by

Helen M BINNS
binns.helen@skynet.be
Tel/Fax (32 2) 771 5031

March 1998

SUMMARY

1. WHY THIS STUDY?

1.1 The GAD Council Resolution

1.2 Likely growth in EC support to micro-finance

1.3 Summary regarding the attitude of EC officials vis-ŕ-vis gender and microfinance

2. MICROFINANCE

2.1 What is microfinance?

2.2 Microfinance customers

2.2.1 Who are microfinance customers?

2.2.2 How do men and women entrepreneurs compare?

2.2.3 Do the poorest benefit from microfinance?

2.3 Who provides microfinance?

3. GENDER AND DEVELOPMENT

3.1 What does GAD mean?

3.2 What are the goals of GAD?

3.3 Does microfinance meet GAD objectives?

4. GENDERING MICROFINANCE

4.1 What is gendered microfinance?

4.2 What are the gendered issues to be addressed?

4.2.1 At the identification stage

4.2.2 At the formulation stage

4.2.3 At the implementation stage

4.2.4 At the evaluation stage

4.3 The need for training

4.4 Institutional aspects

5. FORTHCOMING DOCUMENTS

Table 1: Checklist of gendered issues to be addressed

Table 2: Types of institutions involved in microfinance

Annex 1: Bibliography

The author wishes to warmly thank all those who helped me in preparing this report. Every contribution was valuable. Particular thanks to Arne Ström (European Commission, DG VIII Gender and development Desk Officer) and to Mary Braithwaite (KIT coordinator on EC gender studies) for entrusting me with this report and for their guidance throughout its development. Also many thanks to Richard Boulter (DFID, Zimbabwe) for his inspiration, support and critical comments on the draft report.

The contents of this report do not necessarily represent the views of the European Commission. While every effort has been made to ensure the accuracy of the information contained in the report, neither the European Commission nor the author accepts any responsibility for errors or omissions.

This report may be reproduced unaltered without authorisation on condition that the source is indicated and that is it not for commercial purpose.

In 1997 the Gender and Development Desk of the European Commission Directorate-General for Development commissioned a short study from KIT, the Royal Tropical Institute of the Netherlands, on the gender aspects of microfinance. This study formed part of a wider programme of studies and country missions on the integration of gender in EC development co-operation in ACP states.

Undertaken by Helen Binns, an expert on SME and microfinance, the desk study collected and synthesised existing documentation and guidelines on the subject of women and gender in microfinance. The study report - of which this is a shorter version for dissemination outside the European Commission - summarises what is considered by experts in the field to be "best practice" in the integration of gender in microfinance projects. The report is intended for administrators and implementors of microfinance interventions. A French version of the report is also available.

The report does not provide a recipe for achieving best practice but rather identifies the key issues to be addressed at the different stages of the project cycle to ensure that all aspects of reality in the field are addressed. It therefore contains a checklist with examples illustrating the need to address these issues.

It is hoped that the report will be useful in better integrating gender in microfinance. Your comments, experience and any relevant documents which could help to improve this report would be most welcome.

Please contact the Gender and Development Desk in DG VIII :

Arne Ström
European Commission
DG VIII/A.2 - GAD Desk
Rue de Genčve 12
B-1140 Brussels
Fax: +32 2 296 71 40
e-mail: anja.mattsson@dg8.cec.be

The acronyms of an institution is used in the text when it is better known by its acronym. The full names, however, are listed below.

ACP

Africa, Caribbean, Pacific

ADEMI

Asociación para el Desarrollo de Microempresas (Dominican Republic) (Association for the development of MSEs)

AIMS

Assessing the Impact of Microenterprise Services

BancoSol

Banco Solidario (Bolivia)

BRAC

Bangladesh Rural Advancement Committee

BRI

Bank Rakyat Indonesia

BRIDGE

Briefings on development and gender

CGAP

Consultative Group to Assist the Poorest

DAC

Development Assistance Committee (OECD)

DFID

Department for International Development (UK)

EC

European Commission

EDF

European Development Fund

EIB

European Investment Bank

GAD

Gender and Development

IFAD

International Fund for Agricultural Development

INSTRAW

International Research Training Institute for the Advancement of Women

IRAM

Institut de Recherches et d'Applications des Méthodes de Développment (F) (The Institute of research and use of development met

Foundation for International Community Assistance

GEMINI

Growth and Equity through Microenterprise Investments and Institutions (USA)

GTZ

Gesellschaft für Technische Zuzammenarbeit (German technical assistance agency)

KIT

Koninklijk Instituut voor de Tropen (NL) (Royal Tropical Institute)

K-REP

Kenya Rural Enterprise Programme

KWFT

Kenya Women Finance Trust

MBA

Master of Business Administration

MFI

Microfinance Institution

MSEs

Micro and Small Enterprises

NGO

Non-Governmental Organisation

NIP

National Indicative Programme

OECD

Organisation for Economic Co-operation and Development

PRODEM

Fundación para la Promoción y Desarrollo de la Micro Empresa (Bolivia) (Foudation for the promotion and development of MSEs)

RIO

Rural Investment Overseas

ROSCAS

Rotating Savings and Credit Association

UNIFEM

United Nations Development Fund for Women

UNRISD

United Nations Research Institute for Social Development

USAID

United States Agency for International Development

WID

Women in Development

WWB

Women's World Banking

Following the December 1995 Council Resolution regarding the integration of gender into all development instruments, the Gender and Development desk of the European Commission Directorate-General for Development (DG VIII) has commissioned a number of studies on the integration of gender issues in development cooperation (managed by The Royal Tropical Institute, KIT in Amsterdam).

This report is one of these studies and is concerned with integrating a gender perspective into microfinance. Microfinance is increasingly recognised as one of the pillars of action to relieve poverty and thus an area of EC intervention which is likely to grow substantially in coming years.

The main findings of the interviews within the EC are that:

• EC officials generally do not feel knowledgeable about gender issues and microfinance;
• Some regret the lack of internal expert support in microfinance;
• Most people interviewed favoured a practical checklist to help them integrate gender that was brief but had some examples. Several people indicated that this list should also be available on diskette or on the computer system.

  In response to these findings this report aims to:

• describe microfinance (section 2) - what it is, who are the customers, how men and women compare as entrepreneurs, whether the poorest benefit from microfinance, the institutions providing microfinance (table 2) and the way they deliver it;
• provide an overview of gender and development (section 3) - what it means, its goals, and whether microfinance generally meets gender and development objectives;
• present a checklist of issues to be addressed at the different stages of the project cycle in order to secure gendered microfinance (section 4) which is summarised in the following table.

TABLE 1: CHECKLIST OF GENDERED ISSUES TO BE ADDRESSED Gender-sensitive microfinance takes into account the needs and constraints of both men and women when designing and delivering finance. AT THE IDENTIFICATION STAGE The two main areas to be analysed at this stage are the potential customers and the existing financial services (formal and informal) the target group has access to. This can be done through a brief workshop with, or survey of, potential customers carried out in a gender-sensitive way. AT THE FORMULATION STAGE Loan use and eligibility criteria Do the loan use and eligibility criteria meet the credit needs of poor men and women, who may need to utilise their loans for a variety of purposes (consumption and investment) rather than for a specific targeted use? Interest rate Does the interest rate cover costs and eventually enable the institution to achieve sustainability? Loan size Are loan sizes, repeat loan and loan graduation systems appropriate for both poor people seeking credit at low levels and the MFI aiming to achieve sustainability? Loan duration Does the loan duration reflect the type of business of poor men and women? Loan collateral and confidentiality Is the MFI imposing conditions that women and men can fulfil in terms of collateral and ensuring confidentiality in respect of customer's partners and relatives? Approval time Can management approve loans in a time-frame that meets the needs of both men and women? Repayment terms Are the repayment terms suited to the needs of customers i.e. frequent and regular repayments, convenience of collection, and flexibility for larger loans and more experienced customers? Savings Does the range of savings products meet the needs of both men and women? Forced savings Will the level of forced savings required not exclude many of the targeted customers and is it reasonably easy to withdraw savings? Other financial products Is it intended to provide specific products which will address gender differences in the context of needs for financial services? AT THE IMPLEMENTATION STAGE Group formation Have both men and women equal opportunity to take decision-making positions in a group and do the group's formation rules take into account local traditions? Outreach Is the intermediary accessible in terms of location, convenience and safety, as well as opening hours and transport cost, by both men and women? Attitude of finance officers Are the finance officers acceptable culturally (are female customers comfortable, and allowed to do business, with male credit officers and would women officers be accepted by male customers) and professionally (are women and poor people treated with respect)? Customers' literacy level Are application forms and finance officers intellectually sensitive to the needs related to the literacy level of male and female customers? Lending method Is the lending method (group versus individual lending) acceptable to customers and does it continue to be reconsidered throughout the life of the intermediary? Advertising financial products Will the channels selected to advertise financial services reach both women and men? AT THE EVALUATION STAGE Institutional performance Are the data collected by the MFI broken down by gender? Customer satisfaction Does the MFI assess regularly (once a year?) whether customers are satisfied and how its services can be more gender sensitive? Socio-economic impact An EC strategy should be developed in coordination with other donors to define the way forward on this. As a general rule evaluations should be carried out by donors, as MFIs have neither the time nor the expertise to do this. However, what is proposed should be discussed and agreed with the MFI.

The report also lists forthcoming events and documents of interest (section 5), and includes a selected bibliography (annex 1).