There are 1 billion women in the world without access to financing. The situation of many women in rural areas of Latin America is particularly precarious: they do not have bank accounts, cannot access banks and are at the limit of poverty. Their only option are microloans offered by microfinance companies from the area, with very bad conditions: they are forced to underwrite their homes, opening costs are imposed, and they have extremely high rates of interest.
The social entrepreneur Alejandro de León was in Nicaragua when he realised that this was the situation: instead of making material donations to these women’s children, what he had to do was give funding to their mothers so that they could invest in their businesses and provide for their families. Like the well-known saying goes ‘rather than giving fish to someone who is hungry, teach them how to fish’. This was how the idea of creating Microwd came about.
“We connect women in Latin America with investors in Europe that, as well as getting financial profitability, are creating a social impact. With our microloans we improve the conditions: we do not demand houses as collateral, there are no opening costs and we bring down the interest,” explains Mónica Aznar, who is a member of the Microwd operations team.
The company works as a sort of franchise: “In every community we partner with a cooperative or an NGO. Through these local partners, we replicate Microwd with our guidelines: our product, our technology and our action guide’. The technological support consists of a platform where all the borrowers’ data are collected: age, number of children, percentage of repayment on the loan… This computerisation allows them to detect patterns of behaviour and improve the service.
Each investor has a list of workers and assumes 100% of the risk of investing in each of the women, but in 2019, they will be launching a fund to make shared risk available.
But why is this only for women? “Statistically it has been shown that women repay more than men and that they have a greater impact on their community because they spend their income within it,” explains Aznar. To try to further ensure that repayment, investor and borrower are both able to put a face to a name, organising video calls so they can get to know each other.
Among the businesses of these female entrepreneurs, there are grocery, fashion and beauty, restaurants, livestock and agriculture. The startup is already operating in Nicaragua and Peru, and they are currently making headway in Mexico and Paraguay. Since the start of this initiative in 2013, its success figures speak for themselves: 322 investors and more than 2,600 microloans obtained.
Now, Microwd is involved with MAPFRE’s insur_space to go one step further and offer micro-insurance and micro-pensions to these women workers as well. “When they receive a microloan their income increases by 60% in the first year and 150% in the second. This generates a savings capacity that they didn’t have before,” says Aznar.
During these months with MAPFRE, they will consider if this product is viable and they will carry out a pilot to see how it fits in with the insurer. In this process they have the help of their mentor, Alberto Levy, who highlights the direct social impact of Microwd and encourages them to find their own synergies in the world of insurance: “It is not about applying Microwd to all MAPFRE’s clients and vice-versa, is about finding a common path”. In any case, the collaboration is already having a very positive effect on both parties, as Levy emphasises: “It is very pleasant to see how a giant, such as MAPFRE, and a small company, such as Microwd, begin a journey. At each meeting that I have with them, I can see their desire, their eyes shine brightly”.