BBVA Microfinance Foundation has had much success in developing microfinance: it has fostered the formalisation of the sector; has committed itself to good corporate governance; and has tried to harness the latest technology and telecommunications and the digital economy to make it easier to reach customers

You have held many important posts in your career: vice-president of Costa Rica, under-secretary general of the United Nations and associate administrator of the UN Development Programme (UNDP), for which you were also regional director for Latin America and the Caribbean. And now you are the first woman to become secretary general for the Ibero-American Conference.

Your professional track-record is an example of how women can take on leadership positions, which makes it a special honour for us to interview you for this March issue of Progreso, since during this month we will all be celebrating International Women’s Day.

1. In 2014 you were unanimously elected by the 22 member states of the Ibero-American Conference to become its secretary general, the first woman to hold this position. What are the most challenging issues facing the Ibero-American secretariat general?

The Ibero-American secretariat general is undergoing a process of renewal that started in 2012 at the 22nd Ibero-American Summit in Cadiz and culminated in 2014 with the Veracruz Resolution, in which the heads of state and heads of government entrusted us  with a set of specific measures to better integrate the Ibero-American system, so that it would have greater influence and more impact, working in closer coordination with the governments within the Ibero-American Community.

This renewal is the biggest challenge we have taken up, as it means adapting the Ibero-American institutional set-up to a reality quite different from that which accompanied its creation. Both the Latin American as well as the Iberian countries have changed enormously over the last two decades, and such changes require a more symmetrical and horizontal relationship between the two groups and between them and Europe. At the same time, the panorama of regional integration is far more complex now, with new players, new organisations and co-existing initiatives, which motivates us to seek out the areas where we can make the biggest difference.

2. What are the next initiatives the Ibero-American secretariat general (SEGIB) is taking to strengthen cooperation among the Ibero-American countries?

One of the most important mandates we received at Veracruz was, precisely, to boost Ibero-American cooperation, focussing on three priority areas or “spaces”: culture, knowledge and social cohesion. We have been working on establishing the right structure for each of these and, very importantly, to take a more systematic approach to information on cooperation projects. Only too often, opportunities have not been taken up simply because people did not know they existed or found it too hard to dredge through the information. Our aim is to increase the articulation, visibility and effectiveness of Ibero-American cooperation, which is already seen as an international model of South-South and triangular cooperation, widely acknowledged as dynamic, horizontal and innovative.

In what we call the Knowledge Space, we have launched one of SEGIB’s key initiatives, inspired by the European Erasmus programme: the Partnership for Academic Mobility. We aim to have 200,000 students moving elsewhere to study from now to 2020. We have managed to gather more and more support, both from higher-education institutions and from the private sector, to fund the programme. The private sector has already committed funding for at least 40,000 student exchanges, which sets us well on track to achieve our goal by 2020.

There is a lot of scope for the Partnership for Academic Mobility to grow. According to UNESCO figures for the entire world, there are now over four million university students studying abroad. This is double the number from the year 2000. Academic mobility varies enormously from region to region. More than 7% of university students from Asia are studying abroad, whereas less than 1% of Latin-American university students do so. In fact, Latin America is the region with the lowest student mobility in the world. This means there is a lot of upside for countries to take advantage of their complementarities and increase cooperation among their study and research institutions. Academic mobility can be an excellent way for our educational systems to improve their quality and satisfy the growing demand for higher education that accompanies the burgeoning of the middle classes in Latin America.  

3. Latin America has been a pioneer in establishing a legal framework to promote public policies that guarantee gender equality. However, the region reports very high indices of femicide and gender-based discrimination. What public and private measures or policies are necessary to foster greater respect for women’s human rights in the region?

You are right that Latin America has been a pioneer in positive-discrimination laws to advance gender equality and the political representation of women at the highest levels of government. At present, it is the region with the highest ratio of female members of parliament, well above the average world-wide. At the same time, there is probably no other region that has elected so many female presidents as Latin America has over the last ten or fifteen years. So we can see positive examples of progress towards gender equality in the region. However, gender violence is still a very open wound in the region.

The fact that about 15 countries in the region have had to change their criminal code to establish the crime of femicide, so that the murder of women simply because they are women could be included on the statute book, is a very negative symptom. Throughout the region, there is great concern about the high figures of gender violence and femicide we suffer. That means we have a long way yet to go.

Likewise, in the economy, although there has been a massive incorporation of women onto the labour market, it is also true that the wage gap between men and women has not disappeared. There is still a major wage gap, whether you measure it for the same work or the same educational level.

This means that despite the gains, both in the political arena and in the economic and social spheres, women continue to encounter considerable, often invisible, barriers and manifestations of discrimination in the exercise of their rights.. So gender equality must continue to be a touchstone for all action programmes of governments, public policies, and international bodies.  

4. This is an historic moment for Latin American women’s political participation and leadership. The region has the highest percentage of female members of parliament in the entire world. However, at the local level, political representation continues to be dominated by men. How should the problem of low female participation in local politics be tackled?  

Indeed, only between 16% and 18% of mayors in the region are women. The political representation of women at the local level has not evolved with the same intensity as it has in national parliaments. In part this is due to the lack of positive-discrimination laws at the local level.  

Studies show that countries without positive-discrimination laws at the parliamentary level, for example, tend to have volatile, unstable ratios of female representation. Although at one particular moment they may have an acceptable representation, this may not necessarily be repeated. There is also the problem of not reaching a critical mass, because the idea is not to have one woman in parliament, but to have a sufficient number of women in parliament to be able to rewrite the agenda. Some researchers into this field suggest that the minimum threshold for such critical mass is 30% representation, in order to have sufficient clout to move the gender agenda at national level. Countries that do not have positive-discrimination laws and stable representation percentages have a harder time changing the national status quo.

That is what is happening at local level. From the moment that local governments became more influential, with more political power, more resources, the fight for political representation has intensified. So, despite the fact that women are highly represented in local civil society and participate actively in community organisations, they have been side-lined in accessing local political representation. Some women’s organisations have even begun to talk of political violence, which has become more visible at the local level. In fact, we have had some shocking examples of this phenomenon.

Thus, we should discuss whether positive discrimination quotas need to be set locally; whether there are ways to put pressure on political parties to include more women on their lists of candidates for mayors and councillors. And we must definitely increase local training programmes, which have been lagging behind compared to the empowerment and training opportunities available to women representatives at the national level. These are the three fields where I think action is required to make it possible to boost women’s participation and representation in local governments.

The final stumbling block, especially now at the local level, is the issue of funding. Campaigns are expensive and women often have less access to money. So, all laws that make it possible to obtain public funding for campaigns will help to open up equitable representation opportunities at the local level.

5. More than half the women in Latin America work under precarious conditions in the informal economy, with very limited access to the social security system. What would be necessary to bring women out of the informal economy and offer them some kind of safety networks?

This is a very important question. The over-representation of women in the informal economy is a fact, as is women’s low level of coverage from pensions and social security. I believe we must act on several fronts: first of all, to attain measures to improve home-work life reconciliation, which becomes a central piece to also achieve better societies in the future. The issue of home-work balance does not only concern women. It also involves men. We must have more policies and rules recognising the need for reconciliation of work and home life, with maternity and paternity leave; better hours; more flexibility, and days or hours that can be used to deal with family needs and emergencies. And these things must come to be seen as natural in the workplace and not something that is going to hamper women’s possibilities of moving up the business pyramid. They are fundamental elements of equality. This would also help to move women out of the informal economy because many women have no alternative but to work informally, simply because they do not have anyone to look after their family when they work.

The second front is the need to develop the care network much more. Women who do not have access to the care network cannot move into the formal labour market, because they have no support infrastructure. I want to emphasise that the reconciliation of home and work is not just a matter for negotiation within each household, with one’s partner. It is a social issue. It is the joint responsibility of the labour market, the state and society as a whole, alongside the families and couples involved. And this is very important, because it is also a matter of the capacity to socialise future generations. It is something that we should all concern ourselves with.

Moreover, we know that women’s capacity to move into the labour market and generate income is a vital part of the fight against poverty. On average, in Latin America poverty is about 10 percentage points less when there is female income in the household. So, strengthening the care network affects the mental and social well-being of future generations, the fight against poverty and the construction of fairer, more equitable societies.

The third front is programmes to give women access to credit and training, which are a fundamental element in equalling out opportunities for the future.

Regarding the social protection system, access to the formal economy triggers the social security benefits that are linked to it.. There is an interesting debate going on about whether social security systems should be reformed so that they not only protect workers in the formal economy, but also in the informal economy. That is, social security systems should be decoupled from the formal or informal nature of the job, and linked much more to the individual and his or her income.

This is a very broad-ranging debate, and it is linked to the discussion about whether countries should go for contribution-based systems or tax-funded systems. I am convinced there should be a combination of the two. Latin American countries, with their high levels of inequality and fiscal burden, cannot move towards a Scandinavian-style system where social security is financed by taxes paid by everyone. Contribution-based systems are important, so we should be able to follow the example of Costa Rica, which is to have a multi-pillar system. Costa Rica, Colombia, Mexico, and more recently, Brazil have all implemented multi-pillar systems. A serious discussion of the pros and contras of the solutions or proposals that have been developing over the last few years are advisable and necessary.

The gender issue is also involved in this debate, for example in the discussion, which has not been resolved, about the trade-off between the age of retirement and the density of contributions paid in. The possibility of women being pensioned earlier was a demand which I think will have to be replaced by a pension age relating to the density of payments into the system, which is the real problem for many women who are not entitled to a pension.  Since women tend to move in and out of the labour market (precisely for family reasons, such as taking care of children and the elderly) and sometimes are engaged in the formal and sometimes in the informal market, the number of contributions necessary for a pension becomes an insurmountable barrier to getting a pension. It is rather paradoxical that many women finance part of the system, without ever receiving any benefit.

6. Do you consider microfinance to be a useful tool for empowering women and supporting their social and economic development? What do you see as its greatest strengths and weaknesses and how could its impact be enhanced?

I think that studies demonstrate that access to credit and microfinance has been an enormously useful tool in empowering women. We all know about some of the most successful instances world-wide, such as the Grameen Bank. But several schemes have been developed specifically to give women access to borrowing.

Several people believe that microlending should be subsidised credit. Personally, what I see is that women have no access to a formal system where they are able to borrow quite small sums, so they often fall into the hands of loan-sharks and end up paying unnecessarily high interest rates. It is doubtlessly true that microlending interest rates are higher than on regular bank loans, because they entail higher transaction costs. However, even if the interest rates are higher, they are still a much better option than going to the local loan-shark in your community. This is the strength of the microfinance model.

I think its weakness is when the systems are precarious; when they fail to include the elements we spoke of earlier, for giving women skills and supporting their ability to manage small enterprises. What are most expensive are precisely the support measures, when we are trying to reach out to these more vulnerable sectors, often without much formal education. It makes sense to charge higher interest rates if this gives women access to services that will enable them to use loans for their own personal and economic development.

7. The BBVA Microfinance Foundation encourages the formalisation of the microfinance industry, promoting good corporate governance and the application of leading-edge technology in their entities, in order to facilitate a closer relationship with customers. What do you see as the main challenges before the microfinance industry?

I think the BBVA Microfinance Foundation is the example to follow. As you so rightly say, the BBVA Microfinance Foundation has had much success in developing microfinance. It has fostered the formalisation of the sector; has committed itself to good corporate governance; and has tried to harness the latest technology and telecommunications and the digital economy to make it easier to reach customers. This has an impact on remote places with poor infrastructure and poor access to markets and has turned it into a benchmark for the industry.

Informal microfinance may in some cases have an impact on subsistence, but does not bring people out of poverty. If we want microfinance to really become an instrument for economic development and overcoming poverty, the example of BBVA Microfinance Foundation is the model we should follow.

One of the challenges in the microfinance sector is how to connect the flow of funding, how to create a system in which microfinance is linked to existing credit funds and not just to funds created separately especially for microfinance. It means working out how to create a system that can harness the skills of the organisations that know how to do microfinance, where the loan-book of the formal banking system can generate second-tier funding that can feed into the microfinance system.   

8. What are the advantages and disadvantages of state transfers, even beyond the conditional cash transfer programmes? Are such transfers complements or substitutes for microfinance programmes? What role should be played by each?

Cash transfer programmes conditional on income have been a very important innovation in the Latin-American region’s social policies. 135 million people are currently benefitting from such programmes, with Brazil and Mexico having the largest programmes. Such schemes have different features. Some include elements such as nutrition, child care or savings.

In order to assess them correctly, we must first understand what the conditional cash transfer programmes were aiming at. They were not intended to combat today’s poverty but to tackle tomorrow’s poverty. They were to fight inter-generational transmission of poverty. Because if we fail to invest in infant nutrition from before babies are born until the age of two; if we cannot incorporate them to education systems; if we do not take care of their health, then their opportunities of escaping poverty in the future will be cut short before they even start. It is like sealing their fate at birth, just because of the family they are born into. Of course, when one transfers income to the poorest families, it has an impact on today’s poverty. But that is not the impact we are aiming for. The impact we seek is the impact on the capacities of new generations to escape poverty.

Why does this not replace access to credit and to microfinance? Why does it not substitute job possibilities? Because skills have to be matched up with opportunities. Having skills does give people an advantage, but then opportunities must be created if they are to put these skills to use; so that they can set up a business, create a micro-enterprise, find a job, get into an economic pattern that opens up doors to get some return on the education and learning they have received.

There is a study into this, carried out in Mexico many years ago when they started such programmes, which monitored young people who had had access to education through conditional transfers and compared them against communities where there had been no such access. The question was: did the people with more education do better? The answer was yes and no. Those who remained in their communities did not do better, without any economic opportunity to monetise their education. They were stuck in communities where the same old economic patterns prevailed. Those who migrated did better, because they could take their skills with them. Human capital travels with humans. So the skills had been created, but not the opportunities. Our conclusion would be that one cannot expect one single programme to solve all problems.

Part of the agenda is creating such economic opportunities, and there, lending and microfinance have been playing a very important role, especially with more highly skilled people, who can make better use of the resources.  

9. If you had to cite a milestone in the advance towards gender equality in Latin America, what would it be?

Managing to get over 15 countries to adopt equality laws for gender equity and positive-discrimination policies in political representation has created a critical mass in the region and has already allowed significant progress in boosting women’s parliamentary representation and the number of female candidates in national elections.  Five countries have gone even further and have adopted parity legislation at the department level.

If I can have a second, it would be women’s access to the educational system, where we even see a worrying gender gap working the other way round now in some countries, where men are outnumbered in secondary and university education.

10. What book or film would you like to recommend to our readers?

The book The Man who loved Dogs, by Leonardo Padura. And the film Son of Saul, which is currently showing in cinemas.

11. What person, historical or not, has had the biggest impact on your life?

It is not really a person, but a movement. The feminist movement. The fight for women’s suffrage; the fight for equality; all the women who, despite facing difficult situations in their personal or family life, managed to open spaces that today’s women have been able to take advantage of. This movement includes women from many countries and latitudes, from Susan B. Anthony in the United States to Paulina Luisi in Uruguay or Ángela Acuña in Costa Rica, to name but a few examples.