Four credit unions that piloted World Council of Credit Unions’ Gender Investing Framework Toolkit (GIFT) in Senegal saw evidence of better performance in loans to female entrepreneurs.
Approximately 59% of new micro-, small- and medium-enterprise (MSME) loans went to women in the final project quarter, with delinquency rates for women about four times lower on average than for similar loans to men.
Funded by USAID, GIFT was designed for credit unions and piloted through four affiliates of the UM-PAMECAS network in Senegal. GIFT addresses gender disparities in credit union lending portfolios to improve women’s access to financial services and their needs as entrepreneurs, while boosting their leadership within credit unions. By creating better financial products and helping grow member businesses, credit unions promote positive social outcomes and increase financial returns.
Based on applications and findings of GIFT assessments and activities with PAMECAS members and stakeholders, new credit terms were designed and piloted to decrease existing collateral requirements and increase ceiling amounts on loans for women entrepreneurs.
PAMECAS also designed two new credit products to test. Credit Nopale Jigueen (Lighten Women’s Load) is an equipment loan with a ceiling of about US $8,650 designed to help rural women entrepreneurs finance their businesses. Credit Bawane (Growth, Prosperity) is a working capital loan with a ceiling of about US $5,187 designed for women entrepreneurs to finance their short-term accounts payable needs and avoid cash flow problems.
World Council’s team in Senegal also conducted specialized trainings to increase credit agents’ capacity to understand the needs of women entrepreneurs and better guide them, including on financing agriculture value chains and legal requirements for entity forming and formalization of businesses. The initiative inspired PAMECAS to start designing a formalization kit, including guides on requirements to formalize a business, information on types of incorporations and tax implications in compliance with legal systems. Another GIFT application is the Gender Dashboard, which was developed with credit committee members to better track credit approval for women and increase awareness on disbursement time and performance data.
By the end of December 2021, the pilot credit unions reached:
“UM-PAMECAS is now formalizing the approach we piloted and will embed it into their credit practices across its network of credit unions,” said Megan O’Donnell, World Council's Senior Vice President of Financial Inclusion. “The pilot proved so successful that WOCCU is now looking to take GIFT and implement it through credit union networks in other countries where we are currently implementing development projects.”