Microfinance = poor women’s empowerment, correct?
When we think of microfinance, what comes to mind? Something like the image above?
Poor ‘third world’ women, taking small loans from benevolent credit agencies, breaking down the confines of their entrenched poverty! Sending their daughters to school! Standing up to their oppressive husbands! Creating social change in their communities! Empowerment! Women’s rights! Yes!
It’s a beautiful image isn’t it?
It’s also simplistic, hiding the huge variety of experiences of women living with poverty in the global south, and ignores the many cases where microfinance has had a negligible or worsening effect.
Women and Poverty
Women, like any group, are not homogenous, and within this range, poor women also experience poverty on a scale ranging from living close to the poverty line, to what is described as the “hardcore” or “core” poor (Hulme and Mosely 1996, Nawaz 2010). Whether or not their lives will be transformed for the better, as a result of engagement in a microfinance program depends on many social and economic factors (Kabeer 2005).
As a social group, women are more likely to be poor, as Kabeer (2005) argues, gender norms in south Asia construct women as subordinate to, and dependent upon, men. Accordingly, women tend to carry out domestic tasks, such as cooking, cleaning, child rearing and carrying water, which are under valued and do not earn an income (Vonderlack and Schreiner 2002). This economic dependency leads to what Kabeer (2005) terms “patriarchal risk”, in which women are at risk of destitution if they are widowed or abandoned by male guardianship.
Microfinance ostensibly protects women from this risk by providing them with the means to an outside income, and in some cases, savings. The underlying assumptions are the following:
- Women will use the money for their own enterprises
- They will have control over income earned from these enterprises
- Greater involvement in economic activity will lead to female empowerment and better social conditions
- Women are more likely to use their income to better the lives of their children, especially daughters, and especially in the areas of education and health (Hulme and Mosely 1996, Kabeer 2002)
However, in reality outcomes are not necessarily always positive.
As demonstrated by Hulme and Mosley (1996), despite loans being provided to women, it is often the men in the household who end up controlling the money. When women do control the loan money, they are typically engaged in “traditionally female” activities, which do not earn very much money.
1) The low earning potential and small loan are unlikely to have a large impact on level of poverty.
2) Despite high ideals about transforming women’s subordinate position in society, the microfinance program either fails to be used by women, or reinforces existing patriarchal ideas about gender roles (Ibid).
Vonderlack and Schreiner (2002) argue that for poor women, it is access to savings that is needed, not loans.
They argue that in order to protect poor women from the vulnerabilities associated with domestic violence, ‘patriarchal risk’, and to meet day to day subsistence needs, safe deposit boxes are vital. Women are able to stash away cash, or in kind items, such as jewellery, away from male family members, so that they can accumulate savings safely, to buffer against risk. Savings are lower risk than loans, and if they are secret, cannot be appropriated by men.
Women’s Empowerment and Improvement of Social Position
A main argument in favour of microfinance is that involvement improves the social standing of the female members. However as Kabeer (2002) demonstrates, the achievement of these benefits is dependent on a variety of other factors, and in many cases, are not achieved at all.
There are many areas in which the level of women’s empowerment can be measured, due to the short nature of this post, I will only be able to discuss rates of domestic violence, and the education of children, especially girls. However, it should be noted that other areas are also important, such as: decision making power within the household, participation in politics and protest and income of the household.
- Domestic violence
Results were varied, some studies reported an increase (Goetz and Sen Gupta 1996, Rahman 1999), and others a decrease (Hashemi, Schuler and Riley 1996, Kabeer 2001, Murthy, Raju, Kamath 2002).
Potential reasons for decrease:
- “Increased awareness among family members that the women now had a public forum in which to discuss previously private matters” (Kabeer 2002)
- Easing of economic stress
- Women holding better bargaining position, able to withhold cooperation if husbands were violent
Varied results, Khandker (1999), Kabeer (1999) and Kabeer and Noponen (2004) found that women’s involvement in a microfinance organisation with wider social goals meant an increased likelihood of children’s, including girls’ attendance in school.
However, Todd (2001), and Cortijo and Kabeer (2004) found that women’s membership in microfinance, while increasing boys’ attendance, had no effect on that of girls, and in fact, girl’s very likely to be engaged in paid labour.
- These results were found in Andhra Pradesh, which exhibits the highest levels of child labour in India, Cortijo and Kabeer (2004) argue that microfinance has had a positive impact in the area of education, however the endemic poverty and widespread child labour are not problems that can be fixed by women’s involvement in microfinance alone.
The general assumptions about microfinance paint it as a sort of ‘magic bullet’, that will lift ‘third world’ women out of poverty, and redress gender imbalances.
However in reality the lives and needs of poor women vary, poor does not simply mean poor, there is a great range of poverty within the descriptor, and as many women fall into the category of ‘hardcore’ poor more must be done to engage with this oft ignored group.
Simply providing women with access to small loans will not improve their lives, a mixture of broader social programs alongside microcredit, savings and financial advice, that take into consideration the cultural context appear to deliver the best outcomes. Development organisations need to be aware of this if they are creating their microfinance programs with the aim of fostering social change and bettering living conditions for women.
Cortijo, M J and N Kabeer (2004): ‘The Wider Social Impacts of Microfinance in Andhra Pradesh: A Case Study of SHARE Microfinance Ltd’, draft paper, Imp-Act Programmes.
Goetz, A M and R Sen Gupta (1996): ‘Who Takes the Credit? Gender. Power and Control over Loan Use in Rural Credit Programmes in Bangladesh’, World Development, 24 (1) pp. 45-63.
Hashemi, S, R S Schuler and I Riley (1996): ‘Rural Credit Programmes and Women’s Empowerment in Bangladesh’, World Development, 24(4), pp. 635-53.
Hulme, D and P Mosley (1996): Finance against poverty. Routledge, London.
Kabeer, N (1999): ‘From Feminist Insights to an Analytical Framework: An Institutional Perspective on Gender Inequality’ Institutions, Relations and Outcomes. A Framework and Case Studies for Gender Aware Planning, Kali for Women, New Delhi and Zed Press, London.
– (2001): ‘Conflicts over Credit: Reevaluating the Empowerment Potential of Loans to Women in Rural Bangladesh’, World Development, 29(1), pp. 63-84.
-(2002): ‘Is Microfinance a ‘Magic Bullet’ for Women’s Empowerment? Analysis of Findings from South Asia’, Economic and Political Weekly 40(44/45), pp. 4709-4718
Murthy, R K, K Raju and A Kamath (nd): Towards Women’s Empowerment and Poverty Reduction, Lessons from the Participatory Impact Assessment of South Asian Poverty Alleviation Programme in Andhra Pradesh, India, mimeo
Nawaz, S (2010): ‘Microfinance and Poverty Reduction: Evidence from a Village Study in Bangladesh’ Journal of Asian and African Studies, 45(6), pp. 670-683
Todd, H (2001): ‘Paths Out of Poverty: The Impacts of SHARE Microfinace Ltd in Andhra Pradesh’, Imp-Act report.
Vonderlack R. M, Schreiner, M (2002) ‘Women, Microfinance and Savings: Lessons and Proposals’ Development in Practice, 12(5), pp. 602-612