and outreach at the same time.

Source: Chen 1996.


In addition, certain kinds of BDS play important roles in helping women overcome gender-based con-straints to entrepreneurship.

• Sector-specific skills training overcomes educational and cultural constraints by helping womenmove into higher-return sectors as well as into higher-value functions within a given sector.67

• Entrepreneurship training for girls provides them with education, self-confidence, and role modelsduring their youth. Studies in China, Latin America, and Europe unanimously reveal these as themost important success factors for women entrepreneurs.68

• Mentoring is one way that institutions have provided clients with follow-up services, either in theform of one-on-one advice or group training. Mentoring also helps clients build a network that theycan utilize in their business activities. MFIs can reduce the cost of delivering this service by involv-ing volunteers as mentors.69

• Services that might not ordinarily be considered BDS, notably child care, go a long way towardlifting gender-based constraints on women microentrepreneurs.70 Making provisions for women’sdomestic tasks is especially important because this work is often shifted onto girls when adultwomen must work outside the home, with potentially negative impacts on their education.

Training

A third type of nonfinancial service, training, can be a form of BDS. But it can also address myriadtopics unrelated to clients’ enterprises. If female clients are initiating a formal credit relationship forthe first time, some form of training is critical and should be approached in segments. Initial trainingmight focus on credit consciousness, informing women about what is expected of them in the pro-gramme, and how to be good savers and borrowers. This segment would be tailored to the pro-gramme's own requirement and might include the:

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BDS THAT ADDRESSES GENDER CONSTRAINTS

The Independent Business Enrichment Center (IBEC) in South Africa is piloting business development serv-ices that take an innovative approach to addressing women’s gender-related constraints. Violence is oneof the greatest problems faced by women in South Africa: domestic violence is estimated to exist in 78 percent of all households, and one out of three women are raped in their lifetimes. IBEC’s investigations ofdomestic and public violence against their women clients revealed that it took a heavy toll not only on theirpersonal lives but also on their ability to run profitable businesses. Women are disproportionately target-ed in muggings and holdups on business premises or on their way to or from the bank, decreasing theirhours of operation, increasing their security costs, and suppressing the profitability of their businesses.Physical, sexual, and psychological violence at home had repercussions including physical disability; fearof retribution resulting in limited mobility, indecision, lack of initiative; and absence of control over finan-cial decisions.

In order to empower women to overcome this gender-related obstacle, IBEC has developed a new mod-ule for its women’s enterprise development course that adds training on gender issues, life skills, and vio-lence against women (including self-defense). In addition, the case studies, examples, and other materi-als developed for this module were also integrated into IBEC’s specialized courses in business start-upand business management. The new information includes guidelines for getting help from public author-ities, NGOs, and other institutions; police station connections and NGOs contacts; pamphlets on violencewith tips for prevention; and information on security companies and armed guards. The reaction to theinclusion of these topics from women clients has been extremely positive. A number of other businesstraining organizations and donor agencies have also voiced interest in replication of this exercise.

Source: Esim 2001.

• Credit process, including procedures, policies, and responsibilities;• Credit plan, including the credit application form, description of the business, financial infor-

mation, marketing, and management; and, if applicable,• Group formation, including group dynamics, empowerment, and responsibility to peers in the

group.

Training of this type is crucial, whereas training in accounting and bookkeeping may not be necessaryfor small-scale vendors and similar businesses.71

Some lending methodologies include training sessions on other topics (such as health, literacy, andnumeracy) as part of the credit delivery. This may be particularly important in remote areas wherewomen have little access to these opportunities and information. UNICEF, for example, includes liter-acy training in many of its microfinance programmes, and has used this as an opportunity in UpperEgypt and Yemen to provide illiterate women with a minimal education. In such cases, where cost-recovery has been very difficult to achieve, training may be provided on a subsidized basis inde-pendently of the microfinance programme. However, providing these services directly will result ininefficiencies if clients’ real need and motivation for joining the programme are financial. Therefore,institutions must be mindful of certain principles when designing training programmes.


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FLEXIBLE TRAINING FOR BUSY BUSINESSWOMEN

In addition to loans, the NGO FACES in Ecuador offers flexible training options for womenmicroentrepreneurs. In the three days it takes for a loan to be approved, FACES offers twothree- and six-hour training workshops on credit management and self-esteem, during whichthe credit application is evaluated. Noting women’s long working hours, which leave littletime for attending supplementary workshops, FACES offers additional follow-up training on apartial attendance basis. Each month, clients attend one three-hour class and complete nineworking units at home according to their own schedule.

Several assessments and evaluations have led FACES to conclude that while access to creditand higher income make decisive contributions to women’s financial autonomy, they alone can-not help women forge better business and personal relationships. The organization thereforestrongly believes in the utility of training; however, client attendance is not a prerequisite for aloan, nor does it delay loan disbursal. Despite the optional nature of these training sessions,76 per cent of FACES’ clients attend at least one workshop, evidence that they place value ontraining opportunities as well.

Source: FACES and Intercambio.


• Programmes should be flexibly designed so that training can be integrated when needed.Training must be tailored to the programme and the women, and their input should be solicit-ed when deciding on the topics to be addressed.

• The timing of training sessions should be decided in consultation with the clients, in order tomitigate women’s time constraints. Course schedules have to work not only around the enter-prise responsibilities of the borrower, but also around her household responsibilities.

• Training sites should be local, reducing women's transaction costs to attend. Courses thatrequire overnight stays or distant travel present additional obstacles to women wishing toattend.

• The training methodology used should be appropriate for the target clients given their levels ofliteracy or education. Informal education techniques using participatory and visual methodscan be especially effective for adult audiences; and

• Female as well as male entrepreneurs should be used in illustrations, and language referringonly to men should be eliminated.

In conclusion, nonfinancial services such as social intermediation, BDS, and trainingare important components of the microfinance movement. However, virtually all microfi-nance programmes with the goal of financial viability have found it necessary to separate their mainbusiness of financial intermediation from nonfinancial services, due to the social orientation of the lat-ter. Whether they are offered as part of an integrated service delivery package or through partner-ships with NGOs, concerted efforts should be made to ensure that nonfinancial services are demand-driven and tailored to meet the time, mobility, and education constraints of women clients.

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AN EXAMPLE OF INTEGRATED DELIVERY

Freedom from Hunger’s Credit with Education programme is an integrated package of micro-credit plus training, on topics including health and nutrition, microenterprise, and creditgroup management. Because Freedom from Hunger is committed to integrated delivery ofcredit and education, part of each group meeting is set aside for “learning sessions.” Topicsare identified by group members in conjunction with programme staff and presented in aninteractive, problem-solving manner suited to adult learners. In this way, Credit withEducation seeks to support women in both their productive and reproductive roles.Evaluation studies have consistently shown improved knowledge of health practices amongwomen clients, especially with regard to infant and child care. They have also reported thatthe credit component has enabled women to increase the profit margins and scale of theirenterprises, sometimes by as much as 80 per cent. Thus, the programme not only equipswomen to improve their caretaking abilities, but also gives them the means to do so.

Source: Freedom from Hunger’s Credit with Education

38

s controllers of financial resources, donors ultimately determine whichinstitutions receive grant funding, for how long, and for what pur-

pose. Donors influence what services are expanded and whenoutreach is broadened, as well as contribute to innovation in operationsand to action research. How a donor works influences whether those serv-ices have a permanent impact, and whether those innovations are adopt-ed by many institutions and mainstreamed into their operations.

Donors and Broadened Outreach

Donors have an important role in ensuring that poor women continue tobenefit from financial services. This role is enhanced by supporting insti-tutions committed to:

• Achieving and maintaining financial sustainability, and thereforepermanent, continuous services to female clients;

• Deepening outreach to underserved women by developing prod-ucts that can attract them as customers; and

• Promoting gender equity and gender analysis in the workplace.

Donors and Innovation

Donors are also strategically positioned to support innovation in the field.Some practical guidelines for donors are presented below:

• Support the innovators. The innovators in microfinance are practi-tioners, not donors. Donor operations may require readjustment toreverse the focus.

• Energize practitioners to stretch their own boundaries. Innovationdoes not happen by viewing MFIs as the implementers of donorplans, no matter how well conceived. When MFIs initiate newproducts or services based solely on the donor demands, theresults tend to be unsuccessful and can even damage the institu-tion’s existing operations. In addition, truly innovative and suc-cessful microfinance institutions tend to reject this type of donorinfluence, leaving the donor with partners who are either “grant-hungry” or have unclear organizational direction, or both.

• Allow MFIs to decide who they will reach and how. Although it maybe tempting for many donors concerned with gender to channeltheir resources to services for women only, this limits the MFIs’potential market. Further, when such targeting conflicts with the fun-damental vision of the MFI, it is generally unsuccessful or unsus-tainable.

39

Role of Donors

P A R T V I

A

• Seek out and support MFIs that have objectives compatible with donor goals. Unless they arefundamentally rooted in the MFI’s vision and essential to its operation, quotas regarding gen-der (or geographical limits, poverty levels, or other market restrictions) tend to undermine theMFI’s objectives.

• Negotiate performance targets based on the MFI’s own business plan. Setting performance tar-gets is appropriate only when both parties are fully committed to reaching those targets; i.e.when the MFI does not see the grant as an inducement, and the donor does not use it as one.Setting performance targets based on the MFI’s business plan helps clarify and strengthen theMFI-donor relationship. Donors should keep in mind that the upper level for targets in a grantagreement should be what the donor accepts as a minimum for the investment to be consid-ered worthwhile, not the ideal level represented in the business plan.

Innovation in Operations. Grants or subsidies on a limited basis can also be provided for insti-tutions developing new technologies, systems, and products, or testing markets.

Innovation in Action Research. Donors help advance the state of industry knowledge throughresearch, evaluation, and publication. Donor agencies can leverage the broad perspectives affordedby their contacts with many institutions to disseminate lessons and best practices in the area of gen-der and microfinance. This position also enables them to facilitate information sharing with differentactors in the field, helping build platforms for lobbying and advocacy. Lastly, action research can helpdevelop replicable models for the sustainable delivery of gender-sensitive products and services.


40

ENCOURAGING INNOVATION TO BETTER SERVE POOR WOMEN

The Consultative Group to Assist the Poorest (CGAP) is a multi-donor initiative with a mission toimprove the capacity of MFIs to deliver flexible, high-quality financial services on a sustainable basisto the poor, especially the very poor. As part of its efforts to foster industry learning from initiatives atthe field level, CGAP has initiated the Pro-Poor Innovation Challenge. This is an awards programmeseeking to recognize innovative activities promoting a distinct poverty focus. The programme providesgrants of up to $50,000 to small MFIs demonstrating effective models for reaching very poor clients,reducing their vulnerability and increasing their economic well being. Past awardees have includedinstitutions piloting and perfecting product innovations such as insurance, smart cards, and educationinterventions, as well as those adopting innovative methodologies to reach underserved populationslike nomadic and indigenous peoples. Since women constitute some of the most marginalized sectorsof these populations, MFIs engaged in innovative activities to ensure long-term gender transformationsboth within their institutions as well as in the communities they serve are encouraged to apply.

Source: Syed Hashemi, CGAP.


Donors and Impact AssessmentsDonors investing in microfinance should be convinced of its effectiveness as a poverty alleviation tool.Efforts to measure the impacts of these interventions should be practitioner-oriented, utilizing method-ologies designed to improve the quality of the provision of these services to poor women clients.Specifically, donors should:

• Use approaches that help MFIs better understand their female clients’ needs, enabling them todesign products and services that address gender differences;

• Pilot low-cost tools and methodologies focused on improving service delivery rather than prov-ing impact; and

• Bear the cost of these studies or of the implementation of monitoring systems to track this data.

In conclusion, donors can play a crucial catalytic role in encouraging, defining, anddeveloping MFIs. Donors can:

• Make a difference between the success or failure of MFI programmes;• Either encourage innovation or hamper changes beneficial to MFIs or to gender-sensitive

delivery; and• Provide funds for research that identifies, improves upon, and builds successful programmes.

41

A UNIQUE PROJECT: MICROSAVE OF EAST AFRICA

MicroSave-Africa is a unique project that promotes the development of savings and other moreclient-responsive financial services among microfinance institutions in East Africa. To achieve thisgoal, the project has successfully combined primary field-level research with the poor, actionresearch with MFIs, curriculum development, and information dissemination. While the field-level research entails extensive interviews with poor people (including microfinance clients) tobetter understand their financial behaviour and risk profile, the action research involves helpingMFIs to better listen to clients and design appropriate financial products based on better mar-ket information. Both research activities complement each other and directly feed into curricu-lum development and dissemination efforts.

Through MicroSave-Africa's innovative training course "Market Research for MicroFinance"MFIs:• have experienced significant shifts in the way they think about their clients; • have learned to talk with their clients more effectively; and • are applying lessons about clients and using the specific techniques in a variety of ways.

MicroSave-Africa is supported by DfID, UNDP, and CGAP.

Source: Willis Osemo, MicroSave-Africa.

43

iven the predominance of women among theworld’s poor and the critical contributions theymake to both the household and the greater econ-

omy, it is important that practitioners and donors takeissues of gender into account in designing microfinanceprogrammes. The best practices outlined in this paper,which represent a broad consensus, should be followed:

• MFIs must design products and services thatrespond to women’s distinct needs, goals, andconstraints with respect to the use of financialservices. Gender-responsive product and servicedelivery are important to ensure that women canbenefit from access to credit, but they do not haveto be deleterious to financial perf ormance.Rather, demand-driven products that meetwomen’s needs can enhance an MFI’s bottomline.

• In addition to earning income, poor women pro-tect their families’ welfare by managing risk intheir household economic portfolios. MFIs canoffer savings and insurance services to providevaluable assistance to women wishing to preparefor the possibility of future economic shocks.Special kinds of loans speed recovery from suchshocks after they occur. Savings facilities areoften especially valuable to the poorest women,many of whom cannot gain access to or affordthe risk of taking a loan for income-generationpurposes. As with credit, savings and insurancetailored to women’s specific needs are most like-ly to help MFIs both scale up and reach downwith their services.

• The way in which a product is delivered is asimportant as the features of the product itself inensuring accessibility and attractiveness forwomen clients. Because of women’s time andmobility constraints, MFIs may have to be moreproactive in recruiting women as clients thanmen. Female loan officers may be necessary toserve female clients where cultural norms limitmale-female interaction.

• In addition to financial services, many MFIs offera range of nonfinancial services, often in part-nership with specialized NGOs. Social interme-diation, business development services, and train-ing are three types of nonfinancial services mostcommonly offered in conjunction with microfi-

nance. All of them complement financial servicesby directly targeting the many nonfinancial con-straints under which women labour.

Donors can exert considerable influence over the suc-cess or failure of the MFIs they fund. Donors are alsouniquely positioned to advance the state of industryknowledge by supporting innovation in MFI operationsand action research, and by documenting and dissemi-nating the learning from both. Innovation and knowl-edge dissemination will be necessary to help womenovercome cultural, legal, and other types of constraintsin the struggle to improve their livelihoods.

Summing Up

G

44

1 UNDP, 1995, Human Development Report, Oxford University Press,New York. [Return]

2 Joni Seager, 1997, The State of the Women of the World Atlas, PenguinBooks, London. [Return]

3 UNDP, ibid. [Return]

4 Jeanne Downing, 1990, Gender and the Growth and Dynamics ofMicroenterprises, GEMINI Working Paper No. 5, GEMINI, USAID,Washington, D.C. [Return]

5 L. L. Lim, 1996, More and better jobs for women, an action guide, ILO,Geneva. [Return]

6 Stuart Rutherford, 1999, The Poor and their Money: an essay aboutfinancial services for poor people. Working Paper Series No. 3. Financeand Development Research Programme, Institute for Development Policyand Management, University of Manchester. Manchester, U.K. [Return]

7 Jennefer Sebstad and Monique Cohen. 2000, “Microfinance, RiskManagement, and Poverty,” USAID, AIMS, Washington, D.C. Available athttp://www.worldbank.org/poverty/wdrpoverty/ background/cohene-tal.pdf. [Return]

8 USAID, 1999, “Reaching Down and Scaling Up: Microenterprise ResultsReporting for 1998,” Washington, D.C. [Return]

9 Naila Kabeer, 1998, “Money Can’t Buy Me Love”?: Re-EvaluatingGender, Credit, and Empowerment in Rural Bangladesh,” IDS DiscussionPaper No. 363, Institute of Development Studies. Brighton, U.K.; GrahamWright, Deborah Kasente, Germina Ssemogerere, and LeonardMutesasira, “Vulnerability, Risks, Assets And EmpowermentæThe Impact OfMicrofinance On Poverty Alleviation,” report commissioned from Micro-Save Africa and Uganda Women’s Financial Trust for the WorldDevelopment Report 2001, available athttp://www.uncdf.org/sum/mcsv/studies_uwft_final.html; Sebstad andCohen, ibid. [Return]

10 M. Cohen and J. Sebstad, 1999, “Can Microfinance Reduce theVulnerability of Clients and Their Households?” Prepared for the WorldBank Summer Research Workshop, Poverty and Development, July 6-8,1999, Washington, D.C. [Return]

11 S. V. Sethuraman, 1998, “Gender, Informality, and Poverty: A GlobalReview” (draft). World Bank, Poverty Reduction and EconomicManagement Department, and WIEGO, Washington, D.C. Available athttp://www.wiego.org/papers/sethcontents.html. [Return]

12 Mark M. Pitt and Shahidur Khandker, 1998, “The impact of group-based credit programmes on poor households in Bangladesh: does thegender of participants matter?” Journal of Political Economy (October).[Return]

13 Carol E. Levin, Marie T. Ruel, and Saul S. Morris, 1999, “Workingwomen in an urban setting: traders, vendors and food security in Accra,”World Development (November). [Return]

14 IFAD, 1998, Rural Women in IFAD’s Projects: the Key to PovertyAlleviation, Rome. [Return]

15 Downing, ibid. [Return]

16 Judith Brandsma and Rafika Chaouli, n.d., Making Microfinance Workin the Middle East and North Africa, World Bank, Private and FinancialSector Development Group, Human Development Group, Middle East andNorth Africa Region, Washington, D.C. [Return]

17 Specifically, the categories examined are, in Africa, large and medium-sized institutions (with loan portfolios of more than $900,000); in EasternEurope, institutions of all sizes; in Latin America, medium-sized institutions(with loan portfolios of between $1.5 million and $10 million). All thesecategories of institutions offer a broad range of loan sizes relative to percapital GDP. All categories given according to the MicroBanking Bulletin’speer group criteria. MicroBanking Standards Project, 2001, MicroBankingBulletin (April), CALMEADOW and CGAP, Washington, D.C. [Return]

18 Sebstad and Cohen, ibid. [Return]

19 MicroBanking Standards Project, 2000. [Return]

20 The MFI peer groups referred to here are categories established by theMicroBanking Bulletin, based on criteria such as region, size of loan port-folio, and size of loans compared to per capita GDP. Explanations of allpeer groups are published in each edition of the MicroBanking Bulletin,available at http://www.microbanking-mbb.org. [Return]

21 The key profitability ratio is adjusted return on assets (AROA), definedas adjusted operating income divided by total average assets. Adjustmentsinclude inflation, subsidies, in-kind donations, and loan loss provisions andwrite-offs. The Bulletin adjusts financial data to ensure compatibility acrossregions. [Return]

22 Depth of outreach is measured by average outstanding loan balanceas a percentage of per capita GDP, which acts as a rough proxy for thepoverty level of the borrowers. The smaller the percentage, the greater thedepth of outreach. [Return]

23 J. D. Von Pischke, 1991, Finance at the Frontier: Debt Capacity andthe Role of Credit in the Private Economy, EDI Development Studies. TheWorld Bank. Washington, D.C. [Return]

24 For example, averages for nine developing countries and 13 industrial-ized countries both revealed that women do two-thirds of the total amountof unpaid work. Seager, ibid. [Return]

25 Rani Deshpande and Deena Burjorjee, 2002, Increasing Access andBenefits for Women: Practices and Innovations among MicrofinanceInstitutions, UNCDF/SUM, New York. [Return]

26 Lisa Daniels and Donald C. Mead, 1998, “The contribution of smallenterprises to household and national income in Kenya,” EconomicDevelopment and Cultural Change (October). [Return]

27 UNDP, 1999, Human Development Report, Oxford University Press,New York. [Return]

28 Downing, ibid. [Return]

29 Jeanne Downing and Lisa Daniels, 1992, “The Growth and Dynamicsof Women Entrepreneurs in Southern Africa,” GEMINI Technical ReportNo.47, USAID. Washington, D.C. [Return]

30 Frank F. Rubio, Microenterprise Growth Dynamics in the DominicanRepublic: The ADEMI Case, GEMINI Working Paper No. 21, USAID.Washington, D.C. [Return]

31 This framework is based on one developed by Stuart Rutherford forproviding microfinancial services to the poor. Rutherford, ibid. [Return]

32 Ernst and Young, 1988, “Private Enterprise Development: GenderConsiderations,” USAID, Bureau for Public Enterprise/Office of Women inDevelopment, Washington, D.C. [Return]

33 I. Matin, D. Hulme, and S. Rutherford, 1999, Financial Services for thePoor and the Poorest: Deepening Understanding to Improve Provision,Finance and Development Programme Working Paper Series, Institute ofDevelopment Policy Management, University of Manchester, Manchester,U.K. Available on-line at:http://www.man.ac.uk/idpm/idpm_dp.htm#F_DWP. [Return]

Notes

45

34 Cohen and Sebstad, ibid. [Return]

35 World Bank, 2000, World Development Report 2000-2001, OxfordUniversity Press, New York. [Return]

36 Sebstad and Cohen, ibid.; UNDP, 1995, ibid. [Return]

37 Hassan Zaman, 1999, “Assessing the Impact of Micro-Credit onPoverty and Vulnerability in Bangladesh,” Policy Research Working PaperNo. 2145,, The World Bank, Development Economics, Office of the SeniorVice President and Chief Economist, Washington, D.C. [Return]


39 Zaman, ibid. [Return]


41 Matin et al., ibid. [Return]

42 Wright et al., ibid. [Return]

43 The Center for Urban Development Studies, 2000, Harvard GraduateSchool of Design, Housing Microfinance InitiativesæSynthesis and RegionalSummary: Asia, Latin America, and Sub-Saharan Africa with SelectedCase Studies, Microenterprise Best Practices Project, DevelopmentAlternatives Inc. (DAI), USAID, Washington, D.C. Available athttp://www.gsd.harvard.edu/cuds/microf/cuds_microf.pdf. [Return]

44 http://www.villagebanking.org/where/americas_peru.htm#_ftn2[Return]

45 Rutherford, ibid. [Return]

46 Zaman, ibid.; Sebstad and Cohen, ibid. [Return]

47 Rutherford, ibid. [Return]

48 Graham Wright, 1998, “Moving the Mountains: Savings as a HumanRight in Bangladesh,” Micro-Save Paper, United Nations CapitalDevelopment Fund, New York. Available at: http://www.uncdf.org/sum/mcsv/ftp_downloads/MicroSavePaper1.pdf.[Return]

49 Linda Mayoux, 2000 (a), “From Access to Empowerment: Wideningthe Debate on Gender and Micro-finance,” Austrian Journal ofDevelopment Studies (October, forthcoming). [Return]

50 Graham Wright, 1999, “A Critical Review of Savings Services in Africaand Elsewhere,” Microsave Study, UNCDF, Special Unit on Microfinance,New York. Available at: http://www.uncdf.org/sum/mcsv/wright.html. [Return]

51 Linda Mayoux, 2000 (b), “Microfinance and the Empowerment ofWomen: A Review of the Key Issues,” ILO, Social Finance Unit, Geneva.Available at: http://www.ilo.org/public/english/employment/finance/papers/mayoux.htm. [Return]

52 Mike J. McCord, n.d., “Microinsurance Centre Policy Statement: MFIsand Microinsurance,” Micro-Save Africa Microinsurance Centre, Kampala,Uganda. Available at http://www. microinsurancecentre.org. [Return]


54 Detailed analyses of these two plans are available athttp://www.microinsurancecentre.org. [Return]

55 Mike J. McCord, 2001, “Risk Mitigation and the Poor,” presentationmade at UNCDF Week in Residence, 11 May. [Return]

56 Sebstad and Cohen, ibid.; Fouzi Mourji (forthcoming, 2001),Microstart Morocco AIMS Impact Assessment. UNCDF/SUM. New York.[Return]



59 Zaman, ibid. [Return]

60 C. Jean Weidemann, 1992, Financial Services for Women, GEMINITechnical Note No. 3, USAID, Tools for Microenterprise Programs,Financial Assistance Section, Washington, D.C. [Return]

61 Ibid. [Return]

62 Ibid. [Return]

63 Alessandra Del Conte, 2000, “Participatory Governance andManagement Structures in Microfinance: the Case of Janashakti,”International Coalition on Women and Credit, New York. [Return]

64 Rahul Dhumale, Amela Sapcanin, with Judith Brandsma, n.d., SpinningOff for Sustainable Microfinance: Save the Children Federation into JWDS,Al Majmoua, and FATEN. Case study, UNDP, Regional Bureau for ArabStates, and World Bank, Middle East and North Africa Region,Washington, D.C. [Return]

65 This section is drawn from Sebstad and Cohen, ibid., and ElaineEdgecomb and Laura Barton, 1998, Social Intermediation andMicrofinance Programs: a Literature Review, Microenterprise Best Practices,Development Alternatives Inc. (DAI), USAID, Washington, D.C. [Return]

66 Committee for Donor Agencies for Small Enterprise Development,2000, Business Development Services for Small Enterprises: Guidelines forDonor Intervention, World Bank Group, Washington, D.C.; LeneMikkelsen, 2000, “Marketing Services for Microentrepreneurs: Recent IDBExperience and New Initiatives,” Inter-American Development Bank,Washington, D.C. Available at:http://www.ilo.org/public/english/employment/ent/sed/bds/seminar/publ/mikkelse.htm. [Return]

It must be noted, however, that the market development paradigm for BDSdelivery may not be suitable for all environments, especially those charac-terized by poorly developed economies and sparse population. SeeGarrett Menning, 2000, “SEWA Banascraft Project: A Case Study in RuralMarketing,” paper prepared for the “Business Services for SmallEnterprises in Asia: Developing Markets and Measuring Performance” con-ference, Hanoi, 3-6 April. Available at:www.ilo.org/public/english/employment/ ent/papers/indisewa.htm.[Return]

67 Paula Kantor, 1996, “Promoting Women’s EntrepreneurshipDevelopment Based on Good Practice Programmes: Some Experiencesfrom the North to the South,” Working Paper No. 9, Series on Women’sEntrepreneurship Development and Gender in Enterprises, ILO,Employment Sector, Geneva. [Return]

68 Ibid. See also Karin Reinprecht, 2000, “Key success factors for womenentrepreneurs: the experience of the Austrian Development Co-operation,”paper prepared for ILO-Seminar: Business Development Services, Turin, 4-8September. [Return]

69 Kantor, ibid. [Return]

70 Reinprecht, ibid. See also Valeria Budinich and Alexandra OveryMiehlbradt, 1998, “Challenges for Business Development ServicesPrograms,” Women and Microenterprise (October), International Coalitionon Women and Credit, New York; and UNIFEM, 1993, An End to Debt:Operational Guidelines for Credit Projects, New York. [Return]

71 Weidemann, ibid. [Return]


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