VAST amounts of research have been on the subject of the economic contribution of women in societies across the developing world.
It has become common and accepted knowledge that women play a key role in most economies, starting from their contribution to the household economy all the way up to their contribution as a demographic group to broader aggregated macro economy.
In Zimbabwe, this is no different, judging by the results of the national population census in 2012, together with the results of the Finscope 1 and Finscope 2 Survey conducted in 2011 and 2012.
The census revealed that the majority of our population, 52%, is composed of women against 48% for men. This was very consistent with the results of the Finscope MSME Survey which revealed that the distribution of MSME owners broadly reflects the distribution of the total adult population in Zimbabwe.
According to the survey, 53% of MSME owners are female, compared to 47% who are male, and the majority reside in rural areas (66% of MSME owners reside in rural areas compared to 34% in urban areas).
Finscope 1 survey also revealed that the level of financial exclusion was highest among women, especially those that are in the rural areas. These statistics not only tell a story, but reveal an opportunity. Our women are in fact, very economically active, and they are in the majority, so that demographic can in fact, be harnessed through appropriate financial inclusion strategies to drive savings in the economy.
The stated objectives of financial inclusion are to bring as much of the population under the ambit of formal financial services, by increasing access to financial services, improving financial knowledge and literacy and the overall financial capability of citizens.
Microﬁnance has been traditionally identified as being able to enhance the lives of the poor and vulnerable, particularly women, by giving the access to ﬁnancial services, that are currently not yet available to them.
There is considerable evidence that women have less access to credit, however expensive it maybe, through the informal money market. The same is true for savings facilities that can be used by women.
Women and women’s groups thus have been forced into informal sector means of credit and savings such as Round Tables, Rotating Savings and Credit Association Schemes(Roscas), and Self Help Groups amongst others.
In other parts of Africa, the range of available formal market instruments for saving, with lucrative returns, is more limited.
Besley (1995) for example cites the case of “susu men” or informal bankers used by market women in northern Africa. The women who deposit their savings with them ”earn a negative rate of interest in exchange for safekeeping.”
Therefore the traditional institutions like Roscas which allow the women to save, can be harnessed to drive savings and also create opportunities for credit. The problem, however, is lack of universal access to these institutions by the majority of women.
Roscas, for instance, are not as ubiquitous as the informal money management systems. Women therefore need to be encouraged to work together in groups , in order to create the capacity and scale required to mobilise a higher pool of savings.
These groups can be modelled against common interests such as church, trading markets, communities, villages, or women’s clubs or a trade association.
Successful examples such as burial societies or some other co-operative savings groupings are also being successfully used in Zimbabwe.
However, options for saving, with returns comparable to cost of borrowing in the informal money management structures remain limited.
How can these be improved and what interventions can be made by stakeholders such as banks, government ministries and women themselves to ameliorate the problems.
There are two obvious ways in which an intervention can improve the lives of women and the financially excluded. The string point is for innovation in the financial sector to bring down the cost of ﬁnancial intermediation associated with the women and the marginalised.
Secondly, structures need to be created that allow women and the poor to obtain real returns from the process of ﬁnancial intermediation, particularly savings.
Practically, this would entail, not just giving the women access to credit, at rates lower than the informal money market rates, but also giving them options to save in the formal system, whilst earning returns comparable to the cost of borrowing.
Benefits of group lending models
The current body of literature in microﬁnance suggests that institutional innovations, like lending to jointly-liable groups, has allowed women and the poor to get access to credit at favourable terms.
This allows them to invest in a greater range of socially viable projects, smoothen their consumption, and to a greater extent allows their overall incomes to rise.
However, the studies and literature, hitherto, has overlooked the obvious numerous beneﬁts of involving savers in group lending.
Every person is a potential saver and there are distinct beneﬁts of our women folk in their role as savers in the economy.
Apart from the obvious advantage of improving their welfare, there is, as we see in what follows, because of the organised nature of women’s groupings, the additional advantage of using them to solve the informational problems associated with lending to the poorer segments of society.
Women in many instances, often have no collateral to offer against their borrowings and, for obvious reasons lenders may feel that they bear very little liability of failure, when they borrow. Hence this has been put forward as one of the reasons why access to credit by women is generally lower.
Group lending methodologies resolve these problems by giving “the peers” ie group members, the requisite incentives to solve the informational problems associated with this kind of lending.
Conceivably, the sharper the incentives peers have, to screen, monitor and audit the borrowers, the easier it is to solve the informational problems.
Savings led group lending models are one type of group lending arrangement that can be implemented by women’s groups in Zimbabwe.
Under this model , the women members have dual roles as both borrowers and savers. The savings can be accumulated in a savings account with a bank, and then lent out to qualifying members in accordance with agreed rules.
The advantage of placing the accumulated savings with the bank before they are lent out is that the members will eventually be able to negotiate with the bank for additional funds depending on how well organised they are and how they are managing their group or association.
Leveraging these women’s associations or groups can certainly influence the growth of savings in the economy.
Clive Mphambela is a banker. He writes in his capacity as advocacy officer for the Bankers’ Association of Zimbabwe (BAZ). BAZ expressly invites other stakeholders to give their valuable comments and feedback related to this article to him on email@example.com or on numbers 04-744686, 0772 206 913