This morning, the U.S. House Committee on Foreign Affairs convened a hearing entitled “Beyond Microfinance: Empowering Women in the Developing World” during which a panel of experts in the field of financial inclusion advocated for the economic empowerment of women worldwide. The witnesses called to testify before the Committee brought to the panel extensive professional experience in gender issues and development: Ms. Mary Ellen Iskenderian, President and CEO of Women’s World Banking; Dr. Tavneet Suri, Professor of Economics at MIT; and Ambassador Melanne Verveer, Executive Director of Georgetown University’s Institute for Women, Peace and Security. Each spoke to their specific area of expertise, but all three emphasized the drawbacks and limitations of microfinance—a financial mechanism once hailed as the silver bullet of development. The three panelists highlighted the findings of seven separate studies, each demonstrating that putting the world’s poorest populations in debt does not, in fact, lead to long-term, sustainable economic prosperity. Like anyone else, the recipients of microfinance loans have complex financial needs that necessitate multiple financial instruments for savings, insurance, and credit, among other things.
Mobile money was repeatedly mentioned as an alternative to microfinance. It's a strategy that has begun revolutionizing the landscape of financial transactions across the developed and developing worlds alike. Programs that can send funds directly through a text message (like PayPal, but for basic, non-smartphones) create greater financial security through interactions within one’s own social network. For example, the mother of a child who has fallen ill can request money from relatives virtually, rather than cut back on basic necessities or pull her other children out of school to help work to fund the medical care. This method, unlike microfinance, is especially empowering and financially stabilizing for women. Though mobile money as a development strategy is a promising prospect, more research and evaluation is needed to fully understand its implications and effectiveness.
Apart from the technical financial mechanisms discussed, the witnesses underscored the importance and value of incorporating women into the financial world. Women prioritize the family in financial spending: they spend 34% more than men on education, health, and other needs that improve the wellbeing of their children and their household. As such, solidifying a stable financial foundation for women can catalyze positive development across the spectrum, fostering greater stability within families and communities which, in turn, produces more peaceful and prosperous societies.