From Access to Empowerment: Gender Performance in Microfinance

Posted by: Janiece Greene, Director, Women’s Market, Women's World Banking and Rebecca Ruf, Associate, Capital Markets Group, Women's World Banking

A Women's World Banking client at her shop

Microfinance is best known around the world as a powerful mechanism for low-income women entrepreneurs to lift themselves and their families out of poverty. When women earn, everyone benefits—women focus on improving the lives of their children and families; women repay their loans; women tend to be more loyal customers and to take on greater financial responsibilities of the household. As a result of these dynamics, a majority of MFIs have women as their primary customer base and use “outreach to women” (i.e., percentage of women borrowers) as a proxy for the level of poverty alleviation. However, this indicator only tells part of the story. How well are these women being served? Is simply providing women with access to financial products and services enough to help microfinance organizations meet their double bottom line objectives?

Although women make up a large portion of the industry’s customer base, outreach strategies for the most part have remained gender blind. Women’s World Banking (WWB) believes that microfinance is both a poverty alleviation and empowerment tool for women, which can serve to enhance a woman’s economic position in the household as well as influence how she is perceived by her family, her community, and how she perceives herself. But simply providing access to financial products and services is not enough—to effectively serve the women’s market, the development and delivery of financial products and services must be based on a deep understanding of the gender-based social and economic factors that affect women. 

WWB works closely with its network, which consists of 40 MFIs and banks in 28 countries worldwide, to ensure that with each intervention network members not only retain but also deepen their economic and social impact on women. As such, WWB has acted as a pioneer in the development and tracking of gender-based indicators throughout its network. In parallel the industry has increased its efforts to include social performance into MFIs’ management, reporting, and evaluation systems. However, not all of these initiatives focus specifically on indicators that demonstrate the effect of microfinance on women, and the industry as a whole has not yet adopted a systematic process to identify and institutionalize these indicators. WWB has always been at the forefront of changing the status quo, and is poised to pilot a gender performance monitoring and evaluation framework that will not only help close this gap but will also provide its network MFIs with consistent quantitative and qualitative data that will help them identify new opportunities to more effectively address the needs of women throughout all levels of the organization, from customers to management to staff. 

A comprehensive approach must be considered in building gender-responsive MFIs, but there is no “silver bullet” indicator that will allow the industry to measure the effect of microfinance on women, and so the questions remain—Is there a business case for targeting women as valuable customers and employees and as catalysts for economic change?  Can investing in women provide enhanced financial and social returns to investors?

As an international network that is committed to expanding the economic assets, participation, and power of poor women as entrepreneurs and economic agents by opening their access to finance, knowledge and markets, WWB will continue to advocate for an increased focus on the identification, monitoring and evaluation of gender-based indicators for MFIs. Does your organization have a gender-based approach to monitoring and evaluation?  

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