Cultivating financial opportunities for women: A conversation with Iftin Fatah
By forming effective partnerships with banks and microfinance institutions (MFIs) that have extensive networks in emerging markets, OPIC is able to help women in need of financial services grow or start their own businesses. Many of the financial institutions that OPIC works with are focused on lending to women, and with OPIC loans, they are able to provide hundreds or even thousands of smaller loans to women business owners and entrepreneurs.
Iftin Fatah, an Investment Officer in the Framework Management Division (FMD) at OPIC, monitors the agency’s exposure of many of these projects. FMD is responsible for post-disbursement credit management of OPIC’s financially intermediated facilities. In general, the facilities managed by FMD fall into two categories: frameworks and loan guarantee facilities. Here she discusses how OPIC helps leverage public and private resources to promote financial inclusion among underserved groups, including women.
How does OPIC’s support of microfinance lending advance women-owned businesses in emerging markets?
OPIC supports microfinance lending through a variety of strategic partnerships with financial institutions, non-bank financial institutions (NBFIs), and non-governmental organizations (NGOs). One of many examples of this is OPIC’s more than a decade-long partnership with Citibank that was created to finance emerging markets around the world, which includes providing microfinance loans in some of the world’s poorest places. Through this partnership, OPIC provides a comprehensive partial guarantee for loans originated and extended by Citibank in emerging markets. In doing so, OPIC shares financial risk to the borrower with Citibank while Citibank provides funding for microfinance lending in local currency.
Alongside Citibank, OPIC has provided loans to multiple microfinance institutions, such as Ujjivan. Ujjivan started operations as a non-banking financial company in 2005 with the mission of providing a full range of financial services to the so-called economically active poor who are not adequately served by financial institutions. The majority of Ujjivan’s microfinance loans are to women. It offers ongoing support and guidance to expand the financial capabilities of their clients. This project has helped women entrepreneurs expand their businesses, provide for their families, and boost their livelihoods. On October 7, 2015, Ujjivan received an in-principle approval from the Reserve Bank of India to convert to a small finance bank (SFB).
Have you met some of the women borrowers who have benefited from OPIC financing? Can you share any of their stories?
On a monitoring trip last year, I met with recipients of OPIC-supported MFIs in India. Many of the borrowers were women in rural or semi-urban areas who used the proceeds of their microfinance loans to help them start a business or expand their existing business, as a way of providing for themselves and their families. These loans were catalytic in terms of reaching unbanked populations by providing access to capital as well as providing education and training related to financial literacy. One borrower in particular, based in Chennai, used the proceeds of her loan to buy a sewing machine so that she could begin selling her hand-made garments in her local community.
What challenges have you seen women small business owners face?
Women disproportionately face significantly greater challenges than men in gaining access to financial services. Lack of financial education can limit women from gaining access to finance and benefiting from financial services. Therefore, financial education programs offered through MFIs are crucial in teaching these borrowers about appropriate products and services. It is also important to understand the different financial needs of rural and urban women. Designing appropriate financial products for women to be able to borrow and invest is essential in strengthening their role as producers and in improving their socio-economic status.
Are there certain sectors where you see a lot of female entrepreneurs?
Once given the opportunity, women-owned or women-led entrepreneurs hit the ground running! I’ve seen women entrepreneurs use the proceeds of their microfinance loan to start or expand businesses across various sectors, including agriculture sectors as well as food service and garment industries to name a few.