Despite the existence of microfinance over four decades, the South Asian microfinance industry has failed to integrate a reasonable percentage of women into its workforce
A couple of days ago, Secretary-General of the United Nations António Guterres reiterated that "women leaders (are) essential to peace and progress for all". The UN chief strongly urged all the member countries to ensure fair share of women from top to the bottom level of decision-making process.
Furthermore, Klaus Martin Schwab, founder and executive chairman of World Economic Forum, also emphasizes how important it is to have an adequate rate of women's participation for a long term and sustainable development.
"A growing female talent pool coming out of schools and universities, and with more consumer power in the hands of women, companies who fail to recruit and retain women—and ensure they have a pathway to leadership positions—undermine their long-term competitiveness," said Schwab.
Certainly, the importance of women in the long-term development is undeniable as they possess skills/knowledge identical to men and share a significant percentage of consumer power. Thus, ignoring their potential to contribute to the success of firms and overall socio-economic development of a country could be disastrous.
Still, most women have been rendered vulnerable owing to their involvement in unsustainable economic activities coupled with the lack of support from mainstream financial institutions, particularly in a patriarchal society such as in the south Asian countries.
For decades, women have been mostly subdued in South Asian countries, particularly in terms of economic resources control, participation in the labor force and decision-making processes.
However, in recent years, the situation of women has improved owing to favorable policies/initiatives undertaken by the governments and non-governmental organisations (NGO's), along with the rapid economic growth and structural changes, including the access to finance.
While many countries are trying to increase women participation in various economic activities, unfortunately, even in some developed countries the participation rate of women is still far below than their male counterparts. In some developing countries, the gap is really worrisome.
To understand how women's participation has changed in the top management in microfinance industry over the past few years in Bangladesh, this short column has looked at the participation rate of women in board and management ladder of microfinance institutions (MFIs).
In so doing, a comparison is also made with other South Asian countries to see the position of Bangladesh. The findings discussed below are based on the secondary sources of data retrieved from the Microfinance Information Exchange (MIX) and the World Bank.
Looking at Figure 1, we could see that the average women in the board of MFIs in South Asian countries range from 25 to 32 percent, implying a promising development in the recognition of women's contribution to MFIs.
However, the representation of women on MFIs board varies among countries, with Bangladesh possessing the most female board member for all the years – a trend observed to have been increasing from 2015.
The study strongly believes that this high rate (of women as board members) is related to the overall governance structure of MFIs, since all of them are NGO types in Bangladesh. For example, Brac, one of the world-leading NGO-MFIs has 5 of its 10 (50%) governing members as women in Bangladesh (Brac, 2020).
The rate is even higher for the Grameen Bank, a Nobel Prize winning organisation, which has 9 of its 13 (70%) board members as women (Grameen Bank, 2020). Since the operational and governance strategies of these two MFIs are largely followed domestically, it could have an influence on the overall participation of female board members in the Bangladeshi microfinance industry.
Considering the percentage of women in managerial roles depicted in Figure 2, Bangladesh, in contrast to its commendable representation of female board members ranked the lowest, with an average participation rate of 4 to 10 percent during the studied period.
In this context, India performed excellently, with the rate improving from 2012 and remained above the South Asian average till 2018. Although, the percentage of female managers in Pakistan MFIs correlate with the South Asian average for most years, the trend began to decline from 2015 onward.
Furthermore, Nepal seemed to display a U-shaped pattern for the percentage of female managers between 2012 and 2018. On the other hand, inconsistent trends observed over the years in Sri Lanka and Afghanistan MFIs complicate the drawing of a conclusion.
However, the overall managerial posts held by women in South Asia is below 25 percent, raising concerns for the academics and policymakers (some reasons behind such lower rate are described at the end of the section, which applies to almost all South Asian countries).
Despite the existence of microfinance over four decades, the South Asian microfinance industry has failed to integrate a reasonable percentage of women into its workforce. Although, microfinance credit programmes in South Asian countries are emulated globally; in general, we could say that they have failed in the achievement of gender diversity in their management.
This indicates that the rapid economic growth and structural change observed by South Asian countries in recent years may have failed to integrate more women in the microfinance workforce in absolute terms. Hence, fundamental changes in policies are advised for MFIs in this region to ensure that women represent at least half of their labour force or a rate proportionate to its female clients' base.
While it may not be easy to change policies antagonising the realisation of the gender diversity in the microfinance labour force in the near future, a gradual improvement in this regard could be a promising step.
Hence, we recommend that the regulatory authorities of these countries should take a more proactive approach in legislating and enforcing a mandatory assimilation of more women into MFIs' labor force, particularly in Bangladesh.
Furthermore, a commendable approach taken by the CEO of Women's World Banking to award 'excellence in leadership' by taking the consideration of nominees' commitment towards gender diversity in their leadership rank into account could be replicated among other MFIs (Iskenderian, 2011).
Such rewarding system will create an incentive to leaders to integrate more women under their purview.
Dr Md Aslam Mia is a senior lecturer at the School of Management, University Sains Malaysia, Penang, Malaysia.
This short article is an excerpt from the author's academic research which could be found here: https://onlinelibrary.wiley.com/doi/10.1002/pa.2481