Cell phones and scooters are empowering innovations for women

A recent issue of the Economist featured a cover story about “gendercide” in countries like China where new ultrasound-scan technology has resulted in a significant sex-ratio imbalance.  The use of ultrasound scans to detect the sex of embryos for the purpose of aborting females in countries where male offspring are valued more highly is a frightening example of how a technological innovation can benefit the sexes disproportionately.

Ultrasound scans are widely used and inexpensive even in developing countries.  Few people have to wait until pay day or visit a payday loan store to pay for one.

The internet is man-friendly

Other less controversial innovations also benefit men more than women.  In many countries, for example, the internet benefits men disproportionately.  According to an online Economist article, it is estimated that in Africa only 25% of internet users are female.  In Asia 22%, in Latin America 38%, and in the Middle East just 6% of internet users are female.

Some innovations are inherently woman-friendly

Other innovations, however, have served to directly empower women. Birth control drugs may be the most widespread innovation ever to offer disproportionate benefits for women.  This is especially true in developing countries where education for women — far and away the most effective thing ever devised for improving the lives of women — is still not widely available.  The automatic clothes washer, and in more affluent countries the automatic dishwasher, are other innovations that have benefited women almost exclusively.

A report issued by the International Centre for Research on Women notes that social innovations – some of which might more aptly be called horror-reduction programs – such as the land-titling movement in Peru and the anti-foot-binding campaign in China have had massive beneficial impacts on women’s lives.  How, you might reasonably ask, could something so fundamental as discouraging the intentional crippling of young girls for the pleasure of men have anything other than a massively beneficial impact on the lives of women?

Other innovations are unexpectedly woman-friendly

The beneficial effects of other innovations, however, are not so starkly evident.  Recently, a panel of experts convened by the ICRW examined several less obvious innovations that have helped to empower women and promote gender equality.  The panel concluded that governments and businesses around the world are now at a “critical juncture to use social and technological innovations to benefit women.”

Microcredit lending

Among the innovations reviewed by the panel, microcredit lending has received a fair amount of public attention.  Microcredit is a lending system that makes very small business loans to extremely poor people, most of whom are female.  Microcredit lending has been very successful in helping small business owners in poor countries graduate from miserable poverty to at least marginal self-sufficiency.

Cell phones

A first-world citizen with a cell phone in the car, a cell phone in the golf cart, a cell phone at the office, and three cell phones in the house may find this beyond imagining, but many women in countries like Bangladesh have dramatically improved their lives by investing in a cell phone and renting it out to less technologically advanced villagers.

Motor scooters

Increasing sales of motorized scooters have helped to empower women in China, India, and several other Asian countries. The past decade has seen a dramatic surge in the use of motor scooters by Asian women; in India 60% of scooter purchases are now made by women.  Motor scooters provide a reasonably safe and reliable way for women who would otherwise be house-bound to seek out employment and education.

Cell phones, revisited

Matthew Bishop, a member of the ICRW panel and co-author with Michael Green of Philanthrocapitalism: How the Rich Can Save the World, predicts that developments in health-care technology, especially maternal health, are on the horizon. He suggests, for example, that mobile phones could be used to provide remote medical care or to text information about childcare to isolated women.  Bishop suggests that governments as well as private enterprises should incorporate the goal of improving women’s lives into the development of new products and services.

Involving women in innovation

The ICRW panelists concluded that in order to optimize the effectiveness of an innovation that stands to benefit women, women should be involved in innovation strategies from the start. This seemingly simple insight may turn out to be the most innovative of all woman-friendly innovations.

Case in point: A campaign to encourage people in poor countries to switch to environmentally friendly stoves did not succeed until the stoves were redesigned using input from women’s groups.  The redesigned stoves now require less cooking time as well as less fossil fuel, and are a running success.  Fuel is conserved and women who formerly devoted large portions of each day to gathering wood and standing over the stove now have more time to devote to other things.

More woman-friendly innovations on the way

The ICRW panel hopes that governments and business will increasingly make woman-friendly innovations available to developing countries — things like foot-pedaled water pumps, micro-franchised electricity in rural areas not served by public utilities, and new ways to distribute basic health-care information. These kinds of innovative products and services, in combination with major social campaigns to upgrade the education and status of women in poor countries, have the potential to liberate millions of people.

Gune Susan from Sudan needs microloans for her clothing sales business.

Since its inception, microlender Kiva has been known for giving online loans to help entrepreneurs start businesses in third-world countries. As of today, however, The Associated Press reports:

Kiva.org has spent the past 3 1/2 years raising money on the Internet to finance destitute entrepreneurs in 44 impoverished countries. Now in a sign of the economy’s spreading despair, the online “microlender” is reaching out to low-income entrepreneurs in the United States.

What is a microloan?

The term “microloan” has always been used to describe a loan that is given to an impoverished person or business. This is because microloans, as the name implies, are very small loans. According to Wikipedia:

Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Why lend to U.S. entrepreneurs?

Kiva says its decision to start lending to U.S. entrepreneurs was simply part of a natural progression. Kiva’s blog says:

Our desire has always been to be a truly global organization, and to allow individuals anywhere in the world to make loans anywhere else in the world. Kiva believes that poverty exists in many forms throughout the world and that we can play a part in helping alleviate that poverty by allowing people to lend through our website.
Therefore, to be a truly global organization, Kiva is expanding into microfinance markets in the developed world. Since over 70% of our lenders are currently from North America, the United States was a natural first choice.

More about Kiva

So, as of today, Kiva lends to entrepreneurs in 45 countries, including the U.S. Already United States entrepreneurs in the catering, child care, retail and transportation businesses yet that have started raising money through microloans from Kiva, and they’ve made significant progress toward their goals.

So who is Kiva? Well, it could be you. Kiva’s web site says:

Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe.

So, whether you’re trying to get your business off the ground or you want to help poor entrepreneurs start businesses, Kiva makes it easy. If you are seeking a microloan, you can register at the Kiva web site. If you want to help an entrepreneur, the web site has a simple how-to guide:

1) Lenders like you browse profiles of entrepreneurs in need, and choose someone to lend to. When they lend, using PayPal or their credit cards, Kiva collects the funds and then passes them along to one of our microfinance partners worldwide.

2) Kiva’s microfinance partners distribute the loan funds to the selected entrepreneur. Often, our partners also provide training and other assistance to maximize the entrepreneur’s chances of success.

3) Over time, the entrepreneur repays their loan. Repayment and other updates are posted on Kiva and emailed to lenders who wish to receive them.

4) When lenders get their money back, they can re-lend to someone else in need, donate their funds to Kiva (to cover operational expenses), or withdraw their funds.

Micro means micro

It should be noted that when Kiva says it is seeking small loans, it means really small loans. As in $25. Right now, entrepreneurs in Viet Nam and Peru are looking for microloans to help with raising pigs and growing fruits and vegetables.

You can help. Here are a few examples of entrepreneurs seeking microloans through Kiva:

• Nguyen Thi Hai from Viet Nam needs $725 for her grocery store
• Karen Elizabeth from Peru needs $275 for her cosmetic sales business
• Giovanna Andrea Mendez Apaza needs $800 for her clothing sales business

Thank You for my Financial Success

Recent academic studies of the no fax payday loan industry suggest in a clear, supported manner that the loan product is imminently useful to consumers with less than perfect credit who require short-term budgetary assistance. Dean Karlan of Yale and Jonathan Zinman of Dartmouth recently published a study entitled “Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts” which can be found at http://www.cepr.org/Pubs/new-dps/dplist.asp?dpno=6180. In this study, a strong case is made for not only allowing no fax payday loans, but encouraging expanded offerings of microcredit to all, but particularly those who have been traditionally unserved or underserved by the banking establishment.

Microfinance – born of necessity

Microfinance loans began with the intent of serving consumers who are seeking to build their financial futures. Establishing or improving credit, which is necessary in order to transact with banks, is a primary indicator of financial well-being. By benefiting individuals in this way, short-term payday loans can also be an essential ingredient in regional financial upturn, helping citizens one at a time. Karlan and Zinman found that such loans produced “significant benefits for borrowers across a wide range of economic and well-being,” and hence this form of short-term consumer credit “can be welfare-improving.”

Karlan and Zinman find that expanded access to credit significantly improved average outcomes, and they accomplished this by studying the financial well-being of borrowers for many months after they have used the services of a payday loan.

• During the six to 12 month period, borrowers were “significantly more likely to retain their job” when compared with a control group, and incomes were higher. Households involved in the study, when compared with a control sample, were also less likely to experience hunger, and had more positive views on their financial prospects

• From 15 to 27 months, Karlan and Zinman reported that those without credit established credit scores, and that scores did not decrease due to the use of faxless payday loans

Costs of payday loans didn’t harm consumers

Admittedly, the study did find that the median loan size was about 40 percent of the sample borrower’s gross monthly income.Payday loans in the sample were even taken at the extrapolated annual rate of 200 percent, even though they were not 12-month loans. However, economic downtown was not an observed result of borrowing, and after the six to 12 month period, households were not more likely to take out another loan. This flies in the face of the “cycle of debt” model that is popular in media analysis.

Payday loans are found to be beneficial

“We do not find any evidence that expanding access to consumer credit reduces creditworthiness over a two-year horizon. If anything, the treatment seems to have had a (socially) beneficial impact on creditworthiness by increasing the probability of obtaining a credit score,” write the study authors. “Most importantly, we do not find any evidence that the net effects of expanded access to consumer credit are negative.”

If media outlets looked to sources like Karlan and Zinman, who provide more than anecdotal evidence regarding the worth of payday loans, their stories would be credible. However, then the media would have to report the truth – that the payday loan is not the indicator of financial apocalypse, but a tool for economic betterment.