by Andrew Perry

Expanding the opportunity and financial stability of women—especially low-income women in countries without robust social safety nets—is a mission that has always been at the center of thought and policy around financial inclusion. Yet turning this mission into results is an often halting process. As inclusive financial service providers balance the sometimes conflicting goals of social impact and boosting profits and commercial sustainability, the most disadvantaged segments of society—in which women are overrepresented across the world—fall by the wayside. For financial inclusion to live up to its promise of advancing socially-responsive development via sustainable economic processes, it is essential that research and practice continually take low-income women’s positions into account in the design financial services and broader industry trends.

The Latin American microfinance industry provides an example of this disconnect between providers’ social missions and their financial strategies. While women have traditionally been the industry’s main client base, as MFIs begin expanding portfolios, they tend to seek clients demanding larger loans amounts. Unsurprisingly, men, who are wealthier than women across most of the world, tend to be overrepresented among these wealthier new target client bases. As a result, as MFIs have increased average loan sizes over the last decade, the portion of female borrowers has tended to fall significantly. EA Consultants observed this dynamic in all of the three Latin American countries we studied in a recent study funded by the IDB/MIF of a program to expand microfinance loans to rural women. In Colombia and Peru, average loans sizes have increased roughly two- and threefold, respectively, while the percentage of female borrowers have fallen to near-parity with men, from 70% in 2004. In our third case, Paraguay, a similar trend occured until a broad-based portfolio retrenchment starting in 2010 affected a rebound of women’s share of borrowers in the country’s MFIs.

This phenomenon of falling women’s involvement in microfinance is not limited only to these countries. In recent analyses, EA Consultants found similar trends in Bolivia, Nicaragua, and Uganda. Often this trend is the result of microfinance industries moving from group loan models to single commercial loans to creditworthy individuals. In countries, most notably, India, where the microfinance industry has largely stayed on group lending models, the portion of female borrowers has held steady and very high, at levels comparable to the early days of microfinance.

These trends in microfinance have been a major cause of concern for EA Consultants. To further understand the industry’s gender dynamics, EA, together with Patricia Rojas from BancoSol and Mariana Martinez of el Portal de las Microfinanzas, recently launched a network of women working in microfinance. The network, Andares, brings together women working in microfinance across the Americas to discuss issues of women’s empowerment and leadership in the field and provide networking opportunities. Putting these discussions into motion, EA Consultants was recently contracted by the Inter-American Development Bank to launch a study women’s leadership in Latin American microfinance. The study, which will be implemented jointly between Andares and EA, consists of a survey of more than a hundred prominent microfinance institutions in the region on the gender composition of their leadership and qualitative interviews to understand some of the reasons and effects of differing arrangements. The motivation driving this study is to understand the gender landscape of today's Latin American microfinance industry, with an eye towards its policy and product offering implications. For this reason, the study will serve as an important jumping-off point for further thinking about the microfinance industry’s relation to women and next steps for greater representation of women in institutions and product design.