Rural populations are often an invisible market for financial institutions, being far removed from the bustling markets of the metropolis. Seeing rural women as a market to serve is doubly hard for these institutions to see because in these communities, women’s work and their income are considered just a part of their everyday work and not a distinct, productive activity. Knowing that these communities are in need of financial inclusion, what tools do we need in order to serve a segment that is both geographically and economically distinct from the urban sector? How can we better recognize the economic contributions women make to their household and to society?
These were some of the questions five Latin American institutions attending Women’s World Banking’s workshop in Bucaramanga, Colombia have been asking themselves for years as they work to serve rural clients in their respective countries. With support from Credit Suisse; the Federal Ministry for Economic Development and Cooperation; Hivos; the Multilateral Investment Fund, a member of the Inter-American Development Bank Group; and Irish Aid, Women’s World Banking has been working with Fundación delamujer (Colombia), Interfisa Financiera (Paraguay), and Caja Arequipa (Peru) since 2012 to help find some of those answers and develop a lending methodology that is more inclusive of the rural sector. To date, the new products developed by these institutions have reached more than 60,000 clients, half of whom had never used a financial institution.
Women’s World Banking convened these institutions along with Banco ADOPEM (Dominican Republic), Banco Compartamos (Mexico), and a number of representatives from industry leaders such as Grameen Jameel, the Better Than Cash Alliance, and the Inter-American Development Bank, to discuss the successes and challenges of developing an innovative, responsible, and sustainable approach to serving clients in rural areas.
Three overarching themes about serving this market emerged from the discussion: 1) we must have a deep understanding of clients’ needs, 2) focusing on women and their unique economic contributions to the household is essential, and 3) change must occur at all levels—from marketing pamphlets handed out in the street to incorporating gender-awareness into mandatory staff training.
Understanding the specific needs of rural clients is critical if one is to develop a product that is relevant; understandable; related to economic needs and income streams (cash flow is often seasonal, characterized by large lump sums at harvest times) and easy to physically access Last but not least, the product must be something clients feel they can and should be able to use, especially since accessing financial services is a first for many and they may not feel or believe that financial institutions are speaking to them in any of the marketing or outreach. By doing extensive market research, focus group sessions, and interviews with men and women in rural areas, institutions are better able to design a product that truly benefits the client, yet empowers them to feel that they, too, can use a bank and improve their business and their lives.
Recognizing men and women as separate productive members of society is a game-changer for financial institutions that have traditionally only recognized the prominent activity, generally run by the man. Rural women, and their economic contributions to the household, are often completely invisible in this largely inaccessible sector. Prior to this project in 2012, all three institutions perceived a rural household as just that—a household. Loans were often given to the “largest” economic activity, usually under the purview of the male head of household. However, the Women’s World Banking team uncovered that women contribute almost as much —and sometimes more—to the household income by selling cheese, eggs, crafts or other products made from the farm. The income women bring in is typically smaller in amount, but more regular, usually covering the day-to-day needs of the family. Each institution has since created a product tailored specifically for women, and some now allow multiple loans per household: one for the husband’s activities, and one for the woman’s.
Staff and loan officer training, sales incentives, data collection, and the overall organization’s strategy all must change to incorporate this new vision. This is not an easy or a quick process, but change at all levels must occur in order to better serve the rural sector, particularly women. Loan officers must “speak the language” both literally (such as speaking in Guaraní to clients in parts of Paraguay), and figuratively (in terms of understanding the crop cycle of coffee beans, for example, and how that may impact a client’s ability to repay his/her loan). Marketing materials should be relatable and have clear visuals showing men and women engaging in agricultural activities and simple text explaining the product. Staff at the institution must recognize women’s potential as a market, and incentive structures may need to be adjusted (i.e. to reward number of new clients instead of the size of the portfolio, because the latter may discourage giving loans to women as they usually borrow smaller amounts).
These institutions are continuing to serve rural men and women, those who are often invisible to the financial services providers, and are working to foster a more inclusive lending strategy within their institutions. Despite the challenges that arise from reaching this uniquely challenging market, these institutions’ efforts are met with success as more and more rural clients now have the ability to access a loan that is truly tailored to their needs.