Fund a woman: Enrich a society

Following her husband’s death, his relatives claimed all his assets, throwing her out of their home with only her children and one cow to keep. Traditional custom dictated that women had no claim on land or property and widows were expected to fend for themselves. Not to take challenges lying down, she began leasing out the cow to neighbors who needed milk as she did not have any funds or property to use as collateral to start a business. Slowly but steadily she began to get a regular income which she channeled into a microfinance institution aimed at empowering widows and young girls to build up their own income generating asset bases.

That is how in 2002 Dr. Victoria Kisyombe began Selfina, a microfinance institution in Tanzania that specializes in micro leasing. By providing loans to women to purchase anything from agricultural power tillers, animal feed mixers, catering equipment, tailoring equipment and office equipment such as computers and photocopiers, Selfina empowered women to acquire assets without a history of credit, little or no financial literacy and absolutely no collateral.

The two critical elements in the Selfina proposition are financial empowerment and dignity to the woman. I learnt about this organization at a workshop in Dar es Salaam last week that put together banks providing women specific product offerings as well as women entrepreneurs. I came away with one validation that I have previously written about. Customers talk and talk and talk. Bankers selectively hear what they want and deliver what they can. There were brilliant presentations from many banks around the world that are taking women’s banking seriously. Royal Bank of Scotland, for example, through its Emerging Innovations team, provides bespoke financial solutions to its female entrepreneur clients. By understanding that the key to a successful borrower is financial literacy in the first instance, they provide business training to would be borrowers. They also provide loans to several start up businesses for women, despite the fact that one in every five start ups collapse in the first eighteen months. When a start up potential borrower passes the business training she then qualifies for a business loan as she has been educated on how to manage financial accounts as well as the lifeblood of any business: cash flow. As a result 21% of the portfolio income comes from start-up businesses whose success is also wind assisted by the bank’s online portal that showcases the borrower’s products and provides linkages to potential buyers.

There were several case studies from around the world’s developing economies such as Lebanon, Turkey, Kenya and Tanzania all of which came to four key elements required for a successful women’s banking proposition. The bank should provide access to finance through unbiased loan decisions, access to information through financial education to its female borrowers and deeper product understanding, access to markets through linkages to buyers and finally access to networking where peer to peer collaboration and mentoring programs are well embedded. There was unanimity around the fact that women faced biased lending assessment due to mistaken assumptions about poor repayment potential and their business acumen but it is important to note that women by their very nature, unlike men, have no problems stopping to ask for directions when lost. Consequently, women are happy to jump through whatever educational hoops it will take to get them to improve their own businesses and handling of financial transactions. They are also far more averse to undertaking unnecessary risks in their business as their primary concern is always ensuring that there are enough funds available to feed, clothe, educate and shelter their dependents.

Banks today constantly seek new customers who unfortunately have to fit within their own assessment of risk criteria. There are very few banks in East Africa, a handful really, that have taken this lucrative customer segment and given it the due attention it deserves. But these are mostly banks that started off with a social agenda from the outset. Often the women’s banking proposition you find in the mainstream banks is geared towards the salaried professional and the product push tends to veer towards encouraging consumptive behavior through credit cards and access to furniture and car loans. The salaried professional is a safe bet, with healthy cash flows that provide good repayment records and less stress around default. This is a pretty lazy approach to ticking the box that says “we help women achieve their dreams”.

Providing a sustainable (there, I did it, I used a civil society buzzword in a for-profit media!) but profitable solution to female entrepreneurs can alter a bank’s approach to corporate social responsibility as this has a direct impact on communities within which the banks operate and their standards of living. It also provides an excellent way to deepen their share of customer wallet as the cross sell opportunities for other bank products such as savings accounts for children, insurance, term deposits etc are very high if leveraged well (very, very few banks do cross sell reasonably well largely in part to a massive beast called “silo thinking” that traverses the length and breadth of their organizations).

Westpac Bank in Australia, we were informed, currently has 2.5 million women customers earning the bank close to US$ 91 billion annually. Over the course of servicing this segment, they have found that women have higher average balances in the bank accounts than men and that women are more likely to repay loans. Furthermore women are twice as likely to recommend the bank to someone else than men, meaning that they have higher Net Promoter Scores if satisfied.

When you empower a woman, you empower a family. When you empower a family, you empower a community. When you empower a community, you empower a nation. Women are central and key to our most basic social unit – the family. If we get their financial empowerment right, we get ourselves as a society right.

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Twitter: @carolmusyoka