Gender Action Mainstreaming for Empowerment to Change

ethical finance

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The microfinance industry began as a social movement. However with commercialisation there has been increasing concern with 'mission drift' from social goals. Responses have included:

1) Social Performance Management to reinforce and implement social goals

2) Consumer protection to increase accountability, security and transparency in financial services.

3) Promotion of social business

4) The Paris Appeal which attempts to unite FSPs around a common development agenda.

This has been part of a wider concern with financial inclusion, social business and Corporate Social Responsibility. However gender issues are rarely explicitly mentioned. Even where women are mentioned as part of a poverty agenda, gender issues are not explicitly addressed.

poverty tools and financial inclusion

In the last decade there has been discussion of products and organisational structures to better serve the ultrapoor, and also with measurement of the extent of poverty targeting.

The issue of poverty targeting received particular attention from 2000 when the U.S. Congress passed the Microenterprise for Self-Reliance and International Anti-Corruption Act, which mandated that half of all USAID microenterprise funds benefit the very poor. To verify that USAID meets this target, subsequent legislation required USAID to develop and certify low-cost tools for assessing the poverty status of microenterprise beneficiaries, and required its microenterprise implementing partners to use those tools to measure and report the share of their beneficiaries who are very poor. This then stimulated design of a range of poverty assessment tools by different players in the microfinance sector.

Inclusive finance recognizes that a continuum of financial services providers work within their comparative advantages to serve poor and low-income people and micro and small enterprises. Building inclusive financial sectors includes
but is not limited to strengthening microfinance and MFIs.

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social Performance management

Social Performance Management is defined by the Social Performance Taskforce as “the effective translation of an institution’s mission into practice in line with accepted social values.”

The SPTF Universal Standards for Social Performance Management (“the Standards”) are a set of management standards for microfinance institutions (MFIs) which aim to refocus MFIs on the client. The Standards are organized into the following six categories:

  1. Define and Monitor Target Clients and Social Goals
  2. Ensure Board, Management, and Employee Commitment to Social Performance
  3. Protect Clients’ Rights
  4. Design products, services, delivery models and channels that respond to Clients’ Needs and Preferences
  5. Treat Employees Responsibly
  6. Balance Social and Financial Returns
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SMART Campaign for Consumer Protection

The Smart Campaign was formed to bring people together across the microfinance industry to implement a common code of conduct that governs how clients should be treated and to help implement client protection safeguards within the industry’s operations. By incorporating client protection into all aspects of business operations, microfinance institutions can proactively and collectively strengthen microfinance and position the industry as a leader in responsible financial services.

Smart Microfinance encompasses core Client Protection Principles to help microfinance institutions practice good ethics and smart business:

  • Appropriate product design and delivery
  • Prevention of over-indebtedness
  • Transparency
  • Responsible pricing
  • Fair and respectful treatment of clients
  • Privacy of client data
  • Mechanisms for complaint resolution

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Paris Appeal for Responsible Microfinance

Officially presented at the 4th annual Convergences 2015 Forum in May 2011, the Paris Appeal for responsible microfinance is part of a campaign of advocacy and action among all concerned actors: the general public, microfinance professionals and decision makers.

The Paris Appeal signatories…

  1. Consider that microfinance institutions must pursue a long-term double objective of financial viability and social impact certified by recognized social performance indicators;
  2. Remind of the importance of solid governance.
  3. Call on to microfinance institutions, their national and regional associations, and regulation authorities, to adjust and prevent the sector’s mission drifts,
  4. Encourage investors specialized in microfinance to subscribe to a Code of conduct allowing the MFIs they support to strengthen financial viability and to reach their social objectives.
  5. Encourage researchers and universities to conduct impact studies and disseminate best practices.
  6. Call on to donors and private foundations to uphold their microfinance commitments, to encourage innovation and diversification, to support and train clients and to focus on products and services for the poorest, where the needs are manifest.

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Issues for gender mainstreaming

Although these ethical concerns about the poverty inclusion and development impact of the financial sector offer important openings for gender mainstreaming and a focus on gender justice, gender issues are rarely explicitly mentioned in any of the literature. Even where women are mentioned as part of a poverty agenda, gender inequalities are not explicitly addressed.

The challenges of continually reaching downward to underserved groups, particularly in poorer rural areas have stimulated some very positive innovations:

  • tools for assessing and measuring poverty reach
  • indicators for social rating and monitoring social performance
  • introduction of much more robust measures and staff incentives for poverty reach in organisations like Grameen Bank
  • cost-effective integration of micro-finance with health and education in organisations like ProMujer and Bolivia

However again these measures are not necessarily gender sensitive:

  • poverty assessment tools are based on a household measure which may exclude vulnerable women in households just around the poverty line
  • gender issues may become swamped in the other requirements for social rating and performance assessment
  • women's empowerment may become conflated with access to health education and girls education.

There are a number of key challenges:
1) Identification of relevant, measurable and verifiable gender indicators
2) Identification of gender equitable process indicators which address gender inequality
In neither case is a simple % measure of women's participation necessarily the most relevant because it ignores the impoartant role of men clients and staff in promoting change in gender inequality.

It is however possible through use of something like the FALS methodology to establish locally relevant gender indicators and ways in which they can be verified. If linked to a participatory organisational gender assessment process based on the client priorities, organisational process indicators could also be established.

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