Microfinance is narrowing the gender gap, report finds

The world’s first microfinance social performance report based entirely on customer voice – the 60 Decibels Microfinance Index – finds that microfinance institutions (MFIs) play a crucial role in women’s lives by narrowing the financial gender gap, improving economic well-being and empowering them to pursue business ventures.

Based on nearly 18,000 customer voices across 41 countries, including those of over 12,000 women, the report conducted by 60 Decibels reveals that 78% of female microfinance borrowers are using their loans for business purposes, such as buying equipment or leasing premises. 88% of these customers reported their quality of life to be ‘very much improved’ or ‘slightly improved’.

Furthermore, female borrowers state that their increased incomes also translate into better household well-being – including the ability to make home improvements, pay for schooling, access healthcare, and enjoy a better diet.

The study also finds that microfinance loans empower women to manage their financial affairs. Nearly three quarters (73%) agree their loan repayments are ‘not a problem’, compared with 67% of men. More than one in five female borrowers (22%) report their ability to manage their finances has ‘very much increased,’ with 35% stating their stress about finances has diminished as a result of their MFI loan. Additionally,  67% of female customers say that they fully understand their loan’s terms and conditions.

Despite this progress, the 60 Decibels study finds women are still at a disadvantage when it comes to access to financial services, with 62% reporting fewer ‘good’ alternatives to their MFI. Additionally, 37% of female customers find it ‘very’ or ‘slightly’ difficult to fund an unexpected expense such as a health emergency.

Sasha Dichter, CEO of 60 Decibels, said: “Our research finds microfinance institutions play a vital role in improving the lives of women in developing countries. However, until now, their managers and investors have not been able to see what ‘good’ social performance looks like, or which MFIs are creating the best outcomes.

“By bringing together the voices of thousands of women from dozens of countries, we can show investors in MFIs how and where to target their investments for maximum impact. We look forward to seeing how microfinance continues to improve womens’ financial well-being in future iterations of the report.”