Sunday, December 28, 2008

Is a good woman (small business owner) really so hard to find?

In America, there’s a saying that a good man is hard to find. It’s not true, of course. The problem is that many women haven’t properly identified what a good man is. What woman hasn’t at some point entertained an impossibly romantic notion of a fictional hero or movie star or someone equally unattainable (and nonexistent) as the ideal mate? Admit it, ladies! And if women don’t really know what they’re looking for, they can’t find Mr. Right. In short, they haven’t properly identified the market segment of “good men.”

The same seems to hold true when it comes to MFIs seeking female small business owners. More and more MFIs are expanding their loan ranges upwards, reaching beyond microenterprises to certain small enterprise segments. But if you look at data from the 2007 Microfinance Mix, as loan sizes go up, the number of female clients seems to go down. Are women small business owners really so hard to find? Or are we looking in the wrong places?

First, let me clarify – women are not a market segment. Women are half of the world’s population and as a single group they make a very clumsy segment indeed. But women small business owners are a different and unique breed. They’re typically not the same as their counterparts in the microenterprise segment – after all, they’ve succeeded in taking that leap from “micro” to “small.” Few microentrepreneurs can do that.

This may not appear such a big deal – the gap in dollar terms between a micro and small enterprise loan generally isn’t that large – but it represents a chasm in mental attitudes between the female micro and small business owner.

Therefore, when an MFI looks for female small business owners using the same marketing techniques used for female microenterprise owners, odds of success are low. And dependent on the country and culture, MFIs who use the same outreach methods for women as they do for their male small business clients can similarly fail.

In Africa, the IFC’s gender unit has taken a hard look at this issue, and works with its partner banks to improve the marketing of loans to female SME owners. Sometimes, through the use of mystery shoppers, their team has found that male loan officers are dismissive of potential female clients. If your loan officers don’t believe women are serious about developing their businesses, or don’t believe that female small enterprise owners exist, how successful will they be at attracting women business owners? (Answer: not much). Other times they’ve found that promotional materials and sales pitches don’t speak to issues women business owners care about.

Other barriers fall on the product design side (also a marketing issue – remember the 5 Ps!). For example, collateral requirements may present a barrier to women who don’t hold land title. But there are ways around this – using jewelry as collateral, leasing, or cash flow based lending, for example.

Though women aren’t a “segment” per se, when trying to attract female small business owners, MFIs need to take a hard look through the market research lens at how their product design, sales, and promotional materials speak to the female small business market. Because MFIs have done such a great job of attracting female microbusiness owners, we can fall into denial when we fail to attract female small business owners, blaming the market, the women… anything but our own processes.

Most MFI managers (and banks) really do want to reach women small business borrowers, if for no other reason than they represent a profitable and low-risk market. And admittedly, in some countries (like Afghanistan), there really are fewer female small business owners. But too often, the failure isn't lack of female business owners or lack of will. More often it boils down to poor implementation of the good old “5 Ps” of marketing.

For more information on lending to women in developing countries, check out my recent article on Women Entrepreneurs in UpSides magazine, Issue #8!


  1. This short article very comprehensively explains the phenomena faced by MFIs in Pakistan targeting males and females with separate products. Having spent only 2 months with my current organization, I've found my credit officers to be targeting "male shopkeepers" with the larger loan, smaller group size product. The two misconceptions here are:
    1) Larger loan sizes are for males
    2) Larger loan sizes are for shopkeepers

    The second point re-ensures that all entrepreneurs targeted are males because of the rare incidence of seeing females as shopkeepers.

    The task now at hand for me is to change the credit officers' mindset to "micro-entrepreneurs" regardless of their gender. For this, as the article mentions, we need to go back to the basics and thoroughly understand the 5 P's of marketing.


  2. Thanks for your comment, Jasim! It sounds like quite a challenge and I'd be interested to hear later how you succeed in dealing with it. I wonder how the volume of female small business owners differs between rural and urban areas? (Or if there's a difference at all).

    Women small business owners seem much harder to find in Pakistan, but perhaps if you can find a few to interview or run a focus group with, you'll be able to develop a plan for finding and attracting more.

  3. Today I received the latest MISFA newsletter, with a timely article on lending to women -- the loan ranges mentioned go over $1,000. You can download the entire newsletter at:

  4. Focus groups really do help and I definitely plan to carry out some when we decide to press the accelerator on our larger loan size product. For the time being, I've come to notice that there are lots and lots of beauty parlors in the rural areas which are obviously run by women. Targeting these parlors not only helps access women, but also diversifies the portfolio away from being excessively heavy on the trading side. Once again, it will take some time to make the credit officers believe that women can indeed form smaller groups and repay larger instalments. That said, we do graduate our female clients into the larger loan size product in their 4th or 5th loan cycle. These businesses mostly are stitching, livestock, flower-picking, and sometimes shopkeeping.


  5. Hi Kirsten,

    After reading Kirsten’s article 'is good women (samll business owner) really so hard to find' I wonder about the purpose of MFIs and their ways of working with women. It is considered that MFIs are supposed to serve poor women in order to alleviate poverty and provide them opportunities for empowerment. MFIs in this case have to work more on the side of social upliftment than with commercial purpose of Maximizing profit. MFI have to think of a more customer driven busines strategy in order to differentiate themselves from Profit driven commercial banks.

    I do agree that it is highly important to adopt successful corporate business strategies of effective and efficient service deliver to the clients. While MFIs implying the basic 5ps of Marketing (in corporate sector these Ps have touched now to more than 8Ps due to the intense competition and need for a differentiated product and service delivery) should MFIs simply adopt the criterion and strategies of any other commercial bank to attract customers. In Pakistan the recent war among mushrooming commercial banks for customers and innocently trapped customers have shown the disastrous effects on the clients because of aggressive marketing of the commercial banks people have taken loans excessively than they could afford and many have become bankrupt.

    The same way, recently I have observed during my research work in Lahore, Pakistan, where in a small town of Shadara, five MFIs are working. A significant number of people have borrowed money from more than one MFI. In some cases they have borrowed money from one MFI in order to pay the installment of other one; in this case people are trapped in vicious circle of loans.

    I also observed that the loan officers of MFIs at war with each other in order to score more clients at first place and then to collect installments they are at war with the clients themselves. Most often this kind of situations of poor marketing strategies of product development and customer services is a failure from the view point of basic objectives of MFI’s women’s empowerment and poverty alleviation it rather disempowering women.

    In countries like Pakistan and Afghanistan where most of the women clients of MFIs are first time borrowers of any loan from bank without adequate skills and knowledge of running either micro or small enterprises. In order to boost up graduation of micro-entrepreneurs to small entrepreneurs it is important to keeping in view the social responsibilities while we applying the ruthless market segmentation and applying 5ps to attract more and more customers. In this regard I do agree with Linda Mayoux to be very conscious of social responsibilities. I would like to suggest developing a socially responsible marketing strategies for MFIs rather than simply applying the rules of attracting more and more women customers because they are low risk clients and help to maximize profit.

    Abbas Ali

  6. I think those are great points, Abbas. Sometimes we get so caught up in growing that we forget to look at the real demand, how clients are using our products, and how/if clients are actually benefiting from our products.

    I think a strong social performance management program, which is very close to integrated marketing, can be of help with all of the above.