Women’s economic empowerment through microfinance institutions benefits, as there is an increase in school enrolment

Women’s economic empowerment through microfinance institutions is key for promoting the International Labour Organization’s (ILOs) Decent Work Agenda, which acknowledges the central role of work in people’s lives as a means for achieving equitable, inclusive, and sustainable development. By increasing women’s access to financial services, microfinance ultimately contributes to ILO’s core values of greater gender equality and non-discrimination.

Why Target Women?

Seventy percent of the world’s poor are women. Yet traditionally women have been disadvantaged in access to credit and other financial services. Commercial banks often focus on men and formal businesses, neglecting the women who make up a large and growing segment of the informal economy.

 Microfinance on the other hand often targets women, in some cases exclusively. Female clients represent eighty-five percent of the poorest microfinance clients reached. Therefore, targeting women borrowers makes sense from a public policy standpoint. 

The business case for focusing on female clients is substantial, as women clients register higher repayment rates. They also contribute larger portions of their income to household consumption than their male counterparts. There is thus a strong business and public policy case for targeting female borrowers.

 Strategies For Advancing Gender Equality Through Microfinance:

(a) The strategies to facilitate a positive impact on women’s empowerment through microfinance institutions form a basis for tailoring microfinance policies, practices, and products to better address gender equality and promote women’s empowerment. Internal MFI gender mainstreaming

(b) Crucial components of proactive women empowerment through microfinance institution strategy include training on gender analysis for MFI staff members, the utilization of female loan officers, and the provision of equal employment and management opportunities for women. MFIs should also incorporate empowerment indicators, such as the proportion of women clients in the loan and savings portfolio, into client monitoring and assessment processes.

Adjusting financial services to better address women’s needs:

(a) Microfinance products generate different outcomes for men and women. MFIs should therefore tailor product specifications, such as loan amounts and repayment schedules, to diverse client needs. Individual loan products designed for women are also important for enabling enterprise growth.

(b) Savings products designed for women are a fundamental element of risk management. A diversified MFI product offer should also include other financial services that help reduce vulnerability, such as microinsurance.

(c) Adjusting collateral requirements and encouraging the registration of property in women’s names are other essential components of gendered microfinance.

Non-financial services:

(a) Non-financial services with conditionalities to credit access, such as carefully designed adult literacy and business training programs, can facilitate women’s access to better jobs and income-generating opportunities and are perhaps the most effective means of promoting gender equality.

External marketing for community awareness:

(a) Marketing campaigns directed at women can positively influence both men’s and women’s attitudes on women’s status and employment in the community by helping male community members to accept economic opportunities for women, by building women’s self-confidence, and by facilitating community approval of women’s projects.

Women, Microfinance and the ILO:

Women’s economic empowerment through microfinance institutions is an essential component of promoting the International Labour Organization’s Decent Work Agenda. The Social Finance Programme (SFP) is the ILO’s focal point for microfinance. Operating via a Social Finance Network across all sectors and regions, the SFP contributes to achieving gender equality and women’s empowerment through the promotion of more inclusive financial systems.

 The SFP’s Microfinance for Decent Work action research aims to reduce vulnerability, invest in job creation and strengthen social partners’ capacity to improve access to financial services. 

The SFP also works in cooperation with the Gates Foundation to manage the Microinsurance Innovation Facility, an experimental program designed to improve men and women’s ability to cope and mitigate risk through microinsurance. The ILO Bureau for Gender Equality supports policies and programs throughout the organization that promotes gender equality and lead to women’s empowerment. 

The ILO of ILO’s Small Enterprise (SEED) program, works to enhance women’s economic empowerment through microfinance institution opportunities and by developing tools and strategies specific to the needs of women entrepreneurs and by working to ensure gender is mainstreamed throughout the program.