Adding Gender to the Microfinance Bottom Line

> Posted by Jaclyn Berfond, Senior Associate, Network Engagement, Women’s World Banking

Women have long been the face of microfinance, a fact reflected by the mission and goals of the institutions that serve them. According to the Microfinance Information Exchange (MIX), most microfinance institutions (MFIs) claim to target women (74 percent) and just over half declare women’s empowerment or gender equality as an objective.

Big commitments are all well and good, but if we are going to espouse the importance of serving low-income women, we must be able to hold ourselves accountable. How do we do that?

For many years now, the microfinance industry has focused on financial performance, with sustainability and later profitability driving outreach. In the wake of crisis – often the consequence of rapid growth – the industry has re-focused on social performance, getting back to the basics of ensuring that financial institutions adhere to their mission of serving low-income clients. We strongly believe that there must be a balance between financial and social performance, and that in order to achieve either, the industry must take a good look at their clients – still predominantly women. By truly analyzing this client base, MFIs can both build the business case for serving women, and ensure that they are serving these women well. This is gender performance.

In 2011, Women’s World Banking launched the Gender Performance Initiative (GPI) to develop a framework that defines what it means to serve women and measures how effectively MFIs do so. We wanted to establish a set of indicators that would enable MFIs to consider not only how many women they serve, but how they can enhance their understanding of customers to tailor products, marketing strategies and delivery channels to meet women’s needs. The initiative also set out to demonstrate the benefits of financial inclusion for women and their households, as well as the benefits of gender diversity among staff, management, and board.

Developing the indicators. There is no easy place to start when it comes to measuring performance, and we wanted to be sure that the metrics we chose would truly tell us whether an institution was serving women well. First and foremost, we needed to start with the right questions, in the areas that matter most to women. Beyond outreach, we looked at product design and diversity, service quality, and client protection, as women have specific life-cycle needs and goals that must be considered. For example, women may need a convenient and confidential way to save for children’s education expenses, or an insurance product that offers cash benefits for hospitalization to cover lost income from time away from their business (and includes maternal health coverage). We also looked at the diversity of staff and management, because we believe that in order to be the best place for women customers, a microfinance institution should be a place that welcomes women employees and women leaders. Finally, we wanted to understand how serving women clients contributes to institutional financial sustainability, as well as outcomes for clients.

We compiled a list of indicators that could be used to measure performance in each of these key areas. However, in order to ensure that we chose the “right” ones, we needed to test both the feasibility of MFIs collecting and reporting on these metrics, as well as the “explanatory power” of the indicators. We piloted the full framework of indicators with three of our network member institutions: Finance Trust in Uganda, Fundación delamujer in Colombia, and Ujjivan Financial Services in India.

The lessons learned from the pilots ranged from the value of good data and the insight gender disaggregated information can yield (product uptake or borrower retention, by gender), to the potential for tracking and analyzing social indicators to demonstrate outcomes for clients (children’s education, housing, etc). And perhaps most importantly, 25 key performance indicators emerged. These indicators range from operational metrics such as growth in women clients, women’s market penetration, product diversity (percent women accessing two or more products) and client retention by gender to outcome indicators such as economic improvement or advancement of family well-being (percent women clients with improvement in housing conditions). As a result of this work, we are thrilled to launch a comprehensive tool for microfinance practitioners to track – and improve – gender performance: the Gender Performance Indicators manual.

Success means working together. As we look forward to promoting wider adoption of key gender performance indicators, we see the ability to integrate with other industry initiatives as one of the main successes of the GPI. For example, we specifically wanted to ensure that our indicators aligned with initiatives such as the Social Performance Task Force USSPM, Truelift, and the Smart Campaign Client Protection Principles. Instead of providing yet another reporting tool for the industry, we envision the gender performance indicators as supporting the measurement of the standards and principles established by these leaders in the social performance space.

For example, when thinking about client protection, how do we ensure that products match women’s needs, provide good value for money, and are designed to avoid causing harm for women? The relevant gender performance indicators, which include tracking usage of feedback mechanisms and participation in financial education programs by women clients, are directly correlated to the Client Protection Principles and provide a support mechanism to better understand performance around client protection for women.

Looking Ahead. Women are a huge part of microfinance, and it is high time we had a way to truly measure performance on this front. Gender indicators are only the first step. Ultimately, gender performance needs to be added to the microfinance bottom line.

Image credit: Women’s World Banking

Have you read?

International Women’s Day 2013: Where Are We With Women’s Access to Financial Services?

Microfinance CEOs: Smart Campaign Certification is a “Clear Step” Toward Responsible Microfinance

The Universal Standards, One Year Later