Why lending to women works

The World Bank estimates that 70% of the world’s poorest are women.

Survival is doubly difficult because they lack access to economic opportunities, education and support services. They also bear the brunt of family responsibilities which make it incredibly difficult to obtain employment.  Commercial banks tend to focus on men and the formal economy, and neglect women, who make up a large segment of the informal economy.

Our work has sought to empower women within these patriarchal societies where they can often be overlooked. We provide loans and training exclusively to women so they can generate income and become financially independent.

Lending to women

One of the reasons we work with women is that studies have proven that they are more likely to pay their loans. The World Bank (2007) stated that this was due to “more conservative investment and lower moral hazard risk”.

Women are often the ones who deal with the daily family responsibilities. They are the ones who see their children go hungry or become sick from treatable illnesses. They tend to invest in safer and less risky business opportunities to ensure they can gain reliable income, allowing them to use profits for food and basic healthcare.

They spend a greater amount of their earnings on care and education for their children. This can particularly benefit young girls, as they are often the ones who have to leave school to help out at home.

With MicroLoan’s support our clients can afford school fees for their children. 60% fewer now drop out. Staying in school is crucial in improving the long-term potential of each child. When we loan to a woman it is not just her life we change. Her children are given the chance of a brighter future.

The wider benefits of lending to women

“Economically empowered women create healthier and more productive societies.”

                                                                      – McKinsey & Company (2010)

At MicroLoan, we have achieved a loan repayment rate of 99%, which is testament to the resourcefulness and hard-work of the women we support. High repayment rates not only demonstrate the success of our clients but also allows us to reach more women. When a loan is repaid we can use the money to help another woman start up a business.

MicroLoan has allowed female entrepreneurs to achieve financial independence for the first time in their lives. Being in charge of a business improves their earnings, developing their confidence and boosts standing within the local community. The improved financial status of women receiving loans allows them to become role models in their local community for others looking to follow in their footsteps.

Many MicroLoan women go on to employ others to help in their business. Family members and other members of the community are able to find regular employment. By giving women more responsibility, through a business, they are then able to generate employment for others

In the countries where we operate women are often excluded from the local economy. They often cannot access the financial services that are available to men. We work exclusively with women, giving them the opportunity to access capital. Sometimes this is the first time they have had this chance. Because of the altruistic motivations of women, lending to them means we can reach the greatest number of people. Their reliable repayment rates mean we can use the money over and over to help those most in need.