For Women Smallholders in Zambia, Financial Inclusion is Not “One-Size-Fits-All”

Nov 2, 2018 | All, Digital Financial Services, Women & Youth

This post is a continuation of the Blog Series, Increasing Women’s Financial Inclusion in Zambia. See previous posts in the this series: 

The financial resilience and aspirations of women smallholder farmers are not homogenous. They vary considerably depending on women’s incomes and factors such as their social networks, previous financial experiences, income and expense volatility, and degree of control over household finances. Digital financial products and services need to be adapted to this diversity; otherwise, they risk doing more harm than good.

A loan product that helps one woman invest in a business that improves her family income might have the opposite effect for another. If she is already struggling financially, it may sink her into irremediable debt and leave her worse off than before. It’s not a one-size-fits-all model. 

“Financial inclusion is not a guarantor of financial health” – Christabell Makokha, Zambia Country Director, AFA 

Measuring Financial Health 

In Zambia, AFA used qualitative research and human-centered design (HCD) to explore the contexts and drivers of financial behaviors among women smallholder farmers. They spoke with women individually and in focus groups within their local village and savings associations (VSLAs).

The research was based on a behavior change framework that incorporated four key financial health indicators measuring the women’s ability to: (1) build and maintain their reserves; (2) plan and prioritize their finances; (3) access a range of financial tools; and (4) manage existing debt. These indicators were adapted from the Center for Financial Services Innovation Beyond Financial Inclusion: Financial Health as a Global Framework. 

Four Different Faces of Financial Health 

The research revealed that women smallholders fall into one of four distinct personas, based on the financial health indicators: 

  1. The entrepreneur
  2. The restrained hustler
  3. The tried and true
  4. The burdened breadwinner. 

The “entrepreneur” is the woman who scores highly on all four indicators. She is financially savvy, well-respected, considered a leader in the community, and apt to give financial advice to others. The “entrepreneur” is likely to juggle multiple income-generating activities and be engaged in different value chains. She may be in more than one savings association targeted to different priorities (e.g., school, farm inputs, investing in assets). Her financial needs are geared towards financial growth, and she needs financing options to grow her business and diversify into new ones.  

The second persona is the “restrained hustler.” She shares traits with the “entrepreneur” in terms of money planning and debt management but has a harder time accruing savings and limited access to financial tools. She might take financial risks if she is confident that there will be returns, but the “restrained hustler” needs quick access to asset financing and support in managing household savings to meet her longer-term goals. 

Getrude Masiye, a 25-year-old mother of four from Katete, in Eastern Province exemplifies the third, “tried and true” persona. She has financial plans and priorities but struggles with savings and consistency in her ability to pursue new interests. “I have been burnt by new ideas several times,” says Masiye. “Sometimes I quit, sometimes I move on to the next idea. This is also financially setting me back, and so I tread carefully.” 

The fourth persona is the “burdened breadwinner,” who scores low on all the financial health indicators and is focused primarily on daily survival. Though she may aspire to pay for her children’s education or set up a small shop, she is overwhelmed with emergency expenses at home and lacks financial backup. She is likely to be risk-averse, distrusting of banks, and afraid to access formal credit for fear of not being able to repay strict repayment terms. “If we can’t pay, we might be taken to prisons and have children suffering. We don’t even have animals, which we can give the bank,” says a member of the Kanjala Village Savings Group in Maundu, Eastern Province. 

The “entrepreneur” is the woman who scores highly on all four indicators. She is financially savvy, well-respected, considered a leader in the community, and apt to give financial advice to others. The “entrepreneur” is likely to juggle multiple income-generating activities and be engaged in different value chains. She may be in more than one savings association targeted to different priorities (e.g., school, farm inputs, investing in assets). Her financial needs are geared towards financial growth, and she needs financing options to grow her business and diversify into new ones. 

Segmenting the Market 

The findings point to the need to better target financial products to the diverse financial priorities and capacities of women smallholders. For example, given their relatively weak financial management capacity, digital loan products may not be appropriate for the “burdened breadwinner” or “tried and true” persona. However, products such as e-wallets that promote savings and services that enable access to more affordable and quality inputs such as layby, could help stabilize and improve their financial health. Meanwhile, women fitting the “entrepreneur” or “restrained hustler” personas might benefit from digital loans to grow and diversify their business activities, along with bundled services to further strengthen their financial planning and management capacities. 

Each of these personas represents core needs and opportunity areas for creating financial services for women smallholder farmers. They take us beyond the metric of financial inclusion to broader considerations for improving financial health within different market segments. 

As a next step, AFA is currently pursuing partnerships with financial institutions (e.g., banks, micro-finance institutions, telecommunications companies, and social enterprises) to support the financial needs and goals of various women smallholder market segments. The next blog in this series will elaborate on AFA’s partnerships with these institutions to share early experiences and results. 

See previous posts in the this series: 

Authors: 

Christabell Makokha, AFA Country Director, Lusaka 

Lucy Kioko, AFA Agriculture Engagement Manager, Nairobi 

 

This research was supported by funding from the Mastercard Foundation and Financial Sector Deepening Zambia (FSDZ) Women’s Financial Inclusion (WIN) program.