When it comes to financial inclusion, women in the Dominican Republic have always been stuck in the “second row”. Poverty among women is much higher than among men. One of the reasons: a lack of economic autonomy. In rural areas, more than two out of three women do not have an own income, in cities it is one out of four. Overall, women earn 36 percent less than men. The United Nations Development Programme estimates, that due to this manifest gender discrimination the Dominican Republic loses around 20 percent of its potential human development.
As formal sector jobs are lacking, many Dominican women turn to be “entrepreneurs by necessity” to make a living. Half of all micro-entrepreneurs in the country are women. They work on their own account. However, enterprises bigger than a small shop or family business are hardly ever owned by women: Only 4,8 percent of all micro, small and medium-sized enterprises (MSMEs) are owned by women. This places the Dominican Republic among the 10 percent of countries worldwide with the smallest number of women in an ownership position of MSMEs. One reason for this is that women receive less credits to start their own businesses, and if they do, these come at higher interest rates, even though they have proven to be more reliable in paying them back.
Credits for change
The Dominican government has recognized the problem – and started to confront it. In 2010, the constitution has been amended to advance gender equality: Article 39 determines that the state must actively promote equal rights for men and women. Together with 36 countries of Latin America and the Caribbean, it has approved the “Montevideo Strategy” in 2016 as a road map for achieving gender equality and women’s autonomy and human rights of the Agenda 2030 for Sustainable Development. In accordance with that, the national Ministry of Women has presented an ambitious update of the National Plan for Gender Equality (PLANEG III) in 2019, which identifies the lack of access to credits as one major obstacle towards economic autonomy for women and aims to improve access to credits and capacity-building for women entrepreneurs. In addition, a new law has been introduced in 2015 prohibiting gender-based discrimination in financial services.
Against this backdrop, economic non-discrimination and financial inclusion of women is increasingly becoming a reality in the Dominican Republic. Microcredits have been heavily promoted in recent years by the Dominican government as a development tool and to eradicate poverty. The government has handed out more than 66,300 loans for women via the National Council for the Promotion and Support of Micro, Small and Medium Enterprises (Consejo Nacional de Promoción y Apoyo a la Micro, Pequeña y Mediana Empresa, Promipyme) in 2020 alone.
A governmental programme called “SuperEmprendedoras”, which translates in English to Super Women Entrepreneurs, has started in 2021 to support women in extreme and moderate poverty in starting their own businesses to break the circle of poverty. The programme aims to provide credits to 10.000 women countrywide and create 20.000 jobs in the process. The credits are allocated by Promipyme at a low interest rate and will be accompanied by trainings on business tools, administration and marketing to make the women’s businesses more profitable and sustainable. “The initiative aims at reducing the feminization of poverty, promote the education and financial inclusion of the participants and boost their business activities,” commented Luis Abinader, the president of the Dominican Republic, who personally launched SuperEmprendedoras.
Private banks jump on the bandwagon
Dominican private banks have jumped on the bandwagon and started to act against gender-based discrimination, spurred by the regulatory changes and out of economic and moral considerations. One of the banks specifically aiming at the financial inclusion of women and other disadvantaged groups is ADOPEM, a subsidiary of the BBVA (a Spanish commercial bank) Microfinance Foundation. The bank not only allocates small credits for micro- and small enterprises, but it also offers technical assistance along with it. Today, 67 percent of its credit customers are women.
Other banks have opened up whole new business niches by crafting products adapted to women’s needs, including specific credit lines. Back in 2012, BHD bank (which fused with Banco León in 2014 to become BHD León) introduced a credit card designed for women. It included a specific set of insurances, for example for cancer screening. Tarjeta Mujer, as it was called, turned out to be a full success. As a result, the bank decided to develop an entire gender-focused initiative called Mujer Mujer in 2015 with the support of the International Finance Corporation (IFC) and the Global Banking Alliance or Women (GBA), which supports women as customers and employees in the financial world. It was based on thorough market research to understand more about women’s specific needs. Whole new product bundles were developed, and mindsets changed across all the bank’s departments by actively promoting the new gender strategy through communication campaigns, regular training courses, monitoring and incentives like a financial compensation for the active implementation of the new gender-specific tools and strategies. As the credit card did, the Mujer Mujer programme turned out to be a hit. Within just two years, the bank reached 125.000 new female customers and an annual growth rate of 13 percent. BHD León became renowned as a “benchmark bank for women”, offering also a capacity building programme for SMEs called “Doctor Pyme” (Doctor SME) to enhance the skills of women business owners.
Overcoming discriminatory algorithms
One of the obstacles for women to receive credits lies deep in the algorithms that calculate the creditworthiness. Gender-specific barriers to receiving credits arise within these calculations, because women in the Dominican Republic are likely to have no formal credit histories, less earnings, and do not hold equal property rights. The Dominican bank Asociación La Nacional de Ahorros y Préstamos decided to change that and reduce the gender-based discrimination in credit access, especially for women with a low-income. The bank has started a cooperation with researchers from the World Bank, the University of California and Northwestern University in the U.S. using data of 20.000 low-income individuals in the Dominican Republic to develop a less discriminating credit scoring algorithm.
The algorithm was trained to include “non-traditional” data like mobile money transactions and other mobile phone data, which can be used to predict asset ownership and repayment behaviour. The researchers found out that if credit scores were estimated separately for men and women, instead of being pooled together in a single algorithm, 80 percent of women would get higher scores. This showed that gender-sensitive calculation resulted in less gender discrimination. As a next step, the researchers plan to measure the impact of the new algorithms for women who would not have been eligible for credit before, but who were now thanks to the adapted algorithm.
Steadily, things are changing for women in the Dominican Republic. According to the national banking supervision, in 2020, female micro-entrepreneurs had more microcredits in the banking system then their male counterparts, with 112 Dominican pesos owed by women for every 100 Dominican pesos owed by men. But looking at the overall situation of commercial credits, including credits for bigger companies, women still accounted for only 25 Dominican pesos for every 100 Dominican pesos owed by men. It is still a long way to go to create equal possibilities for women in the Dominican Republic, end gender-based discrimination within the financial system, and break the cycle of poverty. But the government, private banks and researchers have made a solid start towards boosting women’s economic potential.
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