Mind the Gap: Mary Ellen Iskenderian: Why the financial inclusion of women matters

Ensuring women’s independent access to finance has another more profound impact on human development. “There is ample evidence that she will spend that money in ways that contribute directly to the well-being of her family…when money in the household is controlled by women, more of the family members are healthier and eat more nutritious diets and children are better educated,” writes Iskenderian, a passionate advocate for financial inclusion.

At a time when political parties have been competing with each other in putting money directly in the hands of powerful woman voter—seen most recently in Maharashtra where the Mahayuti’s electoral victory is seen as a result—Iskenderain spoke about expanding the net and the net to bring more women into the formal financial sector.

What’s the back story behind Women’s World Banking (WWB)?

At the first UN conference for human rights for women in Mexico City in 1975, Elaben Bhatt of SEWA, Kenyan entrepreneur and banker Mary Okelo, and Esther Ocloo, an activist-feminist from Ghana came together with the idea of creating chapters all over the world to provide guarantees for bank loans to women entrepreneurs.

There was a growing microfinance movement and many microfinance institutions had been started by women. So WWB said: “Why don’t we work to build their capacity?” For a number of years we did both. But creating a network of microfinance institutions dedicated to financial services for women overtook the other mission.

You’ve spoken a lot about financial inclusion. What is financial inclusion and why is this important?

Financial inclusion literally means whether or not you have a bank account in your own name. When digital financial services became popular, it was broadened to include whether or not you have a mobile money account. But at WWB, it’s oriented to truly be a participant in the formal financial sector.

Merely having a bank account isn’t sufficient. For affordable payments you need a safe place to save, access to credit for your business or even be resilient in the face of emergency. You need insurance to protect everything that you’ve built.

What is so exciting about this idea of providing access to the full range of services is that it’s never seen as an end in itself. Getting the account was never what this was about. It was always in service of achieving the sustainable development goals (SDGs) and being able to access education, water, sanitation, healthcare. In fact, financial inclusion supports 10 of the 17 SDGs, including education, zero hunger and poverty.

Some things have remained stubbornly stuck, violence against women, for instance. What are the others?

One of the things very stubborn to change is the misperception that women are not creditworthy. Yet every piece of data tells us the opposite.

In microfinance it was unequivocal that women had repayment rates of 90% versus men who had an average of 60%.

Then there was this drumbeat of: “Women might be good re-payers in microfinance but as soon as they become small business owners, that goes away and they become very poor re-payers.” But what we’ve found is that this perception is an incomplete picture because what’s really going on is that very often a bank would receive a line of credit from another organisation that said, “We’ll lend you $20 million and $5 million has to go to women-owned companies.” So, they make that $5 million loan and completely forget about the population of women they’d served. And women treat the bank in the same way. They didn’t reply in a timely way. What we found is that if you treat women as customers in the same way as you do with men, their repayment rates exceed that of men.

What have you seen changing?

One thing I’m very happy to see shifting here in India is that for many years, there were 18%, 20%, in some countries, 30% gender gap in the ownership of smartphones. India had one of the largest gender gaps. Post-Covid we’ve really seen that gap reduce. When Aadhar was first launched, many women used their husbands’ cell-phones as their identification. But over the years, there’s been an increasing number of women who go back and say, “I want to change that phone number– I have a phone now.”

This does signal an important cultural shift because the conventional wisdom in South Asia has been that women and girls were never given mobile phones because of the fear of who they might be talking to.

I think the extraordinary catalyst for this was India, which was one of only two countries where the first round of benefits during lockdown was made only to women and only via digital payments. In a matter of three or four weeks, 25 million new bank accounts were opened by women. A lot of people, myself included, worried that these would go dormant and won’t be used. So it’s really exciting that they’ve continued it.

Have you been following the story of political parties that are competing with each other to win over the increasingly influential woman voter? They are calling it sops. What is their impact on financial inclusion of women or is this something that is short-term?

I don’t think it’s short term because there is some really fascinating research that is pointing to women being financially included and engaging more with the political system, whether it is by voting or even standing for local elections. So when we look at what empowerment looks like, when a woman has access to finance, one of the things that does appear to emerge is a greater awareness of the right to vote and the right to stand for elections wherever the political opportunities might be.

Does WWB have a plan to bring in women in the informal sector where the bulk of women work for very low remuneration?

Even if they’re running just a fruit stand business, we believe that becoming formal and registering your business is the better way to go. There is some really interesting research that was done in Latin America around the harassment of women where those who weren’t registered are much more subject to being harassed, sexually and otherwise, by the police. If they have that certificate of being a formalised business, they will be much less vulnerable.

As you know India’s female labour force participation has been abysmal. Can you really talk of development without talking about labour force participation?

For a long time there was this almost religious argument within WWB to stay focused on women’s financial access, financial protection and giving them a safe place to save money so that they can be resilient in the face of this.

Then we began asking whether we had any obligation to teaching them the other skills. And I have to tell you the latter argument has won out because it’s really a combination of both things.

Certainly, digital and financial literacy and understanding what those tools mean and how they work is important. But one of the biggest barriers we found to women’s advancement economically is what is available to them, how it works, how to navigate. Hopefully they have a phone, but if they don’t understand the functionality of that phone, then there’s a problem. So we have included these skills in our work.

In your travels to India, is there a story that really moved you or shook you in some fundamental way?

It came literally out of my first visit in India after I joined WWB in 2006. I met a woman who was a star client of one of our microfinance partners. She had taken a loan from a microfinance institution to buy a machine. I learned subsequently that her husband became ill. She had been saving money under the mattress—no health insurance and her cash savings really couldn’t support his medical expenses. They had a daughter who was at school. They had to take her out so that she could start working. The limits of the credit-only-microfinance was this that it didn’t build resilience or provide a safety net. I am sorry it’s a kind of negative story that didn’t end well but taught me that to be functional and secure, you really have to have a full range of products and services.