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Q & A: Mary Ellen Iskenderian, Women's World Banking
Mary Ellen Iskenderian is president and CEO of Women's World Banking (WWB), the world's largest network of microfinance institutions and banks. Below, Iskenderian discusses why her organization works with women and how she sees the microfinance industry developing in the future. Iskenderian will be a panelist at ICRW's March 7 Passports to Progress discussion.
ICRW: How does Women’s World Banking approach microfinance and why focus on women?
MARY ELLEN ISKENDERIAN: Microfinance is about much more than credit, and has the capacity to help more than entrepreneurs. WWB’s research confirms that the key economic priorities for poor women, to a far greater extent than for men, continue to be health care, the education of their children, and housing. All microfinance clients, but particularly women, seek a safe place to save the assets they have created and the means to protect them from catastrophic loss. WWB helps microfinance institutions (MFIs) move away from a strictly credit‐led approach toward providing a broader array of financial products and services, including savings and insurance, that help the poor build financial safety nets. The key to success for the MFIs of the future will be offering financial products and services that are designed to meet clients’ needs, motivations and desires.
ICRW: Why women?
ISKENDERIAN: The initial motivation for microfinance roughly 30 years ago was, to a great extent, gender neutral. The pioneering MFIs sought to provide credit to poor entrepreneurs who had no assets to pledge as collateral and, consequently, were denied access to capital by the formal banking sector. It quickly emerged, however, that women entrepreneurs invested the profits from their businesses in ways that would have a longer‐lasting, more profound impact on the lives of their families and communities. The woman entrepreneur as the gateway to household security became a fundamental premise of the microfinance business model and the success of microfinance as a poverty alleviation tool.
ICRW: Critics have suggested that microfinance is not effectively reaching the poorest of the poor and not empowering women. How does WWB measure the impact of its work on women?
ISKENDERIAN: We have to be careful when talking about the poorest of the poor. It is often the case that microfinance isn’t the right intervention when very basic needs of food and shelter are not being met. Some of our network members are working with nongovernmental organizations to provide basic services, but it isn’t always a part of a sustainable microfinance model. Where microfinance can be effective is for the working poor who have been able to take the step of starting a business and just need access to resources.
Regarding empowerment of women, we know that credit alone is not empowering – women need assets in their own name and the ability to plan for the future. Similarly the measures of progress are not always typical metrics; for a poor family success can be measured in eating three meals a day, moving from a dirt floor to cement or upgrading from a makeshift leaf roof to a weatherproof roof. We also know that women typically don’t make measureable gains in their income until the third loan cycle (two or three years of borrowing) or in more conservative countries, until after a husband or brother’s business is prosperous.
At WWB we are committed to measurement and believe that what gets measured gets done, we just want to be assured that we are measuring the impact on women. We are currently developing metrics with our network members to measure how well we are reaching women with meaningful financial solutions. Our network members are committed to business strategies that include social and financial prosperity and we see the two as inextricable. Our Center for Microfinance Leadership is dedicated to helping leaders grow organizations that value this double bottom line.
ICRW: You’ve worked in both the private and development sectors. In your view, should microfinance be for-profit or nonprofit?
ISKENDERIAN: We firmly believe that the question should not be about profit or nonprofit but sustainability. The legal structure dictates whether an institution can offer savings, which is incredibly important to sustainability, but aside from that distinction there are both nonprofit and for-profit MFIs that are serving women efficiently and operating under a double bottom line. The reality for the industry is that we need capital to grow institutions and there are responsible ways for both MFIs and investors to benefit from commercial capital. There is of course a difference between for-profit and profit maximizing. Because they serve the poor, microfinance institutions have an obligation to share their success with clients – either by investing in product development and delivery or outreach to more of the poor or by including clients in the ownership structure.
ICRW: The industry has exploded in recent years and faced some inevitable growing pains. How do you see microfinance evolving in the next 10 years?
ISKENDERIAN: Now is an exciting time for microfinance. We have made great progress serving more than 190 million borrowers as an industry; however, there is still a significant access gap and closing this gap is going to require innovation. We have a tremendous opportunity to use advances in technology, particularly in mobile banking, to reach more clients. We just need to ensure that women have access to the technology so they are included in the progress.
There has also been a more urgent call for microfinance institutions to offer a broader range of financial services. This is particularly good news for women whose interactions with financial institutions often parallel their life cycle needs. Financial institutions that understand those needs and create related products — for example, programmed savings, insurance and pensions — can be successful and establish a significant competitive advantage for financial institutions. For WWB and women-focused microfinance institutions the future has to include:
- Innovative products for women and girls
- Delivery channels that take into account the lives of women and the power of marketing
- Leadership invested in keeping the industry mission-focused
- Social performance to ensure we are measuring women’s access