Women-centric Financial Products: Meeting Women’s Needs

By Soko Directory Team / November 6, 2019 | 9:56 am




According to the Finscope Survey 2016, the overall gender gap in financial inclusion in Rwanda is relatively small. In terms of the total rate of financial inclusion, women show a difference of 4 percentage points.

Eighty-six percent of women are financially included compared to 90 percent of men. However, women still lack access to formal financial products, especially in rural areas.

Based on this finding, Access to Finance Rwanda (AFR) felt the need to ensure that more women are financially included. They concluded that the process of inclusion had to begin with the design of appropriate products and services that meet the needs of women.

AFR commissioned MSC to support three selected financial institutions—Bank of Kigali, Umwalimu SACCO, and Copedu through product development processes. The focus of the assignment was the design of women-centric financial products.

Additionally, MSC also trained five local consultants in Rwanda to equip them with skills in market research and product development. As a result, the institutions designed three new gender-centric products, two credit products, and one savings product.

We share some key insights on the product and behavioral preferences of the women customers whom we developed these products in the following section.

Loan repayment

Women have financial needs and have the capacity to save and repay their loans.

The large numbers of women who signed up for the product demonstrated this.

Over six months, women accessed a credit portfolio of RWF 1 billion in one institution. Another institution registered a repayment rate of 100 percent.

We cannot ignore this performance. It confirms that women are a viable segment that FIs can focus on.

Individual lending as opposed to group lending

Most women prefer to access loans as individuals and not through the group lending approach.

They prefer to take responsibility for their own debt and not for others. In one of the FIs, the product had been designed to allow women access in groups of five or individually, but all of them opted to access the loans as individuals.

The women reasoned that they wished to access the loans individually. They explained that they found it difficult to make comparatively less responsible groupmates repay the loan committedly.

The women did not want to take on the burden of having to repay the loans for members who defaulted.

Reasons for the decline of loans

The key reasons for loans declined by the bank were poor banking history and negative listing by the Credit Reference Bureau (CRB).

Many of the women, especially in the rural areas do not save formally with FIs and thus had no banking history records. They, however, saved informally in their savings groups, SACCOs, via mobile money at their homes, or even jointly with their spouses, among other methods. The financial institutions that considered banking history as a major determinant of accessing the loan, therefore, had to be flexible.

The negative listing by CRB resulted from the fact that the women had guaranteed their colleagues while borrowing as a group, and eventually the colleagues had defaulted. As guarantors, therefore, they too were blacklisted. This could explain the reservation against borrowing through the group lending approach.

Spousal consent

Women prefer to access these loans without the consent of their spouses.

Most financial institutions require women customers to get consent from their spouse before accessing the loan—regardless of the loan amount. The women, however, explained that they were happy if they had the opportunity to access money without their spouse’s consent.

The women explained that in most cases when they involved them, their spouses were more likely to divert the loan funds accessed to cater to things other than the loan purpose.

On the other hand, the staff of the financial institutions said they were uncomfortable lending money to women whose spouses had not consented. To them, in the case of default, recovery would be challenging because the spouse would not be supportive as he had nothing to do with the loan.

Joint business ownership or collateral

Women find accessing credit independently to be a challenge.

In general, most of the women either lack collateral registered in their names or jointly own it with their husbands. They, therefore, opted for unsecured loans. This means that they often qualify for smaller sums of money, as larger loan amounts often need to be secured.

A significant number of women run their businesses together with their spouses. In most cases, the businesses are registered in their husband’s names, therefore, their husbands had to be involved in the loan process as guarantors.

 Savings ability

We had originally assumed that teachers would not be able to save much since their salaries are quite small.

Yet like any other people, teachers have many responsibilities.

One of the institutions designed a savings product that targeted female teachers. Eventually, their male counterparts also signed up for the product. It was therefore interesting to see that the teachers were able to save more than triple the projected savings amount during the pilot period.

We discovered that these women have other sources of income and are actually willing to save even more, so long as they can access their money as and when they need it and can earn some interest on it.

Besides pursuing a systematic product development process, we made a number of recommendations. The first key recommendation was to encourage women to save formally so that they can increase their chances of accessing loans.

This would, in turn, ensure that those customers who are able to save can access their money as and when they wish through alternate banking channels. The second key recommendation was to digitize the loan application process to improve turnaround time. Doing this will not only promote uptake and usage of the product but also lead to the retention of existing customers.

The financial institutions have expressed optimism in rolling out these products. It is therefore important that they keep track of product performance and continue to refine the products to make them even better.

Overall, no less than 200 new customers signed up for the various products designed with the teams from the three financial institutions. This proves that the products do have great potential. In the near future, we would be keen to conduct further studies to understand the repayment behavior of these clients, especially for the uncollateralized loan facilities since the pilot test time was only six months. Some of the loans disbursed had loan periods of up to 24 months, so we would be interested to monitor if the performance still holds 24 months later.

The Author is Doreen Ashimbiwe, Manager Banking, and Financial Services MSC (MicroSave Consulting)





About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author







Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2019
  • January 2019 (256)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (339)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (314)
  • November 2019 (214)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (257)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (187)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (248)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (108)
  • May 2015 (116)
  • June 2015 (120)
  • July 2015 (148)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (169)
  • November 2015 (174)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950