By Anjali Banthia, Janiece Greene, Celina Kawas, Elizabeth Lynch and Julie Slama; published by Women’s World Banking (WWB); 2011; 17 pages; available at http://www.swwb.org/sites/default/files/pubs/en/solutions_for_financial_inclusion_serving_rural_women_1.pdf
This research by Anjali Banthia et al, uses Uganda as a case study to examine gender-based barriers confronting women in rural areas and the operational challenges faced by microfinance institutions (MFIs) in serving these women. Uganda was chosen as a representative market for the study as 88 percent of its population lives in rural areas, agriculture is the predominant form of economic activity and three quarters of Ugandan women are engaged in agriculture. The study concludes with a call for action to the wider microfinance community to implement strategies to sustainably serve women in rural areas of Sub-Saharan Africa.
The study divides the challenges faced by MFIs in serving rural women into two elements:
1) Demand-side issues: The authors consider gender-based inequalities faced by rural women as the primary factor affecting the demand for MFI services. The study indicates that the community norms within rural Ugandan households confer rights on men as heads of households, owners of assets and decision makers. Women, on the other hand, serve as caregivers, homemakers and a source of labor on farms. These norms have resulted in women assuming additional burdens when adding entrepreneurial activities to their traditional roles: earning disproportionately low levels of income compared to their effort on farms, as their husbands are usually the managers, owners and sellers of the crop; lack of ownership of assets; and lack of control over decision-making in their households. In addition to this, in Uganda, women have a lower literacy rate (64 percent) compared to men (81 percent), thereby making it harder for them to understand loan documentation and creating psychological barriers such as fear and anxiety that prevent them from approaching MFIs to access their services.
2) Supply-side issues: The study also explores operational constraints faced by MFIs that affect their supply of services to rural women. The primary objective for many MFIs is profit-maximization, which drives them to adopt lending methodologies that focus on low-risk, high-profit clients; design products that may not be customer-centric; and serve areas that are easier to access and thus may incur lower transaction costs. The authors argue that all these tendencies lead to MFIs serving predominantly urban areas – as they are easier to access, – and men – as they are more likely to manage cash crops.
Based on the above analysis, the authors examine strategies to overcome these issues to serve the market in a sustainable manner. The authors discuss the importance of governance and leadership within MFIs to ensure that the commitment to serve rural women is developed and communicated across all staff levels. The study proposes the following strategies to combat challenges facing MFIs serving rural women:
1) Developing ‘lifecycle’ products to serve women throughout their lives: Various products can serve women in different stages of their lives, hence supporting their dual role as income generators and caregivers, and enabling them to cope better with financial pressures. These include a savings program to help women achieve their goals based on their stage of life and the ages of their children; health microinsurance to compensate women when tending to themselves or family members in hospital, enabling them to cope with related costs including food, medicines and loss of income arising due to time off from income generating activities; and micropensions and life microinsurance to address costs associated with old age such as healthcare and the risk of losing a spouse.
2) Helping women purchase and retain control over land and other assets: The study recommends MFIs encourage ownership of assets by women by including clauses in their lending policies to ensure that loans are used solely for the benefit of women, such as by directing their use to purchase assets to be held in women’s names.
3) Tailoring marketing messages to resonate with women: The authors recommend sales messaging be tailored to highlight features such as confidentiality and trust; to be personalized based on customers’ lifecycle stages; and to be adapted to serve illiterate women.
4) Adapting sales and delivery approaches to reach women: Providers should sell financial services in places that women are likely to visit such as community events, local markets and places of worship. The use of alternative delivery channels such as mobile phone banking has also been recommended as channels to reach women in rural areas.
5) Investing in hiring and training appropriate sales staff: In order to ensure a more personal experience for clients, the authors recommend hiring staff from local communities, place emphasis on hiring women for customer service roles and highlight the importance of conveying product benefits to clients.
6) Revising lending methodology and collateral requirements to be more inclusive of women: In order to increase the utilization by rural women of financial services provided by MFIs, the report suggests analyzing and extracting loan applicant data to ensure that all sources of income are captured fully, revisions to existing lending methodologies to allow more than one loan per household and replacing traditional collateral requirements through group lending and joint liability.
In conclusion the authors argue that, by providing services that are customer-driven, MFIs can seek to differentiate themselves in the market to reach rural women. By serving this market segment, MFIs can be instrumental in creating a long-term social impact by facilitating the role of women as drivers of rural economic activity.
By Medha Ravi, Research Associate
About Women’s World Banking (WWB):
Women’s World Banking (WWB) is an organization that provides technical and advisory services to its global network of microfinance institutions (MFIs). Founded in 1976, the network is based in New York. WWB seeks to alleviate global poverty by expanding the economic assets, participation and power of poor people, especially women. As of February 8, 2011, WWB reportedly had 39 members working in 28 countries.
Resources:
MicroCapital’s Microfinance Universe Profile: Women’s World Banking (WWB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Women%27s+World+Banking+%28WWB%29
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