Women and Finance

Nubia lives in a an informal settlement in a Latin American city. She has several children and no husband. Nubia wants a house. It is the best investment she, her mother and her sisters know of. It is also security for her and her children. No bank would lend Nubia money. She has no bank account, no savings, and no proper job. Her “savings” are in a television set and a pair of gold ear-rings, paid for in instalments. “Isn’t ridiculous that they have television sets and gold jewellery when they don’t even have flushing toilets in their houses?” This is the comment of more well-to-do observers: but then there is no instalment purchase plan for a flushing toilet. However, it is possible for Nubia to give her television or gold jewellery as down payment for a plot in the informal land market. Some of her friends have done it.

Many women with no right to inherit rural property see a house of their own in an urban area as the only secure shelter they can have access to.

The poor face many problems in obtaining finance for shelter from conventional finance markets. Financial institutions prefer to give big loans. Small loans are not good business. However, the poor cannot afford to take big loans because their monthly incomes are too small for the repayments required. High interest rates make repayment doubly difficult.

Eligibility criteria usually require relatively high and regular incomes. Many of the poor have low and irregular incomes in informal employment.

The poor in general, and poor women in particular, have practically no access to shelter credit.

Lack of substantial savings which banks like to see before lending is another stumbling block.

The requirement for collateral or other security, often in the form of land or other legal property, automatically excludes most poor people.

Women form the majority of the poor and, as such, suffer all the above constraints. In addition, there are specific factors that bar women from the credit market. The legal status of women, by which they are classified as minors who cannot acquire credit or only on husband’s or male relative’s guarantee, is one problem. Definitions of household, where the man is assumed to be the head of the family, and “normal” families have a male head and breadwinner, lead to discrimination against female heads of household, and disregard for the woman’s income when assessing the income eligibility of “normal” households.

Going back to Nubia, if she had money in the bank, she would not be needing a loan, not for the kind of housing purchase or development she is likely to be doing. With her laundry job, she sees no way of saving enough to buy a house, even in her squatter settlement.

Most house purchases or improvements by the poor in developing countries are through cash payments from family savings or from informal loans. However, family house purchases are often not the best solutions for a woman like Nubia. Since she is single: she is expected to contribute towards her parents’ house. Nubia has contributed 25 per cent of the purchase price of her parent’s house. Her parents in turn have helped their sons to buy their own houses. And Nubia? She is expected to live with her parents: but she is 32 and does not wish to live with her parents any more. Her married friends are not much better off.

They have little hold on property for whose acquisition they have directly or indirectly contributed.

What Nubia would really like is a convenient savings plan, where her small savings would enable her to have small loans for whatever she needs a loan for - not necessarily for buying a house, not right now anyway. Yet being able to satisfy some of these other immediate needs brings her closer to acquiring a house some day.

Nubia is like many women among the poor in developing countries, cut off from the conventional housing market that requires large down payments and expensive credit, to buy ready-made housing that is often not suitable for the buyer. Many are not eligible for, do not want, cannot afford, and are even afraid of credit as it is currently available.

A credit scheme for house improvement in a poor rural district in Kenya, run by an NGO (Mazingira Institute), had to change its approach when project staff realized that even repaying the very small loans offered would have been a heavy burden on the women involved. Besides, the women’s first priority was raising money for school fees for their children. The new approach involved giving small loans to women’s income-generating groups, for shelter-related activities. With some technical assistance, the women learned how to make stabilized soil blocks and fibre concrete roofing tiles for sale. Much later, they also learned construction skills. Several years after the start of the project, the women’s groups are taking loans for shelter-related income activities and some groups are now thinking of home improvements. A side benefit for the women has been that the materials production and construction skills that they have gained mean they can do their own construction, or be able to supervise the artisans they hire to do the construction for them. Money was lost before through artisans’ incompetence or dishonesty.

Flexible loan schemes for women’s economic activities usually result in home improvements.

The Working Women’s Forum (WWF), which was started in 1978 in Madras, India, has a credit programme that lends to individual women in poor communities, but through community-based groups. Loans are small, but a beneficiary takes a new loan on completion of payment of the previous one. The WWF’s experience has been that the priorities of the women change as their economic situation improves with each successive loan. Priorities change from paying debts to making trade investments to buying household goods to improving the house. By the fifth or sixth loans, almost all borrowers were improving roofs, walls or floors.

The WWF started off acting as an intermediary for official lending institutions, helping women through bank bureaucracy, and guaranteeing their loans. Eventually it started its own credit cooperative society for women because the banks were not flexible enough for the women clients of the WWF. Even with the credit cooperative, the WWF had to fight against conventional procedures and requirements - for example, making groups rather than individuals responsible for loans was against existing government rules governing savings cooperatives.

Beneficiaries recounted what a difference it made securing loans through the WWF: “We were all women... they were patient and explained everything and helped us to fill the forms... Before, if we went to the big banks in our dirty sarees, they treated us badly... so next time one borrowed a saree from a friend, then they said “your saree is worth a lot of money, why do you want a loan?”... So either way you could not win. Here (WWF) they do not ask us if we own property or land, they just ask about our business enterprise, what we will do with the loan and how we can repay...” The repayment rates have been very good, and the programme has expanded into several other states of India.

It is no accident that several credit schemes just for women are in existence. They should be more widely replicated and disseminated.

There are other innovative credit programmes that help women improve their incomes and their shelter. The Grameen Bank in Bangladesh is one of the best known. Women World Banking and national women’s finance trusts are making their contribution.

There are many successful credit schemes from which experience can be drawn. What is needed is the recognition of the special problems of women in acquiring finance for shelter, and the political will to do something about the problem. Women’s organizations, NGOs, national governments and international agencies can assist in financing and promoting housing finance and credit programmes that benefit both men and women.

The involvement of women in policy-making is also essential. Already some progress regarding women’s access to credit has been made through the work of associations of women bank managers, and women development workers. More needs to be done, for example, to make the necessary education and training available to women, so that they can be in decision-making positions. Steps should also be taken, at the national level, to improve women’s land and property rights. Last, but by no means least, is the need to make information on credit opportunities and procedures available to women. Both governments and NGOs have a responsibility in this task.

The open courtyard is a feature, of many traditional architectures that is particularly valued by women. However, it is often absent in “modern” urban housing schemes.