Emerging Insight: Shifting staff mind-sets around loan repayments
22 February 2022
Microfund for Women (MFW) Jordan offers financial and non-financial services, targeting female entrepreneurs to empower them socio-economically. In 2019, MFW served more than 140,000 clients (96 per cent women) with an average loan size of US$554 and a gross loan portfolio of US$80 million.
In 2016, MFW started a pilot to serve Syrian women refugees in Jordan. It followed earlier pilots with Palestinian women in Jordan, as well as Iraqi refugees. Initial response among MFW staff was mixed: many appreciated the social effort of supporting refugees but felt that the risks for MFW were too big. Especially the perceived instability of Syrian refugees and associated credit risk were a cause of concern for staff.
Frontline staff faced the challenge of determining the risk profile of their new clients. Categories like “character”, “stability” and “reliability” were difficult to assess because they were unfamiliar with their social, cultural and community networks. As a workaround, MFW started applying alternative appraisals of new clients, such as using family ties in the area, housing contracts, long-term phone plans, school enrolment of children and engagement in local social and business activities.
Since starting the pilot, MFW staff have acknowledged that refugee clients do not seem as risky as they initially thought. While they remained wary about possible “Portfolio at Risk” spikes due to departing refugees, the portfolio of Syrian refugee women performed very well.
Since broadening its product portfolio to meet refugees’ needs, MFW has been more exposed and familiarized with the new client segments and learned how to serve them effectively.
Read more about the learning journey of MFW, in this Social Finance Brief.
In 2016, MFW started a pilot to serve Syrian women refugees in Jordan. It followed earlier pilots with Palestinian women in Jordan, as well as Iraqi refugees. Initial response among MFW staff was mixed: many appreciated the social effort of supporting refugees but felt that the risks for MFW were too big. Especially the perceived instability of Syrian refugees and associated credit risk were a cause of concern for staff.
Frontline staff faced the challenge of determining the risk profile of their new clients. Categories like “character”, “stability” and “reliability” were difficult to assess because they were unfamiliar with their social, cultural and community networks. As a workaround, MFW started applying alternative appraisals of new clients, such as using family ties in the area, housing contracts, long-term phone plans, school enrolment of children and engagement in local social and business activities.
Since starting the pilot, MFW staff have acknowledged that refugee clients do not seem as risky as they initially thought. While they remained wary about possible “Portfolio at Risk” spikes due to departing refugees, the portfolio of Syrian refugee women performed very well.
Since broadening its product portfolio to meet refugees’ needs, MFW has been more exposed and familiarized with the new client segments and learned how to serve them effectively.
Read more about the learning journey of MFW, in this Social Finance Brief.