Beyond inclusion: Institutionalizing gender equity in microfinance

Written by Barrett Redmond

• For many women around the world, microloans have served as an entry point into the financial system. But microfinance institutions must move beyond counting the number of women reached and consider the quality of their gender-equitable financial services.
• Kiva is enhancing its mission to support underbanked women by focusing on integrating gender equity at the institutional level through our Gender Equity Assessment Rating (GEAR) tool.
• By using GEAR scores to assess and improve gender practices, Kiva aims to help advance gender equity within the financial system, ensuring more meaningful inclusion for women worldwide.

Centering underbanked women in microfinance

Since the 1970s, underbanked women have been the primary users of microfinance. The first group of Grameen Bank microfinance borrowers were women, and as microfinance scaled and gained prominence as a poverty alleviation strategy in the late 1990s, the classic microlending model continued to center women borrowers.?

Since Kiva’s founding in 2005 — almost 25 years after the launch of Grameen Bank — 80% of loans funded on Kiva’s microfinance crowdfunding platform have also gone to underbanked women, one of Kiva’s four key impact populations. In fact, Kiva has provided 4 million women borrowers with more than $1.6 billion dollars in microloans to date.

"Collecting both quantitative and qualitative data to understand how and to what extent women are using financial services is critical if the microfinance industry is to move beyond counting the number of women reached and really consider how well they are being served.”

Given its focus on underbanked women, the microfinance narrative has become inextricably associated as a vehicle for women’s financial independence.?

But why is this? Looking back on the launch, rise, and growth of microfinance, it is not a coincidence that women have historically been the primary users, rather it is a direct result of the systemic gender inequities and discrimination embedded in our societies and global financial system. Restrictive gender norms, disproportionate care burdens, limited mobility, and an increasing digital divide have stymied women’s access to financial resources, contributing to their socioeconomic exclusion from the financial system. And although the gender gap has narrowed, 55% of all unbanked people worldwide are women with little to no access to financial services.?

Inclusion is not enough

"Simply including women in a financial system that was not initially created with their participation in mind will not be enough to achieve women’s financial parity —– especially when many of the barriers that impede women’s financial success and growth are left unaddressed.”

For many women around the world, microloans have served as an entry point into the financial system and an opportunity to build credit. Oftentimes, microloans are the only available financial option due to systemic barriers like ineligible marital status, lack of required official documentation, or even geographic location.?

As more women have gained access to financial services over the past five decades, the microfinance market has increasingly matured and evolved to accommodate the growing number of women in the financial system. However, simply including women in a financial system that was not initially created with their participation in mind will not be enough to achieve women’s financial parity — especially when many of the barriers that impede women’s financial success and growth are left unaddressed. Without a gender-aware transformation of our financial system, women’s financial inclusion will be slow to lead to meaningful economic empowerment.?

That’s why Kiva is expanding its focus to transform the financial ecosystem in which women live and operate. While access to financial services remains fundamental to Kiva’s mission, we understand that not just access to, but also the quality of gender-equitable financial services will be critical to women’s economic advancement. Microfinance needs to move beyond counting the number of women served and think critically about how financial service providers are serving women at an institutional level – ensuring we’re not just serving more women, but serving more women better.?

At Kiva, we aim to not only bring more women into the financial system, but make sure they are supported with the proper resources and policies to confidently stay, steadily grow, and exponentially thrive within the financial system as well.?

Transforming the financial ecosystem

Kiva’s Gender Equity Assessment Rating (GEAR) is one step we are taking as an organization to transform the financial ecosystem to better serve women. Developed with support from the United States Agency for International Development (USAID), GEAR is a holistic gender lens rating tool that assesses the extent to which a financial service provider integrates and operationalizes gender across its organization’s products, policies, practices and power structures. GEAR represents Kiva’s commitment to engendering institutional change and deepening our understanding of the barriers to financial inclusion women face. As a part of Kiva's strategy to serve underbanked women, Kiva is committed to using GEAR to assess all of our Lending Partners' with a gender lens by the end of 2024.

Expanding our gender impact to the institutional level

Kiva’s Lending Partners operate across more than 90 countries around the world and are critical to carrying out Kiva’s mission. Our trusted Lending Partners do incredible work – they perform on-the-ground financial administration like screening borrowers, posting loan requests to kiva.org for funding, disbursing loans on the ground, and collecting repayments. In fact, most of the work that Kiva does can only be done through these key partners, who understand the needs of their local area and often provide other vital services in their communities. Whereas the majority of Kiva’s Lending Partners are microfinance institutions, some are also nonprofits or social enterprises. Yet, despite differences across geography, impact population, or loan products offered, all of our Lending Partners share one thing in common: the desire to improve people’s lives through safe, fair access to credit.?

Given how critical Lending Partners are to Kiva’s mission, we want to ensure that our commitment to creating a more financially equitable future for women is embedded and operationalized throughout everything we do — including our lending partnerships. As such, we’re excited to roll out GEAR as a way to tackle gender equity alongside our Lending Partners and foster a financial ecosystem where resources are channeled towards transformative products, policies, and services supporting women.?

By expanding our gender impact focus to the institutional level, GEAR enables Kiva to look beyond individual borrower statistics and truly understand how our Lending Partners are integrating gender equity into their everyday operations.?

Kicking it into high GEAR

"Calculating a GEAR score for all of Kiva’s Lending Partners will provide us with an initial snapshot of where our partners’ gender practices stand today, as well as enabling us to track how gender equity is being advanced over time.”

GEAR provides Kiva with a quantitative way to holistically assess the gendered impact of our Lending Partners. An individual Lending Partner's GEAR score is calculated according to their answers to survey questions about their operational practices that have been integrated into Kiva’s overall impact assessment survey, which are then reviewed by Kiva staff. The score represents a Lending Partners’ commitment to and operationalization of gender equity at the borrower, institutional, and leadership level, where a score of one signals a partner with significant room to improve their gender-forward practices and a score of 10 represents a partner which already has strong gender-forward practices. Each Lending Partner’s overall GEAR score is calculated by weighting gender equity considerations across five components, which are represented in the below table.

A gender-norm aware approach

While reaching women with financial services remains a priority, analyzing a Lending Partners’ women client reach is just one of five GEAR components that support women’s ability to financially thrive. Instead, the five components of GEAR are designed to not only analyze if our Lending Partners connect women to capital, but also how they address restrictive gender norms that often prevent women’s proximity and access to capital in the first place.?

For example, in certain countries, gender norms limit a woman's mobility and ability to travel freely beyond her community. In fact, a recent World Bank report found that 30 percent of countries surveyed restrict women’s freedom of movement, and many women are home-bound due to gender-norms such as childcare responsibilities and/or upkeep of household duties. By assessing whether Lending Partners offer funding for home-based businesses, support loan applications via mobile phones and/or carry out in-person loan officer visits, the “Products and Services for Women” GEAR component evaluates whether the products and services available to women are accessible and accommodate their realities.

Understanding intersectionality

"Understanding how and why women’s financial experiences not only differ from men’s, but also from those of other women will be key to dismantling the compounding barriers that prevent women’s financial success.”

The “Women Client Understanding” component aims to capture how Lending Partners respond to and operationalize women clients’ feedback and needs into their products and services. This component has a specific focus on the collection, analysis, and operationalization of gender-disaggregated data. Kiva believes that if a Lending Partner is committed to serving women, they must collect, analyze, and take action on data that supports that commitment. Through GEAR, we embody this belief in our own practices and encourage a similar level of commitment from our mission-aligned Lending Partners.?

Collecting both quantitative and qualitative data to understand how and to what extent women are using financial services is critical if the microfinance industry is to move beyond counting the number of women reached and really consider how well they are being served. In particular, the collection of intersectional data capturing differences across factors such as class, race, ethnicity, religion, sexual identity, citizenship status, physical mobility, or education level can make visible the compounding barriers faced by the most disadvantaged population groups.?

Intersectionally understanding how and why women’s financial experiences not only differ from men’s, but also from that of other women will be key to dismantling the compounding barriers that prevent women’s financial success.

Gender equity at the institutional & leadership level

Access to equitable opportunity affects not only women at the borrower level but also women employees at the institutional and leadership level. In fact, gender norms and power inequities can compound and emerge in the workplace, enabling the occurrence of sexual harassment and inequitable professional opportunities if left unaddressed. Given that institutional policies are a reflection of institutional values, it’s critical for Kiva’s Lending Partners to consider how to embed internal policies or practices that advance gender equity within the workplace. By assessing a Lending Partner’s policies in place (such as sexual harassment prevention, maternity leave, paternity leave, pay equity analysis, equal recruitment retention and promotion policies, flexible work arrangements, childcare solutions, and employee satisfaction surveys), the GEAR “Policies & Practices” component reveals if Lending Partners are themselves modeling gender-forward strategies often touted on behalf of their clients.

The extent to which a Lending Partner embeds gender considerations throughout their institutional policies can directly influence gender parity at both the employee and leadership level. The “Women in Workforce” GEAR component asks Lending Partners to report the percentage of gender diversity across their staff, leadership, and board levels to assess how they not only track and monitor gender diversity in the workforce overtime, but also use the data to inform gender considerations across hiring, retention, advancement and leadership practices. For example, by tracking the female staff turnover rate, Lending Partners can monitor the effectiveness of their institutional management and professional development strategies and reflect on?why?women might leave their organization as a way to transform gender-equitable retention rates in the workplace.

A diagnostic tool & driver of change

Each of the five GEAR components are scored and individually weighted, enabling Kiva to understand where Lending Partners’ gender practices excel, and uncover areas where their gender-focused efforts could be improved. In this way, GEAR component scores can be both a diagnostic tool and a driver of change by revealing where interventions are most needed.??

For example, a Lending Partner may have a client base composed of majority women borrowers. However, the Lending Partners’ loan officers and personnel in decision-making positions are almost all male. This Lending Partner would likely score highly within the “Targeting Women Client” component, but would likely receive a low “Women in the Workforce'' component score, as their workforce does not reflect the demographics of the population they serve.?

Analyzing scores across the five GEAR components in this way provides deeper insight into our Lending Partners’ practices. These insights will enable Kiva to initiate a dialogue around opportunities for gender-forward growth and/or identify potential capacity building projects to enhance a Lending Partners’ gender-related practices.?

An important next step

"For Kiva, GEAR is an important next step in strengthening the financial ecosystem to better serve underbanked women with tailored products and services, meaningful policies, and approaches that ultimately advance gender equity.”?

The component scores across the five dimensions of GEAR are subsequently summed and further weighted to calculate a Lending Partners’ overall GEAR score, representing a holistic assessment of a Lending Partners’ gender-focused efforts. A partner’s overall GEAR score can be used to initiate dialogues that drive gender-forward transformation, reform company policies related to women’s leadership, shift power and resources into the hands of women around the world, and ultimately advance gender equity. Calculating a GEAR score for all of Kiva’s Lending Partners will provide us with an initial snapshot of where our partners’ gender practices stand today, as well as enabling us to track how gender equity is being advanced over time.

For Kiva, GEAR is an important next step in strengthening the financial ecosystem to better serve underbanked women with tailored products and services, meaningful policies, and approaches that ultimately advance gender equity. After 19+ years of working with local Lending Partners to best serve their clients, Kiva understands that gender equity cannot advance through disparate and siloed efforts. Instead, by working closely with our well-established network of Lending Partners, we are eager to learn from GEAR’s insights and continuously adapt the tool to institutional learnings, partner feedback, and industry best practices that better serve the financial needs of women over time.?

We look forward to sharing our ongoing GEAR learnings with you in an effort to push the space forward and ultimately transform our financial system into one that equitably serves all.

Share your thoughts with us in the comments!

Originally published at kiva.org