Microfinance boosts women's agency, confidence and financial decision-making ability

By Sophie McAulay

60 Decibels ' annual Microfinance Index report revealed key insights into the outcomes of microfinance services for women, including increased confidence and financial decision-making ability. 

Research from independent social impact measurement company 60 Decibels provided new evidence that microfinance offers significant positive impacts for women. 

The Microfinance Index report is an annual study based on phone surveys of clients of financial service providers (FSPs), allowing us to hear directly from the recipients of loans about how their lives have been impacted. 

Alongside findings that the vast majority of microfinance loan recipients feel their quality of life has improved, their ability to manage their finances has improved, and their business incomes have increased, the report also reveals crucial insights into the way that microfinance impacts women specifically. 

Measuring women’s sense of ‘agency’ 

The 60 Decibels report uses six impact themes to measure the outcomes of a client’s relationship with an FSP, and in one particular theme — agency — women significantly outperformed. 

‘Agency’ is measured by three dimensions and indicators, which note whether a client reports: 

1. Increased ability to make decisions related to their finances 
2. Increased confidence 
3. Increased ability to achieve a financial goal 

Women were between 4 and 6 percentage points more likely than men to say they had ‘very much increased’ in each of these areas.

Women's confidence improved after taking loans

"I know that I am a fighter." - Intesar, Kiva borrower in Turkey

83% of women saw an improvement in their confidence after engaging with their FSP, the report found.

Clients of Kiva’s Lending Partners that were included in the microfinance index were even more likely to report an increase in confidence, at 86%. And while globally, 30% of clients say their confidence has ‘very much improved’, 41% of women surveyed from Lending Partners in Kiva’s portfolio had the same response.  

This finding mirrors those of a previous study by Kiva and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). That report, titled Catalyzing Innovation for Women Entrepreneurs, surveyed women microfinance borrowers in Fiji, Samoa and Cambodia, and found over 70 percent reported that being a member of a microfinance organization had increased their business confidence. In addition, almost all those featured said that their lives had improved from microloans and that they experienced improved outcomes in their households and ventures.

Women improved their ability to make independent financial decisions

67% of women in the 60 Decibels report noted an improvement in their capacity to make independent financial decisions, underscoring the role of microfinance in enhancing women's financial autonomy. In Kiva’s portfolio, 30% of women said their ability to make financial decisions without consulting someone had ‘very much improved’, versus 23% as the global benchmark.

This finding was also reflected in Kiva and UNESCAP’s previous study, where 60 percent of the women surveyed said their loans helped raise their confidence in making decisions in their household.

Women were more likely to achieve their top financial goals

Along with improved confidence and decision-making abilities, 88% of women said they experienced an improvement in their ability to achieve financial goals because of their FSP. This number was 90% for women borrowers from Kiva Lending Partners. 

Both women and men report investing in business and increased income as their top financial goals, but their likelihood of having achieved this goal differed.

When asked ‘How did your life improve?’, women were more likely to mention:

• Investing in and growing their business (43%, versus 28% for men) 
• Increased ability to afford household expenses and bills (36%, versus 29% for men).

Read more: Four innovations to advance women’s financial inclusion

Women invest in their families

Previous studies have suggested that women are more likely to use their earnings to provide long-term benefits for their families and communities, and some of the findings in the 60 Decibels report reiterated this. 

Women clients of partners in Kiva’s lending portfolio were more likely to say that the number and quality of the meals their family eats had increased, at 66% versus 60% for men. 

Women were also more likely to say that their ability to access healthcare had increased. 

"My household needs are met very well since I went ahead and took the loan. I've purchased more buffaloes and since I sell milk, this means my business has expanded overtime. My kids are studying well and everyone has access to good food." - Anonymous borrower, quoted in the 2023 Microfinance Index

Learn more: Kiva and Friendship Bridge: Improving gender equality through impact-driven partnership

Additional services help women achieve better outcomes

The 2021 report conducted by Kiva and UNESCAP found that when business management training is provided alongside loans, women micro-entrepreneurs achieve better business outcomes. 

This was further evidenced by the findings of the 2023 Microfinance Index. 

A higher number of women who accessed additional services (financial and non-financial) beyond credit reported stronger agency outcomes than those who accessed credit only. Of women who accessed additional services: 

• 89% reported improved confidence (compared to 80% of women who accessed credit-only services)
• 72% reported an improved ability to make decisions (compared to 63% of women who accessed credit-only services)
• 92% reported improved ability to achieve a financial goal (compared to 86% of women who accessed credit-only services).

The Kiva and UNESCAP study also indicated that for women recipients of microfinance, the desire is there to participate in these kind of wraparound services. 90% of those surveyed said they would like to attend a business course, with a focus on management skills and business coaching. 

Provision of additional wraparound services is something that Kiva considers when assessing potential and current Lending Partners, and has been included as part of our Gender Equity Assessment Rating tool — a tool we developed with USAID to help assess gender-forward practices in FSPs.

Read more: Assessing gender-forward organizational practices: Kiva’s Gender Equity Assessment Rating tool 

Kiva’s commitment to positive outcomes for women

Across the global microfinance industry, women account for 66% of microfinance loans. At Kiva, providing women with capital has been one of our top impact objectives since our inception, which is why we direct a larger proportion of our loans to this underserved population. 80% of the loans funded on kiva.org support women, and over the past 19 years this has translated to over $1.6 billion in loans for 4 million women across the world. 

Kiva has set an ambitious target to reach a total of 8 million women by 2028. With this goal, we aim to double our reach in less than half the time. Importantly, we also aim to reach this goal with increased focus on outcome measurement to ensure our loans are having as much positive impact as possible.

As Kiva seeks to continuously improve our measurement of the outcomes of our loans, partnering with 60 Decibels has been essential to help us hear from many more borrowers than we could alone. Their independent evaluation enables us to better understand borrowers’ experience of working with the microfinance institutions that we partner with. It also helps provide indication of how our partners are performing in comparison to global benchmarks, and where improvements can be made.

Find out more about how Kiva's partners performed in the 2023 Microfinance Index.

Advancing gender-forward practices 

By focusing on the provision of loans with improved outcomes for borrowers, as well as the improvement of gender-forward practices in the institutions who are providing those loans, Kiva is actively participating in the broader movement towards gender equity. 

Your organization can partner with us on this journey.

This article was originally published on the Kiva blog.