When we talk about micro credit, we're dealing with finance at a very small scale, where loans are no more than a few thousand dollars in size. These loans are usually offered to individuals in less-privileges communities who fail to qualify for loans from bigger banks. Today article is about lending to women who own small-scale businesses and need funds to run them,
Women in rural areas of developing countries are often associated with extreme poverty, lack of education, poor access to health care, domestic violence, social seclusion, and the list goes on. As a result, the third Millennium Development Goal is to "promote gender equality and empower women".
Micro finance institutions are eager to serve women for this reason (among others), but working with women has its own pros and cons. This article covers the pros.
According to a survey report by UNCDF, 'Practices and Innovations among Microfinance Institutions', there are several institutional benefits and social benefits of working with female clients.
Women make responsible micro finance clients
Women are good customers in the sense that their loan repayment patterns are "more reliable and timely" compared to repayment patterns of men. Plus, women tend to save more than men so banks can either offer them additional savings accounts or the entire family benefits from the bigger safety net.
Women are loyal customers
Compared to men, women are more loyal to their micro finance banks and credit institutions. This helps perpetuate a strong relationship between the credit firm and its clients, and can lead to better service delivery to those women.
Women are more honest in their dealings
One of the credit institutions surveyed noticed that women generally invest the loans as per program guidelines and not use it for purposes other than those stated on the loan contract. This effectively reduces the client's risk profile.
Women offer less resistance when called upon to participate in social causes
Some micro finance institutions reported that women are "more easily mobilized for social goals" that require behavioral changes for the better (e.g. health trainings).
Women look after their family
This benefit is more social than institutional in nature. Many credit institutions reported that female business owners were "more likely than men to spend their profits on household and family needs' (such as clothing, food, education, health care, etc.), which enhances the "multiplier effect" of such social businesses.
Note: these findings should not be generalized because many men do all of the above. The report can be viewed to determine the limitations of these findings.