MICROCAPITAL STORY: A Brief Survey on the Impact of Microfinance on Women Part 2 of a 3-Part Series: Evidence of Women’s Empowerment

Though there is less quantifiable evidence to justify the effect of microfinance on woman’s human rights, it is widely accepted that giving women access to savings and credit will increase women’s social and political empowerment, and even change traditional gender relationships. These assumptions continue to be evaluated as recent microfinance studies are focusing more and more on women’s empowerment.

In a 2006 microfinance workshop given in Chennai , India , Dr. Linda Mayoux of Genfinance, a UK-based information gateway for the empowerment of women through microfinance, described key issues pertaining to women and microfinance including the question of women’s empowerment and gender equality being central to the achievement of sustainable development, and whether or not microfinance programs make a significant impact on the lives of women. She questioned whether microfinance alone can reduce poverty and facilitate financial sustainability, firmly believing that a mixture of microfinance services and education are necessary.

Linda Mayoux and the United Nations Capital Development Fund (UNCDF) caution that microfinance alone cannot be credited with impact on women. Social services such as self-help counseling are also major factors when measuring impact.

Credit with Education is a model developed by Freedom from Hunger in which training in health and business is integrated into microfinance services.

Many MFI’s, especially NGOs offer credit services accompanied by education integrated into loan repayment meetings. Thus, an MFI’s impact on women is not only a result of quantifiable loans, but also the outcome of educational programs offered.

The empowerment of women and gender equality, while often attributed as being significantly impacted by women’s access to microfinance, is extremely difficult to measure. In Hashemi, Schuler, and Riley’s “Rural Credit Programs and Women’s Empowerment in Bangladesh”, published in 1996, the authors were able to show that MFIs had a positive effect on the empowerment of women by creating an “empowerment indicator” ,based on eight factors: mobility, economic security, ability to make small purchases, ability to make larger purchases, involvement in major household decisions, relative freedom from domination within the family, political and legal awareness and involvement in political campaigning and protests. A survey participant was considered empowered if she had five out of eight of these attributes.

A 1992 survey conducted by Hashemi, Shuler, and Riley concluded that members of the Grameen Bank were seven and a half times as empowered as non-members, and BRAC members were four and a half times as empowered. They also determined that non-members living in surveyed villages were still twice as empowered as villages without Grameen Banks as a result of positive economic spillover. Whether this is a direct result of the effect of microfinance or because of community selection bias is not clear according to the authors of the survey.

The Swedish International Development Cooperation Agency (SIDA) reported on an empowerment survey conducted by Uppsala University Department of Economics between August 2003 and January 2004 covering five states in India and 1,025 households. According to the survey results, 65 percent of Self Help Group households experienced an increase in income over a three-year period, while 61 percent agreed that their hardships had significantly decreased. An increase of school expenditures was reported by 69 percent of participants. Eighty-eight percent of respondents reported confidence in meeting a financial crisis in the family, with a same percentage reporting an increase in self-confidence after joining a Self Help Group Bank.

While many MFIs targeting women worry about the possibilities of women being forced to turn their loans over to their husbands, and the “feminization of debt”, where women become mediators between male family members and MFIs, in the SHG study, 60 percent of participant households reported that it was the borrowers themselves who made the crucial decisions in the purchase of raw materials and product pricing.

The empowerment of women is evident in today’s microfinance sector. Though many questions still remain about the social impact of microfinance on the lives of poor women, microfinance institutions can be credited for significant improvements in the wellbeing of women.

By Melissa Duscha
 

A Brief Survey on the Impact of Microfinance on Women, 3-Part Series:

Additional Resources:

Allianz: Microfinance: A Platform for the Empowerment of Women

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

Linda Mayoux 2006 Chenai presentation

Linda Mayoux Website: Genfinance

Linda Mayoux: Women’s Empowerment or the Feminization of Debt?

Linda Mayoux: Women’s Empowerment and Microfinance

Swedish International Development Cooperation Agency (SIDA): September 2006 Division for Market Development: Evidence from the self help group bank linkage programme in India: Microfinance and Women’s Empowerment

UNFC Publication: Supporting Women’s Livelihoods: Microfinance that works for the Majority

Uppsala University Department of Economics Working Paper August 2007: Does Microfinance Empower Women? Evidence from Self-Help Groups in India

Women’s World Banking

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