Policy Brief Issue 29 ARE MOBILE SAVINGS THE SILVER BULLET TO HELP WOMEN GENDER GROW THEIR BUSINESSES? INNOVATION LAB The Africa Gender Authors: Gautam Bastian, Iacopo Bianchi, Mayra Buvinic, Markus Goldstein, Innovation Lab (AFRGIL) Tanvi Jaluka, James Knowles, Joao Montalvao and Firman Witoelar and the East Asia Pacific Gender Innovation KEY MESSAGES Lab (EAPGIL) carry out impact evaluations • In Tanzania and Indonesia, we promoted the expansion of and inferential research mobile savings accounts among women microentrepreneurs to generate evidence and provided them with business related training. In on how to close the doing so, we simultaneously relaxed supply- and demand- gender gap in earnings, side constraints to savings that women might face. productivity, assets and agency. The impact • In both countries, the training enhanced the impact of promoting objective of the GILs mobile savings. In Indonesia it led women to save more overall, is to increase take-up including a nascent use of mobile accounts, and report greater of effective policies decision making power within the household. In Tanzania, it led to by governments, substantially higher mobile savings, new businesses and products, development more capital investment, labor effort, and better business practices. organizations, and the private sector in order to • However, these short-term impacts have yet to translate address the underlying into higher business profits. In Indonesia, we observe increased causes of gender household welfare, but no discernible effects on business outcomes inequality. The labs aim shortly after the training ended. In Tanzania, the increased business to do this by producing investments were not accompanied by greater profitability. and delivering a new body of evidence and Savings can help businesses expand, by enabling them to finance lumpy investments developing a compelling and absorb unexpected shocks. However, several barriers stand in the way of narrative, geared towards policymakers, on what women firm owners in developing countries who want to increase their savings. works and what does not work in promoting gender equality. For instance: social pressures women might face The goal was to teach and motivate women to set to share their incomes with friends and family business goals, identify business opportunities, put members, the high transaction costs of traditional ideas into practice, and mobilize finance (with a savings products, and implicit or explicit biases from focus on savings). The curriculum also emphasized financial service providers against women as potential the importance of fostering personal effectiveness good customers. If despite these barriers women and perseverance, as well as the benefits of a manage to set aside some savings, any effective more gender equal society. Additionally, it covered use of these funds towards business expansion standard good business practices. The face-to- may take time to materialize, compete with other, face group training was supplemented with an more urgent uses, or be hindered by human capital interactive mobile phone learning platform. limitations such as limited entrepreneurial ability. The research design in Tanzania allows us to identify the impacts of the mobile savings intervention, with and HERE’S WHAT WE DID without the business training. To do so, we randomly We designed two randomized control trials: assigned about 4,000 women microentrepreneurs one in Tanzania, the other in Indonesia. In both (operating in Dodoma and Mbeya) into three groups: countries, we tested the impact of two interventions, (i) 1,000 women were invited to the mobile savings separately and together, in alleviating some of intervention only, (ii) 2,000 women were invited to the constraints impeding savings and business both the mobile savings and the business training growth among women microentrepreneurs. The interventions, and (iii) 1,000 women served as a control first intervention (“mobile savings” intervention) group. All women were first surveyed in June-July 2016. expanded access to mobile savings bank accounts. The interventions run from August-November 2016. The second intervention (“business training” Follow-up surveys took place at one year and at 18 intervention) provided training to improve business months after the baseline survey. For the analysis we skills and financial literacy. The specifics of each also exploit administrative data on M-Pawa transactions intervention differ by country, as follows. made available by Vodacom for all women in the study. Tanzania Indonesia In Tanzania, the mobile savings intervention promoted In Indonesia, the mobile savings intervention also M-Pawa: a mobile banking product linked to M-Pesa promoted access to a new branchless banking that allows customers to save money on an interest- mobile savings product, but that was dependent on bearing mobile savings account. It also gives customers the successful operation of a new mobile banking access to uncollateralized instant microloans. The network. Unlike in Tanzania where we worked intervention invited women microentrepreneurs for a directly with women business owners, in Indonesia training session on M-Pawa. At the end of the session, the intervention targeted local bank agents and we helped women create an account with M-Pawa. We included men and women entrepreneurs. It provided also offered them the option to set personal savings agents with enhanced financial incentives for goals and receive weekly SMS savings reminders. signing up new customers, as well as training on This latter feature attempted to relax possible the product and the importance of targeting female psychological barriers related to limited attention customers. The intervention thus targeted the supply that could lead to under-adoption of the product. side of the market for mobile savings, whereas in Tanzania we directly targeted the demand side. The business training, designed and implemented by TechnoServe, lasted for 12 weekly group sessions. The business training, designed and implemented The training was designed by TechnoServe and it by Mercy Corps Indonesia, invited microentrepreneurs was explicitly adapted to women business owners. for an average 3 hours-long training session on financial literacy with a focus on mobile savings. This Survey data show that there are no systematic group session was followed by three group mentoring effects on overall savings or loans. Firm owners sessions to reinforce the training with practice. appear to have shifted both savings and loans to the mobile platform from other sources, including The research design in Indonesia allows us to identify cash savings at home. So although savings balances the impacts of the two interventions, separately haven’t increased, they appear to be more secure. and together. To do so, we followed a two-stage randomization procedure. The first stage randomized The mobile savings intervention led to firms the mobile savings intervention across about 400 opening new businesses. Women in the mobile villages (in East Java): the villages were either paired savings only intervention are 4pp more likely to grow with bank agents receiving high (Rp. 10,000, around their business activities by operating a second business. $0.77) or low (Rp. 2,000, or $0.15) monetary incentives This impact is higher among women who receive the for signing up new customers. The second stage additional business training intervention, though not randomized women microentrepreneurs within both significantly different from the mobile-savings only group. types of villages into two groups: about 1,600 women The mobile savings intervention also led to an were invited to the business training intervention, and increase in women’s intra-household decision- about 1,200 women served as a comparison group. making power vis-à-vis their husbands. Self- Microentrepreneurs were surveyed in two waves, reported data from women who were encouraged with the first wave surveyed in January-February to open mobile-savings accounts indicates that 2017 and the second in July-November 2017. The they have greater decision-making power over results below are restricted to half the sample, where business and household expenditure allocations a majority of the women (77%), were re-interviewed compared to women in the control group. This in early 2018, a month or less after the last group evidence is consistent with mobile savings mentoring session (as delays resulted from operational accounts offering greater privacy and security. challenges in setting up the network, now resolved). The business training further led to better HERE’S WHAT WE FOUND business practices (such as record keeping and financial planning), more labor effort and capital investment. The marginal impact of adding business Tanzania training to the mobile savings intervention was a 4pp The mobile savings intervention led to firms increase in the number of good business practices , saving more on M-Pawa, and the business training a 2-hour increase in time the woman devotes to work enhanced this impact. Transaction-level data shows per week, and a 23% increase in capital investment. women in the mobile savings only group saved two times more money weekly on M-Pawa than women in Indonesia the control group, while those in the mobile savings + business training group saved almost four times more. The business training increased women’s knowledge of mobile money and Borrowing from M-Pawa also increased. The mobile savings and their likelihood of mobile savings intervention led to a 14pp statistically opening a mobile savings account. significant increase in the likelihood that women received a mobile loan. This impact is slightly higher The business training in combination with among women who received the additional business the mobile savings intervention led women training intervention, though not significantly different. to increase total savings and mobile savings. These women increased total savings The increase in mobile savings and loans appear balances by about 24%, including a statistically to crowd out other types of savings and credit. significant 4% increase in mobile savings balance. Women who only received training and women who were only exposed to better paid agents also increased total savings (11 and 7%, respectively), but these increases were not statistically significant. Women who received training and were served by high-incentive agents reported being more empowered, reflected in an index of household decision-making. This empowerment effect seems to have been mediated by the increase in savings and mobile savings, providing privacy and enhancing women’s economic self-reliance. The combination of the two interventions also had positive economic welfare effects and increased women’s self-confidence, but there were no discernible effects of either intervention alone or combined on women’s business outcomes. Both interventions independently increased household assets – women who received training reported a 20% increase in household consumer durables (including smartphones and TV connection) and women served by high-incentive agents reported a 24% increase in these durables. These women likely invested at least part of their increased savings in durable household assets. An outstanding question is whether increased savings will also be invested in the business over time. WHAT HAVE WE LEARNED SO FAR? Our results suggest that easing supply-side constraints increases the uptake of mobile savings accounts by women microentrepreneurs in developing countries, and has beneficial economic empowerment effects. However, the evidence also shows that without relaxing complementary demand-sided constraints that women might face, access to mobile savings accounts per se is no silver bullet. Providing women with complementary business training bolsters the effectiveness of mobile savings accounts, although this is still not enough to improve business profits in the short run. We plan to conduct additional follow-up surveys for both the Tanzania and Indonesia projects to track longer run effects on business performance. http://www.worldbank.org/en/programs/africa-gender-innovation-lab http://www.worldbank.org/en/programs/east-asia-and-pacific-gender-innovation-lab FOR MORE INFORMATION, PLEASE CONTACT Markus Goldstein (AFRGIL) mgoldstein@worldbank.org This work was partly funded by a generous grant from the Exxon Mobil Foundation to the Center for Global Development. This work has also been funded in part by The Umbrella Facility for Gender Equality (UFGE), a World Bank Group multi-donor trust fund expanding evidence, knowledge and data needed to identify and address key Elizaveta Perova gaps between men and women to deliver better development solutions that boost prosperity and increase opportunity for all. The UFGE has received generous contributions from Australia, Canada, Denmark, Finland, Germany, Iceland, (EAPGIL) Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, and the United States.. eperova@worldbank.org The researchers would like to acknowledge the ExxonMobil Foundation’s pivotal role in the creation of “She Counts”—a global platform that seeks to put financial services in the hands of women business owners. The researchers are privileged to provide the evidence that feeds into this partnership. Photo credit: Marijo Silva and the “She Counts” global platform The first draft of this policy brief was released in September 2018.