INNOVATIVE FINANCIAL SERVICES- TARGETING WOMEN AS A VIABLE BANKING MODEL

1. INNOVATIVE FINANCIAL SERVICES- TARGETING WOMEN AS A VIABLE BANKING MODEL April 2008

2. INTRODUCTION Gambia Women’s Finance Association (GAWFA) was founded in 1987. Mission To serve as a financial intermediary to enhance the entrepreneurship development of Gambian women as a means of alleviating their poverty. It also serves as a vehicle for mainstreaming women in national Development processes. Vision To transform the economic and social systems of the Gambia towards an equitable distribution of resources and power.

3. Legal Status • Registered under the company’s Act 1955 and is limited by guarantee; • The first institution to be registered by the Central Bank of the Gambia as a • None-Bank financial Institution and is therefore regulated and supervised by the • Central Bank. • Registered with the NGO affairs as a National NGO • Ownership • Membership of over 44,000 throughout the country; in addition to the 23 founder members.

4. Objectives • To promote financial and operational self sufficiency. • To build a sound human and material resource base. • To maintain a sound governance structure, organizational vision and culture reflecting the principles of service, sustainability and growth. • To implement a cost effective savings and credit programme for low-income women in both rural and urban areas. • To enhance the competitiveness and profitability of enterprises operated by low income women entrepreneurs. • To advocate for the formulation of government policies and legislation which are favorable to women entrepreneurs and micro enterprises.

5. Core Business • Provision of financial services to low-income women engaged in income • generating activities- farmers, traders, etc. • Why target women? • Seen as a more ‘efficient’ way to end poverty: Women contribute a higher percentage of their • earnings to the household. Women spend more on children’s education, children’s clothing, • children’s leisure and healthcare → intergenerational benefits. Women responsible for lifecycle risks such as elderly care, healthcare etc. Hence more focused on saving → asset creation. • 2. Where gender inequalities constitute barriers to women entering or fully participating • in markets, economic growth will be constrained. Women are poorer than men and makeup the majority of informal business owners • Gender equity argument: Why should women remain in a subordinate position?

6. EXPERIENCES The association started its direct lending programme with a nominal amount of D65,000 and that was given out to 13 women. In 1990 the organization made a breakthrough in providing access to credit for women when it signed the tripartite loan agreement with Standard Chartered Bank Ltd and Women’s World Banking (WWB). In 1991 the first loan under the agreement ranging between D10,000 and D20, 000 was given out to 14 women. However, the repayment rates on these loans were low, so the organization had to adopt measures of solving these problems. In 1994 the Organization introduced the integrated savings and credit progamme and that required the clients to save before they could access loans. It also introduced the group lending methodologies during this period. This was a turning point for GAWFA as repayment rates rose drastically (an average of 98% repayment rate on time). Between 1994 and 2007, over D127 million was given out as loans. We were also able to build a culture of savings amongst women, more than 45,000 savers with a net savings of D12 million.

7. EXPERIENCES CONT. The institution has been very successful at targeting women. It has done so through a combination of strategies: • The group lending methodology, where borrowers co-guarantee each other, negates the needs for collateral (and since women are asset poor) it enables us to target women. • Keeping loan sizes small—women tend to request smaller loans; women more risk averse and diversify into multiple businesses due to • gendered roles and responsibilities. (as the sector becomes privatized, and microfinance providers are under pressure to show greater and greater returns, the tendency is to increase average loan sizes which in turn, reduces the % of borrowers that are women. This is a worrying trend, but it is offset somewhat by the fact that absolute numbers of women reached is increasing) • Simplifying paperwork, simple explanations—low income women tend to be less educated and tend to be less financially literate. • Marketing efforts directed to where women congregate (neighborhoods, village communities)—creation of group leaders; reliance on word-of-mouth

8. PRODUCTS • The Group Credit Scheme • The large group credit scheme • The aims of this scheme are: • To ensure that poorer women in the rural communities have access to credit • To enable rural groups invest in communal activities. • To facilitate scaling up of GAWFA activities. • The Solidarity Group Loan Scheme • The aims of this loan scheme are: • To ensure that the average rural women have access to credit. • To enable rural women to invest in their individual activities. • To facilitate the scaling up of GAWFA activities

9. Uses of Group loans • GAWFA finances groups engaged in all forms income-generating activities; • Tie & dye • Soap making • Trade • Food processing • Agriculture (rain-fed, gardening, animal rearing, poultry, etc) • Construction of wells • Guarantee • Micro finance is a tool for poverty alleviation and an industry that allows the poorest of the poor to access credit with less stringent conditions. Therefore for all group loans, GAWFA relies on the co-guarantee mechanism and peer pressure.

10. Advantages of group loans • At GAWFA Level; • Group loans account for only 25% of the total default rate • The institution generates most income from group loans as they form over 75%. • The organization was able to achieve its objective of reaching the poorest of the poor. • At Group Level; • Individuals in the groups are able to benefit from credit, which might not have been possible if • they were on their own. • Individuals are empowered • Communities are developed • Financial discipline amongst members • Improved livelihood of group members and their families.

11. The Individual Loan Scheme Targets: • Residents in both rural and urban areas • Women with average annual income of not more than D10,000 • Women engaged in micro and small scale enterprises or planning to start one. Third party guarantee is requested for individual loans.

12. The Sinyara Loan Scheme • Target: • Individual women resident in the Greater Banjul Area. • Individual women with good established businesses and a monthly • average income of at least D10,000. • Aims: • To enable individual women with growth oriented enterprises in the small and medium scale sectors to access credit and take advantage of business opportunities that may arise in a very dynamic environment.

13. The Voluntary Savings Scheme Targets: • Women and men of all occupations • Women’s and men’s groups • Youths Aims: • To instill financial discipline in the low-income population. • To enable low-income people to generate capital for investment and for personal and family contingences.

14. ACHIEVEMENTS TO DATE • Membership of more than 2000 village base women’s group and 3500 individual members. • Provided business advice and management training to more than 10, 000 women. • Achieved both operational and financial self-sufficiency in 2001. • Recognized as the pioneer and a leader in the Micro Finance Sector in The Gambia. • Operating 20 outlets countrywide • 20 years of continuous service.

15. PORTFOLIO BY SECTOR FOR THE YEAR 2007

17. OUTREACH OF MAIN PLAYERS IN THE MF INDUSTRY IN THE GAMBIA

18. CONCLUSION • From the above, you will agree with me that women are bankable if given the opportunity. From experience women are more creditworthy than men; they are committed to repayment on time and will only take amounts that they can invest and manage very well. As a sector, microfinance is still in its market ‘expansion’ phase as opposed to its market ‘saturation’ phase. There are three broad challenges facing it: • Access: Most of the world’s poor remain without access to basic financial services, over 500m poor clients with need, only about 92m with access • Breadth and Quality of Services: Most microfinance providers have mainly focused on credit, not on other services such as voluntary savings or insurance. Also, there is a quality gap—much has to be done to improve the quality of those services to maximize impact.

19. CONCLUSION CONT. 3. Impact: There is a limited consensus on how to measure impact in a practical way and results of large quantitative surveys have been inconclusive. However, I would not have been here today if I did not believe we have had great impact. Therefore, the impact that GAWFA has made on women is as follows: • For the new entrants into business, the focus is on access to capital. The process to access credit is fast and at less stringent conditions. • For the incumbent client, it is a continuous process of capacity building and helping in business advisory services.

20. WHAT DO CLIENTS WANT? From GAWFA’s experience, clients want: • Continuous access • Convenient repayment terms • Reasonable interest rates • Reputable institutions • Expert advice on business management • Information on markets • Asset building financial products Provide all the above to women and they will change the way the world works!!

21. “WOMEN IN THE VANGUARD OF AN EVOLVING FINANCIAL SECTOR”

22. THANK YOU