Can microcredit improve conditions for women?

With nearly 80% of microcredits being granted to women, we often hear of microcredit’s force of empowerment and its role in the evolution of the female condition in developing countries. Looking at the still limited studies on the subject, it would appear that things are rather different in reality.

The term “empowerment”, describes the act of taking charge of one’s life on an economic, professional, familial and social level. The question still under debate is whether microfinancing services can help women, traditionally victims of discrimination, along the path to a certain level of autonomy in the private as well as the public sphere.
For ten years, following the long battle led by Muhammad Yunus 1, the World Bank and the various NGOs and organisations involved in the fight against poverty have been joining their voices to the arguments affirming the benefits of favouring women in the distribution of loans privilégier les femmes dans l’octroi des crédits. The 2007 microfinance summit report 2 estimated that microfinance affected 79 million women worldwide in 2006.

Studies in the field conclude that the results are by and large positive: improved purchasing power and access to healthcare, greater powers of decision-making and geographical mobility and a reduction in domestic violence. In Afghanistan 4, 74% of microfinance clients participate in their family’s financial decisions as opposed to 53% of non-clients... In Jordan 4, according to a study carried out in 2007, 66% of women and 77% of men participating in microfinance programmes declared an improvement in their diet, 46% of the women and 50% of the men declared an improvement in their health and 41% of women declared an improvement in their children’s education.

It would appear that women are playing a larger role in the economy of countries where microfinance services are developing. According to the International Finance Corporation (IFC), more than 60% of people at the head of small and medium sized businesses in Africa are women. In 2008, the Indonesian Office of Statistics recorded that 60 to 80% of small and medium sized businesses in the country were managed by women. These same businesses represent 97.1% of the country’s labour force.

However, other analyses such as that of researcher Isabelle Guérin 5, draw attention to collateral effects which reveal how much ground remains to be covered with regard to female emancipation: misappropriation of funds by men, loss of control of businesses as soon as they become productive, the increase in responsibilities, problems of overwork, fatigue and growing stress… Another problem is the limited range of activities open to women: the concentration of women in the field of arts and crafts may, for example, create a level of competition that is detrimental to everyone’s chances of success.

In 2009, the United Nations reaffirmed in a report 6 that the increased participation of women in the workplace was not enough to change inequalities on a daily basis. Women are still over represented in the informal economy, where jobs are often precarious, underpaid and not protected by official standards. As already underlined in a report in 2003 7: “satisfying clients’ needs is not enough to resolve the problem of gender”, i.e. those concerning equality and fairness between the sexes.

The analysis of informal practices in the field 8 would even appear to point to the consideration that, on a long term basis, microcredit should not be favoured as a tool in the fight against female poverty. Women’s responsibility in the family economy suggest that micro savings accounts would be more appropriate, replacing debt with the savings and favouring the logics of investment rather than reimbursement.

Even if there are no “miracle solutions” to poverty, studies in the field 9, show that women are on the move, but it is still up to the participants in the microfinance system to adapt their services to their situation and real options. This is the cost of the hoped-for equality; it does not hang on the thread of microcredit alone. 10

1 "The money entering a household through a woman brings more benefits to the family as a whole," excerpt from “Creating a World Without Poverty” by Muhammad Yunus – founder of the Grameen Bank and Nobel Peace prize winner in 2006 - with Alan Jolis, published by. Jean-Claude Lattés, 1998
2 Microcredit Summit Campaign report 2007

3 "Afghan women gain socio-economic empowerment through microfinance, but challenges remain”, Microfinance Investment Support Facility for Afghanistan (MISFA), July 2009
4 National Impact and Market Study of Microfinance in Jordan, 2007, written by PlaNet Finances in collaboration with the Ministry of Finance in Jordan, and the Agence Française de Développement (French Development Agency)
5 Isabelle Guérin, "Femmes et Microfinance, Espoirs et désillusions de l’expérience indienne", (Women and Microfinance, Hopes and Disillusions of the Indian Experience) Publisher: Editions des archives contemporaines, March 2009
6 Un report, "Women’s Control over Economic Resources and Access to Financial Resources”, October 2009.
7"A Guide to Gender Sensitive Microfinance” FAO (ASEG), April 2002

8"Women, Microfinance and Savings: Lessons and proposals", R. Vonderlack and M.Schreiner, BIM, 2004

9 According to latest International Microcredit Summit report: 84.2% of the poorest microcredit clients are women.
10 Elisabeth Hoffmann, coordinator of the Genre en Action (Gender in Action) network:
"Microcredit can only be productive if accompanied by high quality training, efficient social services to assist women with their family responsibilities, support for their organisations, better access to political positions in order to promote their needs and interests and - last but not least – men, who are also changing."

This article is part of the special report: