Traditional development theories believed that a high growth rate of the economy would benefit the poor through the so-called trickle down effect. This suggests that, among the poor, both men and women would equally reap the fruits of high economic growth rate. However, this has been belied by actual development and in spite of the various development measures and constitutional legal guarantees – women have lagged behind in almost all sectors.
In India, the emergence of liberalization and globalization in early 1990s aggravated the problem of women workers in the unorganized sectors from bad to worse as most of the women who were engaged in various self-employment activities have lost their livelihood. Despite the tremendous contribution of women to the agricultural sector, their work is considered just an extension of household domain and remains non-monetized.
Micro Finance is emerging as a powerful instrument for poverty alleviation in the new economy. Micro Finance refers to a collection of banking practices built around providing small loans (typically without collateral) and accepting tiny deposits. In India, micro finance scene is dominated by Self Help Groups (SHGs) – Bank Linkage Programme, aimed at providing a cost-effective mechanism for providing financial services to the “unreached poor”. Based on the philosophy of peer pressure and group savings as collateral substitute, the SHG programme has been successful in not only in meeting the peculiar needs of the rural poor, but also in strengthening collective self-help capacities of the poor at the local level, leading to their empowerment.
Micro finance for the poor and women has received extensive recognition as a strategy for poverty reduction and for women’s economic empowerment. There are good reasons to target women. Gender equality turns out to be good for everybody. The World Bank reports that societies that discriminate on the basis of gender have greater poverty, slower economic growth, weaker governance, and a lower standard of living. Women are poorer and more disadvantaged than men. The UNDP’s Human Development Report, 1995 found that 70% of the 1.3 billion people living on less than $1 a day are women. Studies in Latin America, and elsewhere show that men typically contribute 50-68% of their salaries to the collective household fund, whereas women “tend to keep nothing back for themselves.” Because “women contribute decisively to the well-being of their families,” investing in women brings about a multiplier effect. Again, every micro finance institution has stories of women who not only are better off economically as a result of access to financial services, but who are empowered as well. Simply getting cash into the hands of women (by way of working capital) can lead to increased self-esteem, control and empowerment by helping them achieve greater economic independence and security, which in turns gives them the chance to contribute financially to their households and communities.
While many micro finance institutions seek to empower women as an implicit or explicit goal, others believe they cannot afford to focus on empowerment because it is incompatible with financial sustainability or because it detracts from the core business of providing financial services. Yet, various studies have shown ample evidence of efficient, sustainable micro finance institutions whose programmes are intentionally empowering. It is worth mentioning some of the institutions that are both focused on empowerment and are financially self-sufficient, such as Working Women’s Forum (WWF) in India, which organizes women to achieve better wages and working conditions; ADOPEM in the Dominican Republic, which provides business training and training on democratic processes and civil society; and OMB in the Philippines, whose commitment to holistic transformation includes leadership training, personal development and business training.
A survey of 60 micro finance institutions by Cheston and Kuhn found strong evidence that micro finance institutions contribute to women’s empowerment. One consistent finding was increased self-confidence and increase self-esteem. Another was women’s increased participation in decision-making. Women’s Empowerment Project in Nepal, for example, showed 68% of women experienced an increase in their decision making role in the areas of family planning, children’s marriage, buying and selling property, and sending their children to school. World Education also found that the combination of education and credit put women in stronger position to ensure more equal access for female children to food, schooling and medical care. Other studies also showed increased ability to make purchasing choices, manage household funds, and manage enterprise funds.
Women clients have also experienced improved status and gender relations in the home. Women’s financial contributions helped them earn greater respect from their husbands and childrens, negotiate husband’s help with housework, and avoid family quarrels over money. The study also found increased respect from and better relationship within extended family and in-laws. Several studies show that women received more respect from their communities than they did before joining a micro finance programme. They also show women taking greater roles in giving advice within the community, organizing for social chance, and participating in community meeting – in part because they are now able to contribute financially to community need and activities such as funerals. A number of programmes also found increased political participation, including involvement in civic action and women clients being elected to office.
There are also some negative impacts and limitations to empowerment. A number of studies show an increase in women’s workloads. As they expand their businesses and participate in micro finance meeting. Some women have reported ill health and exhaustion. However, the majority of women who experienced increased workloads were happy to make that choice and felt that the benefits out-weighed the costs of participation.
There is also the issue of loans pass-through, in which women receive a loan and hand it over to their husband or another male in the household.
Besides the above, there are other limitation including limits to the level and kinds of change in women’s social status, decision-making power limited to making small purchases or other smaller decisions, clients’ husbands withdrawing their support from the household, and women hiding their savings or even their businesses from their husbands.
For micro finance programme to be cost-effective in bringing about the empowerment of women, it would require
1. providing business training,
2. investing in women’s general education and literacy,
3. providing guidance in balancing family and work responsibilities,
4. providing a forum for dialogue on social and political issues, such as, women’s rights and community problems,
5. giving women experience in decision –making
promoting women’s ownership, control and participatory governance in their micro finance programmes.
Micro finance programmes, thus, has been very successful in reaching women. This gives micro finance institution an extra-ordinary opportunity to act intentionally to empower poor women and to minimize the potentially negative impacts some women experienced.
- Women Empowerment Through Micro Finance – A Boon For Development – Tiyas Biswas.
- Empowering Women Through Micro Finance – Susy Cheston & Lisa Kuhn.
- World Development Report, 1995 - UNDP.