FINCA: Giving Credit to Women
f the one and a half billion people in poverty worldwide, women make up the majority. They receive one-third fewer employment opportunities than men, and they typically earn half of what men earn, often working longer hours.(1) In rural areas alone, the number of poor women has increased by 50 percent since 1975.(2) The figures are equally bleak for children, since increasing numbers of families throughout the world are headed by single women.
Sadly, women are still being denied access to credit that would allow them to improve their situation, either because of traditional gender biases, or because of misconceptions about women -- especially poor women -- as bad credit risks. Since 1984, FINCA's mission has been to extend credit -- not charity -- to poor women as a means of combatting poverty. By promoting the estab- lishment of village banks, support groups of 20-50 low-income women, FINCA offers women access to credit and a safe place to accumulate savings. Yet FINCA does not target women at the expense of others; rather, we recognize that the surest way to reach all members of a poor family -- particularly the children -- is through the mother. FINCA promotes the economic progress of women, knowing that on them depends the welfare of the entire family.
What a Loan Can Do
In a survey of 1,010 village bank members in El Salvador, FINCA found that before joining a village bank, 57 percent spent less than $12.50 per week on food for their families. Once they became bank members, 90 percent spent more than $12.50, and 43 percent spent more than $25.00 -- doubling the amount they were able to spend to feed their families. Of village bankers with school-age children, 84 percent have been able to keep their children in school.
On average, for every $50 that a bank member borrows and invests, she will earn income equal to 20 days of minimum-wage employment every four months. By the time she reaches a loan level of $300, the bank member will have created the income equivalent of at least one full-time job.
Poor women lack the collateral needed to secure traditional loans. In some countries, women are prevented by law from owning or inheriting traditional sources of collateral, such as houses or land. In many countries, groups that provide information about credit, or credit itself (agricultural extension services, cooperatives, or social groups) are exclusively male.
Many lenders mistakenly believe that poor women represent bad credit risks because they would spend loan capital on immediate consumption needs, rather than saving or investing it.
Increasing numbers of families in poverty are headed by women. In cases where poor families are headed by a man, the woman's income can provide a crucial "safety net" during times of economic crisis. Women spend a larger percentage of their earnings on the family than men do, purchasing food, health care, housing, and education.
Women are more likely than men to hire family members to help them, thus creating more employment for the family unit. Most microenterprise credit programs have found women to be equal or better credit risks than men.
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