Many key players in microfinance including the Foundation for International Community Assistance (FINCA), believe that targeting women will result in an increase in household income under women’s control. This will thereby cause an increase in the entire household’s wellbeing including women, men and children of poor families, meaning improvement in nutrition, literacy, health, and happiness. Thus, targeting women for microfinance services is generally accepted as an effective method of poverty reduction.
According to a UNCDF report, the poorest households rely more on women’s income. Women’s access to microfinance benefits women, their families, and communities by increasing income, awareness, and bargaining power, increasing resources available to families for improved nutrition and education, growth in local economies through local increases in women’s spending, and an expanded view of social and economic norms that relate to women.
One of the first comprehensive microfinance impact assessments was “Credit for the Alleviation of Rural Poverty: The Grameen Bank in Bangladesh,”1988, by Mahabub Hossain. In this assessment, Hossain found that Grameen members, of which 55 percent were women, had an average household income that was 43 percent higher than non members.
FINCA founder, Dr. John Hatch, believes that increasing the income of poor mothers results in an almost immediate improvement in the nutrition of their children, and mothers often use their increased income to send their children to school, thus improving a child’s opportunity to escape poverty in the future.
A FINCA Client Poverty Assessment conducted in 2003, of which 81 percent of interviewed clients were women, found that food security was 15 percent higher among their village banking clients than non-clients. The report also showed clients to have 11 percent more of their children enrolled in school with an 18 percent increase in healthcare benefits. Clients’ housing security was reported as 18 percent higher than non-clients. The assessment concluded that microfinance improved the wellbeing of clients and their families.
Research conducted in 1998 and again in 2005 by Mark M. Pitt and Shadhidur Khandker on three microcredit programs in Bangladesh showed that women had a 20 percent return to income from borrowing that was used to benefit their household (including children’s wellbeing) where as men by contrast had no returns from their borrowing that were used towards household expenditures.
A 2001 report analyzing the World Bank’s data sets found substantial impact on children’s health from women borrowers, but an insignificant or even negative effect from men borrowers in rural Bangladesh. Children in the household’s of women borrowers were taller, had larger arm circumferences and higher average weight than non-borrowers.
Education, nutrition, housing, and healthcare have all been shown to improve due to services offered by microfinance institutions. By targeting poor women, microfinance has had a significant positive impact on the well being of poor households.
By Melissa Duscha
A Brief Survey on the Impact of Microfinance on Women, 3-Part Series:
Additional Resources:
Business Today: Fighting Global Poverty with the Click of a Mouse
Foundation for International Community Assistance (FINCA)
FINCA Internship Handheld Palm Pilot Social Impact Results
The Grameen Foundation: Measuring the Impact of Microfinance: Taking Stock of What We Know
Interview with John Hatch: Social Edge
Linda Mayoux 2006 Chenai presentation
Linda Mayoux Website: Genfinance
UNFC Publication: Supporting Women’s Livelihoods: Microfinance that works for the Majority
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