Why are women at the core of the microcredit system?

Worldwide, 3 microcredits out of 4 are granted to women. Is it because they are better borrowers than men? Or is there so much discrimination against them elsewhere that microcredits are their only solution?

Women are the primary beneficiaries of microfinance (1). What may seem like a reversal of the traditional discrimination directed against women is in fact the consequence of it. Women are in the majority where obtaining microcredits is concerned because they are by far the poorest clients. The number of hours worked by women worldwide amounts to two thirds of the total number of working hours, yet they earn only 10% of the total income, since they possess less than 2% of the world’s land and receive less that 5% of bank loans.

According to the latest International Microcredit Summit report, 85% of the poorest clients are women. Their need for genuine support in their projects for economic emancipation has proven to be crucial (2).

But women are also considered as having the best profiles for becoming micro entrepreneurs. According to Jacques Attali, founder of PlanetFinance, “80% of the microcredit beneficiaries are women. They are far more capable of managing a business, since managing a family is already like managing a business. Men are more often looking for a salaried position or a job in local government whilst women have a greater desire and need to manage; they understand better what a business is.”

Studies have show that women’s repayment rates, in the region of 98%, are higher than men’s. They also spend more of their income on household expenses than their male counterparts. The revenues generated by microcredits granted to women appear to go directly to the benefit of children and the community. They therefore correspond to the offical objectives of microfinance, to work towards both the economic and social development of the most underprivileged populations.

At the end of 2006, microfinance had reached over 79 million of the poorest women in the world (3). In developing countries where women are often excluded from holding positions of political, economic or social power, the impact of microcredit on the quality of their living conditions is being closely examined, for if women are good clients, we still need to determine whether microfinance can offer them a real emancipation of their status in return.

(1)-(2)-(3) Daley-Harris S., 2007, “State of the Microcredit Summit Campaign Report 2007”

This article is part of the special report: