Outreach

Why Women and Microfinance?

The initial motivation for microfinance roughly 30 years ago was, to a great extent, gender neutral. The pioneering microfinance institutions (MFIs) sought to provide credit to poor entrepreneurs who had no assets to pledge as collateral and, consequently, were denied access to capital by the formal banking sector. It quickly emerged, however, that women entrepreneurs invested the profits from their businesses in ways that would have
a longer-lasting, more profound impact on the lives of their families and communities. The woman entrepreneur as the gateway to household security became a fundamental premise of the microfinance business model and the success of microfinance as a poverty alleviation tool.

The microfinance industry has recently moved into the commercial mainstream, reducing its reliance on subsidized donor funding. This commercialization has decidedly shifted the focus of MFIs away from low-income populations in general and poor women in particular. While this trend is worrying, WWB believes its effects can be significantly mitigated by another important development: the movement by MFIs away from a strictly
credit-led approach toward providing a broad array of financial products and services, including savings and insurance.

The key to success for the MFIs of the future will be offering financial products and services that are designed to meet clients’ needs, motivations and desires. WWB’s research confirms that the key economic priorities for poor women—to a far greater extent than for men—continue to be health care, the education of their children,
and housing. All MFI clients, but particularly women, seek a safe place to save the assets they have created and the means to protect them from catastrophic loss.