DAKAR, Senegal.—Four credit unions that piloted World Council of Credit Unions’ (WOCCU) Gender Investing Framework Toolkit (GIFT) in Senegal have seen evidence of better performance in loans to female entrepreneurs.
The project is being featured here as part of a series appearing in CUToday.info during International Credit Union Week that highlights credit union initiatives around the world. Part I in this series on Ukraine can be found here. Part II on Ecuador and Peru can be found here.
According to the World Council of Credit Unions, approximately 59% of new micro-, small- and medium-enterprise (MSME) loans in Senegal went to women in the final project quarter who were involved in the project, 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,” the World Council stated. “By creating better financial products and helping grow member businesses, credit unions promote positive social outcomes and increase financial returns.”
The WOCCU analysis said that 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.
Two Products Tested
PAMECAS also designed two new credit products to test, WOCCU reported. Those new products included
- Credit Nopale Jigueen (Lighten Women’s Load), an equipment loan with a ceiling of about U.S. $8,650 designed to help rural women entrepreneurs finance their businesses.
- Credit Bawane (Growth, Prosperity), a working capital loan with a ceiling of about U.S. $5,187 designed for women entrepreneurs to finance their short-term accounts payable needs and avoid cash flow problems.
Specialized Trainings
In addition, the World Council said its 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,” WOCCU said. “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, WOCCU said the pilot credit unions reached:
- 1,960 new women members benefiting from financial products and services
- 401 new groups, each comprised of five micro and small women entrepreneurs on average
- Six new formal businesses registered by women entrepreneurs
Formalizing Approach
“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, WOCCU SVP-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.”