Guest Post by Maha Khan at the GSMA Mobile Money for the Unbanked Programme (MMU)

Has the recent global financial crisis had any gender specific consequences for women and their children living in poor countries? A recent World Bank paper, How Do Women Weather Economic Shocks? What We Know, explores this question. The paper outlined the dire need to provide low-income women in developing countries mechanisms to protect them from economic shocks—be it medical emergencies or financial crises. We could not help but think of the role mobile technology can play in assisting women access credit, accumulate savings, obtain health or funeral insurance and other m-health products.

Specifically, the evidence suggests that while historically women from low-income households have typically entered the labour force, and women from high-income households have exited the labour market in economic crises, the 2007-2009 downturn may have impacted women differently. Low-income women in developing countries employed in the export manufacturing sector and in high-value agriculture may face greater employment losses from the contraction of industrial countries’ demand for developing country exports. Additionally, women who are clients of microfinance institutions* could feel the credit squeeze thus decreasing their earnings from microbusinesses. The paper also revealed that women defer childbearing and that while there is no gender difference in child schooling, girls’ health suffers more adversely than boys’ health—perhaps indicating that households actually reduce health inputs to their daughters during economic crises, among other explanations.

So how exactly can mobile phones protect women from economic shocks? Mainly, through mobile financial services. Microfinance has given over 150 million people access to financial services for the first time—especially women. However, 2.5 billion adults still lack access to formal financial products. It’s becoming increasingly clear that the assets and capabilities of microfinance institutions (MFIs) and mobile money service providers are complementary and can range from distributing cash and electronic value using MFI infrastructure to disbursing microloans and accepting repayments on mobile payment systems. Although this model is dependent on the maturity of a mobile money ecosystem, by eliminating some of the administrative costs that MFIs incur in the field and the back office, mobile microfinance makes transactions much more efficient for both the customers and the MFI. Organisations such as Musoni, an innovative MFI in Kenya which has been built from the ground up to be “all mobile”, and Kopo-Kopo in Sierra Leone take alternative delivery channels to a whole new level providing a paradigm shift in the way more traditional MFIs operate.

Similarly, many now recognize that microsavings can help low-income households invest in new tools and businesses to improve their productivity, allowing them to smooth their consumption (i.e. equalise the health inputs between daughters and sons), and cushion shocks. In fact, M-PESA, a successful mobile money operator in Kenya, and Equity Bank in Kenya, last year launched M-KESHO, which allows customers to access a savings account, credit and insurance services via M-PESA. As of October 2010, M-Kesho had 400,000 account holders.

Another financial service which can specifically assist women in protecting themselves from crop failures, natural disasters, and/or medical emergencies is microinsurance. According to the International Labour Organization, only “three percent of the low-income people in the world’s 100 poorest countries benefit from microinsurance,” leaving approximately two billion vulnerable to economic shocks. The mobile platform can be used as a tool that reduces these delivery costs. For example, mobile money can provide customers the ability to enrol and make premium payments remotely, saving both time and money. Since 2009 The Syngenta Foundation’s Agriculture Insurance Initiative called Kilimo Salama uses a combination of mobile phones and solar-powered weather stations to provide crop insurance to over 5,000 farmers in western and central Kenya. Changamka MicroHealth, a local microinsurance provider, helps families save towards the cost of childbirth by enabling them to purchase treatment packages at pre-contracted prices in various clinics whereby Changmaka smart-cardholders can remit small amounts of money via M-PESA. In this light, Changamaka can revolutionize access and delivery of primary health care and essential drugs through innovative technology and distribution mechanisms—such as their mobile-based maternal health insurance product.

While the mobile phone cannot be the silver bullet to alleviating women’s vulnerability to economic shock, it can certainly be a catalytic agent. Products, such as the ones mentioned here, are playing a vital role in changing the way financial services are accessed and used by low-income households—and hopefully women in particular.

*In 2006 women comprised 85% of the poorest 93 million microfinance clients (Microcredit Summit Campaign Report 2007).