Financial Education as Stepping Stone to Women’s Economic Empowerment: Reflections from CSW 63
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Financial education is essential for the long-term success of financial inclusion initiatives.

It magnifies the “empowerment effect” brought by access and control over resources, as it places ownership and accountability into the hands of the beneficiary.

Peruvian microfinance officer Rut Pelaiza shared with participants at the 63rd session of the UN's Commission on the Status of Women some of the tools provided during her training sessions with rural women.

“I always teach basic finance using my dolls. May I present Señora María, Señora Teresa and Señora Josefa. Each one has a different way to save money: Señora María has a formal savings account, Señora Teresa buys cattle to breed, and Señora Josefa stores her extra money in a tin can, kept in her house.” For a brief moment, Peruvian microfinance officer Rut Pelaiza transported participants at the 63rd session of the UN’s Commission on the Status of Women (CSW) to one of her training sessions with rural women.

During a side event hosted by the BBVA Microfinance Foundation (BBVAMF), Rut and others showed women as “forerunners of change” with a focus on financial inclusion and digital transformation. In Peru, 66% of women don’t even own a bank account, forming a segment with scarce knowledge on key financial notions. As Peru’s Permanent Representative to the UN, Gustavo Meza-Cuadra, noted during the side event, “There is still a lot to do in terms of integrating women in the financial system. Sharing best practices like Rut’s method is one way to achieve it.”

Financial education is essential for the long-term success of financial inclusion initiatives. It magnifies the “empowerment effect” brought by access and control over resources, as it places ownership and accountability into the hands of the beneficiary. Orienting these efforts towards women in vulnerable conditions is thus especially valuable. For one, as heads of households (if not single-parent households), they possess information that allows efficient management of the family’s finances. Similarly, basic financial management skills will make them more responsible users of products and services.

Microfinance institutions (MFI) like ours pay attention to this, and we know that responsible financial inclusion requires not only giving access to credits, savings facilities or insurance. It also entails learning how to best use these tools to increase clients’ well-being.

At BBVAMF, we implement this approach in all six of our institutions in Latin America. We give special focus to women’s economic empowerment that is currently affecting 57% of the more than two million entrepreneurs served in five countries (Colombia, Peru, Dominican Republic, Chile and Panama). Of these female entrepreneurs, 84% live in vulnerable conditions, 40% possess primary education at best, 45% are single heads of households with dependents, and nearly 30% live in remote, rural areas with little access to basic services such as health and education.

Even with these potential setbacks, we have observed through our social performance assessment that 37% of the female entrepreneurs had left their initial poverty level within the second year of working with us. Additionally, they register higher growth rates compared to their male counterparts: their sales increase by 19% (versus 14%), and their net incomes and assets grow by 20% and 25% respectively (compared to 12% and 21%). These are promising outcomes that strongly support our approach.

These figures are interesting because our female clients not only run businesses with less starting capital, less assets, and lower loan disbursements than men. In general, they also have less knowledge in finance, and traditionally face more obstacles to participating in the formal banking system. Most of them have likewise expressed misgivings about generating additional income, given that their husbands “already provide for the family.” Some have even aired their fear of getting overly indebted, and in associating themselves with a financial institution.

Our microfinance officers walk long distances to reach remote places where nobody else goes to bring access to finance closer to those who need it the most.

We have sought to identify which of our actions are contributing to these outcomes, especially among the more vulnerable female segment. We have detected three factors:

  • (1) Productive Finance methodology. Composed of financial services, skills training and accompaniment, this approach builds up a long-term relationship with low-income entrepreneurs to support their progress, and that of their families and communities. Our microfinance officers, whom we consider the “soul” of the Foundation, travel by motorbike, public transport and even walk long distances to reach remote places where nobody else goes, to bring access to finance closer to those who need it the most.
  • (2) Local knowledge. Through microfinance officers who originally hail from the communities they serve, we learn so much about clients’ needs. Such is Rut’s case: she would address her group of female entrepreneurs in their native quechua, making them feel more at ease. They also become more open to sharing their experiences, and perhaps even their concerns. This kind of work at the grassroots level has the most potential to positively impact people’s lives.
  • (3) Security. Since its creation, the Foundation has established a group of sustainable and innovative microfinance institutions from local organizations specialized in the sector. On one hand, the viability of our MFIs guarantees our entrepreneurs that we are able to accompany them for a long time. On the other, the institutions’ familiar origins help dispel some of our clients’ doubts about being integrated in the formal financial system.

Financial institutions play a pivotal role in promoting women’s economic empowerment. It is in our hands to design financial services that consider their specific needs and concerns, but more importantly, we can also channel some of the more basic knowledge that would help women make better financial decisions for them and their families. This is essential in achieving prosperity in all levels because, women are, as in the words of Laura Fernández, Head of Women’s Empowerment for BBVAMF, “cornerstones for their country’s development and poverty reduction.”

The author of this article, Karessa Ramos, is a Social Media Data Analyst at BBVA Microfinance Foundation.


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