Lending to Women Makes Good Business Sense -- and Lifts Up Whole Communities

http://knowledge.wharton.upenn.edu/article.cfm?articleid=1218


Published: July 27, 2005 in Knowledge@Wharton


Attending a conference on women's health and safety at the global level, one might expect to hear reports from doctors and scientists talking about new technologies and medications to address specific health issues. If only it were that simple. Instead, participants at the recent "Penn Summit: Safe Womanhood in an Unsafe World," organized by the Schools of Nursing and Medicine, heard a complex story of poverty, illiteracy, limited access to the formal economy and inadequate property rights -- some of the conditions that most directly affect women's health and their ability to care for themselves and their families. It is among these seemingly ancillary problems, said Summit speakers, that we will find solutions to the greatest health challenges facing women today.


Poverty and Illiteracy: A Lethal Combination


When asked to pinpoint the most detrimental causes of ill health among women, speaker May Rihani, director of the Global Learning Group and Center for Gender Equity, Academy for Educational Development, said that without doubt it is the combination of illiteracy and poverty. As such, said Rihani, "girls' education at the primary and secondary level might just be the most powerful strategy to improve the socioeconomic environments in which women live, and improve the health of women and their families." She provided the audience with statistics from numerous studies that linked education to better health:


• A 63-country study showed that higher education levels for women increased productive farming and accounted for 43% of the decline in malnutrition achieved between 1970 and 1995.

• In Africa, children of mothers who receive five years of primary education are 45% more likely to live beyond the age of 5.

• Multi-country data show that educated mothers are about 50% more likely to immunize their children than uneducated mothers.


She also presented statistics that show the effects of illiteracy and lack of education:


• Countries with lower than 20% of girls enrolled in secondary school have the highest rates of teen birth rates.

• A study from Zambia finds that AIDS spreads twice as fast among undereducated girls.

• A study in Brazil shows that illiterate women have an average of 6 children, while literate women have an average of 2.5.


Lack of education, coupled with poverty, sets up a secondary problem - that of women being forced to seek financial stability through unsafe means. Geeta Rao Gupta, president of the International Center for Research on Women, told Summit participants that the asset gap, particularly with land ownership, places women in extremely precarious financial situations.


Statistics of land ownership among women in many countries, she reported, is dismally low. In Brazil, just 11% of women own land; in Pakistan that figure is only 3%. "The asset gap pushes women into the informal sector," said Rao Gupta. "This means insecure, low-paying jobs -- the kind of work that is not protected by laws or governments." By far the greatest threat, agreed participants, is the often inevitable slide into prostitution.


"Far from being the oldest profession in the world," said speaker Esohe Aghatise, executive director of Associazione Iroko Onlus, a group in Italy that addresses human trafficking, "prostitution is the oldest form of oppression in the world." Laura Lederer, a senior advisor with the U.S. State Department, said that their research has uncovered numerous health issues associated with women involved in the sex trade: 64% had been threatened by a weapon, 80% had substance abuse problems, and 68% suffered from post-traumatic stress disorder.


Ameporn Ratinthorn, a member of the nursing faculty at Siriraj Mahidol University in Thailand, has worked directly with prostitutes. She reported that among nearly all of the prostitutes she spoke with during a recent research study, economic instability and lack of education were the two key factors leading women to the sex trade. The portrait of a prostitute, at least in the area of Thailand where Ratinthorn conducted her research, is that of a woman with little education (65% had less than six years of formal education), who is a mother (60% have children), is the sole bread winner in the family (if there is a husband, he tends to be absent), is in debt, and whose family has at least one member who is sick and unable to work.


What these women tend to have in common, said Ratinthorn, is that they are highly economically disadvantaged and at the same time have enormous family responsibilities. Not surprisingly, the women in Ratinthorn's study suffered from high rates of sexually transmitted diseases, including HIV/AIDS, and had suffered physical injury and even death due to violence by customers, partners, pimps, and even law enforcement personnel.


Opening Doors to Wealth Generation


While women are often kept out of the formal economy, they have proven -- when given a chance -- to be highly adept at improving their financial situations and in turn, the well-being of their families.


This fact was the catalyst for the creation of microfinance organizations more than 20 years ago. As C. K. Prahalad notes in his book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, "Women are central to the entire development process. They are also at the vanguard of social transformation." He attributes the success of Grameen Bank, a microfinance pioneer in Bangladesh, to its policy of lending only to women. Indeed, the default rate at the Grameen Bank is less than 1.5%.


Speaker Hans Dellien, manager of microlending services for Women's World Banking, said that investing in women "is a secure bet." And the connection to women's health is clear. "If you empower women through economic means, they will invest in their children (by sending them to school) and in their households. Good health follows."


WWB's web site answers the question of "Why lend to women?" this way:


• Women are major actors in the global economy. Women's roles as the farmers, traders, and informal sector industrialists are major and often overlooked.


• Global experience with microlending demonstrates that women are better credit risks than men, and that low-income entrepreneurs have higher repayment rates than large bank clients.


• Investing in low-income women entrepreneurs is a highly efficient means to achieve economic and social objectives. Women manage household finances in most of the developing world. As more cash and assets get into the hands of women, most of these earnings are spent on food, medicine and schoolbooks for their children.


• Women tend to be honest, practical and reliable. This results in a low percentage of business failures and loan defaults among women business owners.


Dellien said that he and his colleagues within WWB, which doesn't lend money but serves as an advocate and provides technical assistance for microfinance, spend a lot of time explaining to banks and potential lenders that this isn't charity, but rather a highly effective, smart way to invest resources.


That idea is at the core of Prahalad's book, which notes that more than 4 billion people live at the bottom of the pyramid on less than $2 per day. Rather than pity them or treat them like "poor" people, imagine what we could do if we involve and respect them by opening doors to financial stability, suggests the author. This kind of limited thinking -- that poor people are all the same -- held back even microfinancing organizations, added Dellien. "Twenty years ago we had a one-product-fits-all approach." Groups like his eventually began to see that their clients, though all poor, had very different situations.


"Our clients were running small, medium, and large enterprises," he said, "which means they had different financing needs." That realization has led to a variety of new products and services, which Dellien hopes will soon include health insurance and pension funds. By recognizing the power at the bottom of the pyramid, microfinancing organizations have moved their focus from just helping women subsist to helping them (and in turn, their families) create long-term financial stability.


As Judith Rodin, past president of Penn and current president of the Rockefeller Foundation, said in her welcoming remarks at the Summit, "This is a multidisciplinary problem .... Education and employment affect women's health." That theme played out during the two-day summit where participants heard over and over that a woman's economic position directly affects her ability to pay for needed improvements in health, housing and education; impacts her power and status in the family and community; and plays a major role in her ability to act against violence directed toward herself and her family.