Giving Women More than Credit: Women and Microfinance
Seventy percent of the world’s poor are women, and microfinance is a powerful instrument of social change, particularly for women. Since women are often among the most vulnerable and poorest members of low-income societies, and given that 68 percent of global microfinance customers are women, it is no surprise that there are obvious economic and social benefits to involve women in microfinance programs. Recognizing that microfinance can empower women, women are also proving to be a good investment. Studies show that women in poor rural regions are more reliable borrowers of credit than men. Additionally, women tend to invest in sectors that improve their families’ welfare, such as education and healthcare. In terms of social benefits, women’s financial inclusion has significantly contributed to female empowerment by giving women additional income earning opportunities, increasing their independence, and improving their status both within their families and their broader communities. To give just one illustrative example, in India the microfinance institution (MFI) Deepalaya has provided loans to 900 groups of poor rural women and these customers note that they now receive greater respect from their husbands, and some have even used their earnings to fight domestic abuse cases.
Although microfinance began thirty years ago as a gender-neutral industry, MFIs increasingly began to target women and recognized the potential of female entrepreneurs. The microfinance revolution started among rural women in Bangladesh in the 1970s and quickly spread to the rest of the developing world. Most notably, 11 percent of the poor in South Asia are accessing microcredit, followed by 7 percent in Latin America. In these areas, when poor women were given the opportunity to borrow and invest money in their businesses, they proved that they were reliable and efficient users of credit. Since then, a number of MFIs have tailored programs and developed products specifically for women. Women’s World Banking (WWB), a global network of MFIs that is committed to investing in women, showcases some of the microfinance products that are most useful to women, including savings and insurance products that facilitate women’s role in the household as caregivers; micro-health insurance products that help women save for health expenses; and mobile banking services that are designed to reach women who face access constraints.
Microfinance programs have drawn millions of women into commercial economic activities from which they were previously barred. The International Fund for Agricultural Development (IFAD) argues that women involved in microfinance, either as borrowers or savers, gain a level of power that allows them to make independent decisions and raise their status. MFIs that focus on women also tend to be highly regarded. The Grameen Foundation, for example, cites the importance of providing credit to women because they help break generational cycles of poverty by investing in their children. The Grameen Foundation is ranked number two on Philanthropedia’s International Microfinance 2012 ranking of MFIs. Another women’s focused MFI, Pro Mujer, launched in 1990 providing Latin America’s poor women with the means to improve their livelihoods. In addition to financial services, ProMujer has pioneered a healthcare and human development methodology. They have disbursed over US$ 1 billion in loans and provided healthcare to approximately 1.6 million women and 6.4 million of their children and family members.
Furthermore, governments have also begun to take note of microfinance’s potential to empower women. For example, India’s finance minister recently announced a plan to establish a small public bank for the poor run by and largely for women, due in part to the successes of similar Indian institutions and by the recognition that microfinance is an effective poverty reduction tool.
The successes and social benefits brought about by women-focused MFI’s should be celebrated, but it is important not to overlook the challenges facing rural women. 63 percent of women in the developing world lack formal bank accounts, and many more remain underrepresented in the financial sector. A 2012 study by Booz & Company concluded that microfinance is necessary but not sufficient for women who seek to enter the workforce, and that both government and the private sector must help women move beyond microfinance to reach their full potential. Additionally, depending on a country’s cultural norms, sometimes microfinance loans that are given to women actually end up being controlled by their male relatives.
Practitioners recognize that microfinance can only go so far, and they question whether a woman selling tortillas at the street corner can move up the economic ladder. Microfinance is not a silver bullet, but there are impressive success stories. For example, a Jordanian woman whose Microfund For Women loan turned her from a janitor into a businesswoman who now supports seven households; a Kenyan woman who used loans from Kenya Women Finance Trust to open a hardware store that now employs 25 Africans; and a Pakistani woman whose $70 loan from the Kashf Foundation allowed her to open a jewelry business that became widely successful and provided the means to give her nine children an education. Although microfinance is not a cure-all, it has changed the lives of many women in the developing world. /cz