Interview: Mary Ellen Iskenderian on why women + microfinance = less poverty
Fresh out of business school, Mary Ellen Iskenderian went to work on Wall Street, where she learned the art of banking and made good money. But something was missing. “I thought, ‘This is not what I’m here for,’” she says. She made a jump to the World Bank, where over 17 years she worked to stimulate the private sector in developing countries, in order to alleviate poverty. Now, as president and CEO of the New York-based Women’s World Banking (WWB), she oversees the provision of training and support services to microfinance institutions that serve more than 20 million people, mostly women.
Iskenderian told Dowser why she believes that private capital directed to poor women is the best strategy to end global poverty.
Dowser: What exactly does Women’s World Banking do?
Iskenderian: We’re a network of over 40 microfinance institutions, including some banks. Combined, our members have 23 million clients and a loan portfolio of over $4 billion. Our members provide very small business loans to poor people. About 70% go to women.
We help our members set up and improve their operations. Plus, because of our size, we can access capital markets for them that they couldn’t otherwise tap.
WWB has a ‘double bottom-line.’ What does that mean?
Our mission is to increase poor women’s access to capital, not consumerism. Our second bottom-line is reducing poverty. We don’t want our clients to become over-indebted, or to go into debt to buy consumer goods they don’t need.
You also want to help poor women save money.
We do. Given the chance, poor women are very good savers. If business is slow, or a child gets sick, a little savings can keep her business on track. This has tremendous potential to help women become economically stable. Providing savings programs for poor women is a trend that we hope becomes the norm.
Why focus on women, though?
When women have money they invest it more wisely then men. Women spend their money on nutritious food, schooling for their kids, health care, improving their homes. That has a positive ripple effect on the community, both economically and socially. And women pay their loans back at a higher rate than men.
How did you learn this?
Years ago, when I was working at the World Bank, the Ugandan government commissioned us to assess its gross domestic product, and to see how much it would increase if Uganda fully utilized women in its workforce. We crunched the numbers and there it was in black and white: women could be the game changers for this poor country.
Is that what attracted you to WWB?
I came to delve deeper into microfinance, but when I got here, I found the women’s part of the microfinance story incredibly compelling. Women are the reason for the success of this business model.
How do you ensure good lending practices when you’ve got 23 million clients?
We rely on a consensus-oriented approach. All the microlenders in our network agree on a set of standards. WWB doesn’t have a direct ownership or even governance role with its members, but we do have very close relationships.
You call WWB’s microfinance model ‘high-touch.’ What does that mean?
There’s a lot of interaction with the borrowers. Much more than with traditional loans. And clients can be spread across great distances, which can be expensive. So it’s high-cost and high-touch.
At the outset, microfinance was practiced mostly by nonprofits. Why are banks and for-profits suddenly getting in the game?
Banks benefit from economic growth in the markets where they do business. If you leave the economic capacity of the majority of the people on the table—i.e., the poor—you’re neglecting substantial untapped economic potential. Banks see that.
Are there any downsides to banks entering this market?
Commercialization has brought many positive things to microfinance. The downside is that while the number of clients continues to grow, the percentage of clients who are women is falling quite dramatically. This is not good. If your mission is to alleviate poverty, you need women.
You gave up a career in high finance to help poor people earn more money. What happened?
When I graduated from Yale School of Management I went to Lehman Brothers—may they rest in peace—for four years. I learned superior banking skills, but I knew pretty early on that it wasn’t for me. I just didn’t believe in the work.
- How to Measure Microfinance’s Social Impact: Forbes reports on the difficulties.
- Measuring the Impact of Microfinance: Our Perspective: Download this PDF statement by ACCION, the Grameen Foundation, WWB, and others.
- WWB Leaders and Clients in Focus: In this YouTube video, clients explain how loans lead to females earning respect.
I was on an assignment, hired by a large U.S. truck manufacturer that had a completely unionized labor force. Management wanted to move south to a non-union state to cut labor costs. I was estimating how many people they could fire in the northern state, and I’ll never forget this moment: I thought, this is not what I’m here for. This is not why I went to college and graduate school.
You met a woman in Kenya who wanted to open a hardware store but no bank would loan her money. What was it like to see her business up and running?
Inspiring. Her neighbors were fixing up their houses but didn’t have a place to buy good materials. Our affiliate, the Kenya Women’s Finance Trust, loaned her $70 and provided her with some business training. She has since repaid five loans, each one bigger than the last. Now she employs 25 people, including her husband.
This interview was edited and condensed.
Photo: Casa Asia