07/30/2013 05:40 EDT | Updated 09/29/2013 05:12 EDT

How Microfinancing Can Narrow the Gender Gap

Getting rid of the gender gap is critical to the empowerment of girls and women globally. There are 3.5-billion women on this planet, meaning their empowerment not only impacts them as individuals, but also their communities, their countries, and ultimately, our world. One cause I advocated for during the 2013 Summit was the importance of having microcredit loans for developing countries. More specifically, I advocated for the vital impact microcredit loans could have on the lives of women.

By definition, microcredit represents the loan of a relatively small amount of money to individuals, regardless of their employment status or credit history. The nature of the loan would provide women and girls, (currently underrepresented in terms of access to credit in developing economies), with an opportunity to start or expand their business. The spin-off of this is the potential for financial independence and an opportunity to reinvest in their community.

Often in developing countries men and women do not contribute to the economy in the same way. Traditionally, many women have been responsible for domestic roles, while men have been responsible for finances and roles outside the home. This has often been described as one of the causes of the economic gender gap. Through microcredit loans women in developing nations have the resources to start their own business and earn their own income. By adding a source of income to their household, women would be more independent and valued for their role in their community. This is essential for the full participation of women in their country's economy.

Studies have shown that women, by experience, have been known to make better and more responsible investments with money lent to them. Women often invest into their household's well-being, or in reliable activities that generate a sustainable income. Moreover, women have a higher repayment rate than men. Because of a higher repayment rate women represent 75 per cent of microcredit recipients. By directing microcredit to women in developing nations, there is an opportunity to economically empower women as well as their communities.

Simply put, access to credit and banking institutions is essential in today's economic world and vital to female independence. Once economically independent, women would be able to lead a new movement, funding other activities and empowering other women. This would be the start of a cycle that can lead to great change.

By Violette Perrott

Violette Perotte, 2013 G(irls)20 Summit Delegate, represented France at the 2013 G(irls)20 Summit, June 15 - 19 in Moscow, Russia. Visit to watch the G(irls)20 Summit.