editorial

The vast majority of microfinance customers around the world are women

Margarita Correa, Vice-chairwoman of Bancamia

Margarita Correa

Women forge their economic independence through building up their enterprises. Their involvement in business empowers them, encouraging them to exercise their rights and independence, thereby laying the foundations for their own welfare and that of their families

The vast majority of microfinance customers around the world are women. This is due, in the first place, to the fact that they are hardest hit by poverty, the most vulnerable among the poor and, in the case of Colombia, they tend to be the ones who have survived the war. In generational terms it has also been the female heads of the household who have, on the whole, led one-parent families. This is a key factor in explaining the lack of development in the region, because it makes it less likely that women participate in the paid-labour market.

In second place, there are more female microfinance borrowers because in the past, more women were excluded from the traditional financial system than men, due to particular social, political, economic and cultural conditioning factors, such as access to property, low educational levels and self-exclusion. Women have been prone to take on unpaid work, such as looking after the family, and have also been more likely to fall victim to violence. In many cases these conditions have led to women working in the informal economy*, excluding them from equitable development and wealth generation.

We have witnessed how women forge their economic independence through building up their enterprises. Their involvement in business empowers them, encouraging them to exercise their rights and Independence, thereby laying the foundations for their own welfare and that of their families.

The informal economy has enabled many women to juggle their two key roles, caring for their families while also running their business. But although they have been able to take advantage of the flexibility of movement it gives them, working this way means they lack any regulatory protection.

The heavy burden of responsibility that women take on with unpaid domestic work restricts the type of job they can take, which further aggravates their economic disadvantage. Measures are therefore needed that allow women to reduce the time they spend on unpaid work so that they can dedicate more to productive activities, increase their assets and access to markets, get better opportunities in education, and participate more fully in politics, employment and leisure.

Vulnerable women have provided an example of development and commitment. In Bancamía they account for 56% of all our clients. On average, they remain with us for over 3 years, are leaders in savings products and are less likely than male customers to go into arrears, contributing more to the quality of the overall portfolio.

This success story shows that microcredit helps women and their families. Nevertheless, it cannot produce a sustainable reduction in poverty on its own, nor trigger changes in gender issues unless additional action is taken. Specific standards and regulations must focus on women’s specific conditions and needs.

Empowering women and closing the gender gap is crucial if we are to meet the sustainable development goals of the 2030 Agenda. This requires a multi-faceted approach that factors in the specific problems of women in different parts of the informal economy. Innovative measures need to be adopted to improve the lives of rural women, focusing particularly on formalising their property rights and expediting their access to land, essential public services and markets for their products.

The United Nations’ recent report on women pointed out that “Greater gender equality means a higher level of human development, higher per capita income, faster economic growth and a more competitive economy.

The financial industry is currently facing new challenges, not just because of competition and innovation, but also because of changes in the world economy. Lending to traditional microfinance customers, low-income women, will thus have to be adapted to meet new needs.

Traditional banking models increasingly focus on attracting the best customers from the microfinance market. Yet at the same time, women seem to be stuck in the informal labour market, where they are far more vulnerable to the vicissitudes of economic growth, gluts and scarcity of agricultural produce, migration of the labour force to the cities, increasing numbers of single-parent families, prevalence of gender violence, etc.

In Colombia, for example, when we look at the informal labour market figures by gender, it is apparent that women’s participation in the informal sector is growing, and over the last decade the statistics have shown a higher growth rate in rural than in the urban areas**.

Another point worth noting is that in the informal sector, women's revenues are seasonal, both in urban and in rural environments, although more so in the latter, where incomes peak at mid-year and at year-end. As a result, women’s cash flows in the country are irregular and only go up twice a year.

During downturns in economic growth in Latin American countries, more women than men move into the informal labour market. This scenario ushers in new possibilities for signing up our development-focus clients.

But the numerical evidence leads us to question the sustainability and development of women’s enterprises, of family companies, the appropriate use of resources and the competitive advantages. We, as leaders of microfinance institutions, must proactively manage the value proposition for our primary clients.

Our microfinance experience has helped us to understand how women act as a stabilising force in society. Natural entrepreneurs and multi-taskers, they manage to bring up their children while also creating more cohesive communities. We have been witnesses to a generational change, with greater inclusion and equality of women. We have seen women grow on the basis of their own merits. We have observed their deep commitment to their families and to the world. I extend an invitation. May this tribute to women, which we will read in these pages and in many others, make us act, in whatever circumstances we find ourselves, to live up to the responsibilities we have as agents of change in the economies of the region and of their future sustainability.

“Let’s look at gender as a spectrum instead of two sets of opposing ideals”, Emma Watson, United Nations Goodwill Ambassador.

* Note that informality in the Colombian labour market stands at 51.6% for women vs. 45.1% for men. Source: DANE 2015.

** General Household Survey. DANE Colombia 2007 -2016.

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