Helping Microfinance Institutions Advance Financial Inclusion and Women’s Empowerment
People with low incomes, especially women and other structurally excluded groups, have long been underserved by financial institutions. This limits their potential to capitalize on economic opportunities and forces a majority of them to rely on informal and unregulated financial products.
Financial inclusion refers to efforts to ensure that all people and businesses have access to—and are empowered to use—affordable, responsible financial services that match their needs. These services include savings, credit, and insurance. Universal access to financial services corresponds to Sustainable Development Goals 1 (no poverty), 5 (gender equality), and 7 (reduced inequalities). Financial inclusion, however, does not guarantee gender equality and empowerment.
Microfinance institutions provide low-income earners who have been excluded from the traditional banking system with access to finance. In Burkina Faso, Tanager has, through the Impacting Gender & Nutrition through Innovative Technical Exchange in Agriculture (IGNITE) project, been providing technical assistance to the Professional Association of Decentralized Financial Systems of Burkina Faso (APSFD), an association of microfinance institutions (MFIs), and its members to mainstream gender into their operations. Increasing women’s access to MFI services can enable them to engage in income-generating activities that improve their household well-being and influence the consumption of healthy diets.
Earlier this year, IGNITE held a gender and microfinance training, delivered in three modules, for APFSD and its members. A total of 28 practitioners from different MFIs gained in-depth knowledge on gender mainstreaming in their operations and management, designing gender-sensitive financial products and services, and using sex-disaggregated data to improve oversight for improved financial inclusion.
Gender in Operations and Management
Analyzing social and gender dynamics within MFI institutions is key to mainstreaming gender; this helps to make better-informed decisions. In the first module, the practitioners gained insights on how gender mainstreaming occurs at the organizational level and the importance of capacity-building of its own staff.
It’s actually smart business to do so. As Soumaila Sankara, head of operations for Promotion of Industrial and Artisanal Development (PRODIA), observed, “The recovery rates are higher when we lend to women. To ensure women effectively benefit from access to financial services, we need to take their needs and social realities into consideration.”
A gender diagnosis or audit is critical in determining the extent of gender mainstreaming in an institution’s policies, programs, operations, and staff. The gaps identified can then be used to inform an institution’s gender strategy, implementation, and monitoring.
At the management level, the absence of women in key positions at MFIs may contribute to unconscious bias during product development and marketing processes. Women, after all, are in the best position to understand the challenges associated with gender stereotypes and client needs.
Gender-Sensitive Products and Services
In this module, practitioners were introduced to different approaches for integrating a gender lens into each phase of the product development process. Some of these approaches include: creating a business case, maintaining a gender-smart product development cycle, and deploying gender-smart non-financial services. A gender market study forms the basis for developing gender-sensitive products and services. This process can be costly, but it can help MFIs serve their clients better (by developing products and services that meet the needs and preferences of women) and ultimately lead to better business performance. Monitoring the adoption and use of these products is also essential after the launch to determine if the strategy used is correct.
“Traditionally MFIs prioritize gender during financing and when complying to donors and audit requirements,” relays Justin Banaon, director of the Caisse de Crédit et d’Epargne de la Boucle du Mouhoun (CEC/BM), “Financial products should, however, be designed to cater for both men and women in order to maximize their profitability and entry to new markets, and enhance customer loyalty”
Gender Data & Use
MFIs are accountable to diverse stakeholders, comprising clients, trustee boards, the public, international donors, and local government institutions. With an efficient, gender-sensitive monitoring and evaluation (M&E) system in place, these institutions can improve oversight of their programs, learn continuously, and use evidence-based data to communicate the impact of their work.
In this module, practitioners learned the importance of analyzing sex-disaggregated data and monitoring the product portfolio to reach women. Financial institutions can address financial inequality while also expanding their customer base by promoting financial products targeted exclusively at women, collecting client feedback, and learning about various methods that can connect the MFI to their clients.
“Cost is usually a barrier to data collection,” acknowledged Mamadou Coulibaly, a trainer with Réseau des Caisses Populaires du Burkina (RCPB). “However, it is necessary to identify the gender disparities and analyze the gaps before designing financial products.”
Training of Trainers to Enhance Sustainability
In Burkina, IGNITE is working with PanAfricare as its local implementing partner to support mainstreaming of gender by financial institutions.
To further expand its impact, IGNITE later held a training of trainers for PanAfricare personnel and APFSD to enhance practitioners’ understanding and mastery of each module, explain the central role of financial services as a catalyst for women’s economic empowerment, and further build the capacity of MFIs on how to design gender-sensitive products and services.
With IGNITE’s support, APFSD plans to conduct a similar training to all the MFIs within its network, using the learning, models, and tools developed by IGNITE.