Credit Unions are uniquely positioned to lead Gender Lens Investing
The membership structure, non-profit mission, and excellence at educating their members make Credit Unions ideal to lead the wave of gender investments that can change the fate of women entrepreneurs. Gender Lens Investing (GLI) is quite popular with investors who intend to do well be doing good. But what exactly is Gender Lens Investing and why are Credit Unions such great gender vehicles? What can we learn from a pilot project in Senegal?
The Global Impact Investing Network defines Gender Lens Investing (GLI) as“a strategy or approach to investing that takes into consideration gender-based factors across the investment process to advance gender equality and better inform investment decisions.” A GLI approach will examine how an organization treats women whether they are employees, clients, members, and vendors. As gender gaps arise, existing solutions can be put in place. For instance, a pay gap calculator can identify a gap in compensation that the Human Resources department can then address. A deep dive in the portfolio of a financial institution may reveal that although women represent a larger percentage of the members/clients, they borrow less in total value than men.
Beyond the moral imperative to treat men and women equally, research increasingly shows the economic benefit of gender-balanced workforces and inclusive economies.McKinsey & Co in their 2015 report “The Power of Parity: How Advancing Women’s Equality can add $12 trillion to Global Growth” made the case that economies would do better if women did better. Companies who have at least one woman on their board perform better, have a lower risk of bankruptcy, and attract and retain better talent.
WOCCU’s Pilot project in Senegal
In 2020, WOCCU partnered with UM-PAMECAS, a network of 28 credit unions in Senegal, with over 600,000 members, half of them women. The goal of the project was to design and pilot a Gender Lens Framework and toolkit to address three specific issues, or levers of change:
Lever 1.
Improving the credit application process and the financial products offered to women.
Lever 2.
Supporting women-owned businesses and leading them out of the informal sector.
Lever 3.
Creating networking and upskilling opportunities for women working with UM-Pamecas or women members with elected roles.
WOCCU and UM-Pamecas co-created the tools to implement each lever. They tested them with four credit unions selected for their diversity in urban, peri-urban and rural areas. The project relied on the participation of women — members, employees and elected — who shared their thoughts, desires and ideas through interviews, questionnaires, and focus groups discussions. WOCCU collected and analyzed data from UM-Pamecas’ banking system to monitor progress, gather insights and adapt solutions.
Over the past 12 months, a few key findings have stuck with me:
Group lending is both an opportunity and a trap. Women become invisible and liable when they borrow with a group. When they don’t have the collateral, they must join a group of another four women to borrow. The “solidarity” bond between the five women will act as collateral: if one of them defaults, the other four will reimburse for her. It is hard to leave from the group.
Women are real entrepreneurs. They may have become entrepreneurs reluctantly because they could find no market for their labor. As entrepreneurs they develop drive, ambition, and creativity. I met women who had been in business for decades, to support their families, or in business for themselves because they did not want to rely on their husband’s money. Some of them thrived more than others, which is reflected in how much money they borrow.
They are stuck in the informal sector. They can’t get a loan big enough to grow their businesses, they can’t document their track record or benefit from technical assistance programs offered by the government and can’t bid on public markets.
WOCCU and UM-Pamecas tested solutions such as loosening credit terms, creating new loan products, designing a formalization kit and providing trainings to women members to strengthen their businesses, such as digital marketing training.
As the project winds down, results and findings are rolling in. Maybe, the most important one is that when UM-Pamecas embarked on this project, they were already serving women, but with the Gender Lens Investing is now improving the quality of the services offered. They are also paying more attention to the women who work in the network. UM-Pamecas’ leadership is keen on deepening its gender transformation: better serving women is a definite competitive advantage.