Put people at the heart of finance

As the Finance Ministers meet to discuss a new financial system in preparation for the G 20 meeting in April, it is appropriate to look at an area of the financial system that has been successful at putting people at the center of finance: Womens World Banking which, for 30 years, has been helping poor women in poor countries have access to microfinance to transform their lives and their communities. I recently spoke with CEO Mary Ellen Iskenderian about how, in a time of financial crisis, she explains that while not all of her clients have paid their loans in as timely fashion as they normally do, their have been very few defaults. Her answers – and our subsequent conversation – illuminated not just WWB but the larger issues of women controlling their own money.

“We know the need for good old fashioned credit analysis. We really know our clients. We closely monitor our portfolios. Unfortunately the larger financial institutions got away from knowing the customers – you just can’t slice the risk away.” She sees a strong role for government in supporting the financial sector: “Governments need to be a catalyst for people to do the right thing and provide the right conditions for people to act in their own enlightened self interest.”

The poor – especially poor women – are feeling the brunt of the crises; credit is becoming more expensive. This has helped fuel microfinance institutions to start mobilizing savings deposits to support the communities. That’s not the only shifts in the micro-credit industry. For Iskenderian, one of the exciting and nascent fields is micro-insurance.

In much of the developing world, there is no insurance – including life insurance or medical insurance – for poor communities. Which means that when someone dies or goes to the hospital, it can take people – especially women – months if not years to financially recover the costs. Again and again Iskenderian has seen small, women led- businesses fail not because of lack of initiative or good business sense but because of a the sickness or death of a family member whom the entrepreneurial woman then has to take care of.

Insurance companies have not traditionally shown an interested in poor women – especially not in giving them maternal or pre-natal insurance, which is Iskenderian’s long term dream. First, she is focusing on basic insurance, and she has recently found a partner in Zurich. Together, they are looking to bring the benefits of insurance (in a ‘right size, right fit’ fashion) to poor communities.

She also sees a powerful role for microfinance in post-conflict situations. “Women are the protectors of household security, and out of necessity they become very entrepreneurial in post conflict situations. Micro lending is very successful, and it builds women’s’ self-esteem and dignity.”

Iskenderian is concerned that micro-finance should remain focused on women and the power that women have. Their most recent research details how as many microfinance institutions become more profit-driven, they loose their mission-focus on women. As women remain the catalysts for community change in many poor communities, that has potentially serious consequences.

Womens World Banking won’t loose their focus on women. And when the G-20 meets in April in a room that will be mostly filled with mostly white men in suits, I hope they can learn some of WWB’s lessons. Know your business, your clients and their real needs. Focus on women, not just men. Put people at the heart of finance.