Role of Government in Rural and Agri-Finance: Transitioning to private sector involvement

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Understanding women’s rural transitions and service needs

2020

In 2019, ISF Advisors and RAF Learning Lab launched Pathways to Prosperity, a report about the state of the rural and agricultural finance sector. The report presents new, dynamic frameworks for accelerating progress toward closing the $170 billion smallholder financing gap. Recognizing the critical role they play in rural economies, the research included deep dives on engaging both women and youth in achieving inclusive agricultural transformation. In this blog, we share key learnings from the gender deep dive.

The global gender challenge

Despite their vital role in the development and transformation of rural economies, women continue to have unequal access to opportunities that help them build resilient livelihoods. Gender inequality is not only holding women back, it’s holding entire countries back. Women currently represent half the world’s working-age population, but generate only 37% of global GDP. In agriculture, gender inequality limits agricultural productivity, among other things. This is a major concern, given the increasing pressure climate change is placing on our food security. At least one estimate posits that if women had equal access to productive assets, yields could increase between 20% and 30% per household. In a world where hunger and malnutrition has risen for the third consecutive year, this would be a game-changer.

The rural transition pathways model and how it relates to gender

In the Pathways to Prosperity report, we introduced a new framework (seen above) for understanding and segmenting rural households. This rural transition pathways model describes a series of predictable development trajectories for smallholder households as they pursue resilience and agency through various livelihood strategies. The model moves us from a static understanding of smallholder households based on their characteristics at a particular moment in time, toward a dynamic view of how households might evolve as they move along the different pathways.

The pathways model can help financial service providers determine the right engagement for their rural customers at the right time. But given the unique position of women in the rural economy, providers must layer on an understanding of their specific needs and challenges. At a foundational level, women have the same set of rural transition pathway options as men. But, as noted above, women face significant barriers in accessing the skills, networks, and assets needed to transition through rural pathways. As this limits women’s agency and mobility across different livelihood strategies, it’s vital that service providers take these barriers into account.

Unique challenges for rural women

Rural women face a range of educational, socio-cultural, and legal constraints that arise from the environments in which they live. Importantly, these constraints also manifest differently at different stages throughout the life cycle of women and girls.

During childhood, girls are more likely than boys to stay home — often required to care for siblings, conduct housework, or labor on the family farm. Cultural norms often mean that while sending boys to school is considered a worthwhile investment, educating girls is not. Financial pressure at the household level can lead families to marry girls off earlier to decrease the number of mouths to feed. For instance, the drought that has affected large portions of southern Africa for the last five years has led to a rise in the rate of adolescent girls being forced into marriage. Early marriage and pregnancy disrupt their chances at secondary or tertiary education. Because lower educational levels are correlated with lower access to agricultural resources and assets, girls who are married early are more likely to remain in poverty, along with their entire families.

During young adulthood and middle age, rural women must perform a balancing act between productive and reproductive responsibilities. Social norms that dictate how mothers spend their time greatly limits their ability to fully participate in income-generating activities. Because of this, rural women are less likely to engage in activities that require commuting to nearby markets or to engage in off-farm formal employment that is subject to fixed schedules.

Once children are grown, women may regain some time and flexibility that can be put into the management and growth of a rural business — unless they are caring for extended family members. However, in the event of separation or death of a spouse, customary norms and discriminatory inheritance laws put women farmers at risk of being pushed off the household land by their in-laws, leaving them destitute.

The severity of these challenges vary across different contexts, but ultimately require careful analysis by service providers to ensure that rural women are served according to their unique pathways, life stages, and needs.

Serving women through a pathways lens

So how can providers match their service delivery to women’s unique needs and constraints? The pathways model is an effective framework to better analyze and map out service provision opportunities for any rural customer, including rural women in different life stages. Using this approach, providers can optimize service delivery for women moving through each pathway:

Service providers targeting women in subsistence farming households (pathway 1) should aim to improve their access to productivity-boosting assets, including land, credit, social networks, and information. For example, One Acre Fund requires all input loan contracts be signed by the person tending to the fields, meaning that a large percentage of loan contracts are signed by women.
As smallholders move into more intensified agricultural activities (pathway 2), service delivery channels, market access, and collateral requirements must be adapted so that women can accumulate the productive assets needed to intensify their farm operations. Mercy Corps Agrifin Accelerate has been working directly with several providers, including Zanaco in Zambia and Safaricom in Kenya, to design gender-inclusive financial products in order to ensure greater uptake and usage by rural women.
The transition from farm intensification to land consolidation (pathway 3) requires opportunities for women to secure leased, joint ownership, or sole ownership of land. In Tanzania, for example, an experimental study used financial incentives to encourage co-titling of landholdings between husbands and wives.
For women transitioning into formal enterprise (pathway 4), their lack of access to financial services is aggravated by non-financial constraints such as negative stereotypes relating to women as business owners. Service providers can make concerted efforts to help women-owned or -led rural SMEs access financing and capacity building by setting ambitious gender targets, as Root Capital does through its Women in Agriculture Initiative.
Women who pursue entrepreneurial opportunities in rural services (pathway 5) are more likely to start enterprises with low capital costs and barriers to entry, often relying on informal sources of finance. Service providers should strive to design products that can overcome the constraints female entrepreneurs typically face, such as savings accounts or credit with flexible collateral requirements. For example, Diamond Bank and Women’s World Banking create a special savings account that can be opened in less than five minutes with no minimum balance and no fees.
Women’s need for flexibility to balance their productive and reproductive roles means they often pursue rural employment opportunities (pathway 6), especially part-time. Interventions that aim to reduce the gender gap in wages, improve working conditions, and address occupational segregation are necessary in this pathway. Technoserve’s Girls Apprenticeship Program (GAP) is one example that supported girls in generating stable incomes and entering the formal workforce.

What comes next?

As emerging economies continue to industrialize and undergo agricultural transformation, women must play a crucial role in unlocking rural growth. Achieving gender equality will require not only adapting service delivery to overcome challenges, but — perhaps more importantly — making fundamental investments in systemic change. Only by making these investments can we remove structural barriers and create sustainable opportunities for women to build more resilient and prosperous livelihoods.

In the context of the pathways transition model, we see an opportunity for:

Improving our collective understanding of women’s service needs: This means shifting away from talking about women in general terms and instead recognizing distinct segments of women, according to their pathway and life stage. This recognition can help drive changes in how services are designed and delivered.
Driving innovation in market access initiatives: Because most innovation in market linkages has been private sector-led, it has targeted the most attractive customer segments, and therefore failed to reach women — despite their high potential for impact. But translating productivity gains into income gains requires rural women to have access to markets at fair prices.
Aligning capital investment with capital needs for the delivery of services to women customers: Rural women tend to require a more intensive package of services than the “standard” customer, delivered in a higher-touch manner. Since the economics of serving female smallholder farmers can be particularly challenging, donors and service providers must improve their understanding of the capital needs for serving this segment.
Engaging across sectors to coordinate action on gender-transformative initiatives: The complex and multi-dimensional nature of gender inequality requires cross-cutting approaches. With a unified view of the various dynamics that affect rural women’s transition pathways — and how specific service models can support these transitions — government, private sector, and civil society actors can better engage in concerted, targeted actions.

To learn more, explore the full gender deep dive here.