Microfinance and Women Empowerment
By Nomaxabiso Maqanda
Poverty, it has been said, has many faces and its definition and measurement can be quite hard to pin down. Some have defined poverty as lack of income or being denied choices and opportunities for living a quality life. The World Bank has defined poverty according to the following circumstances: hunger, lack of shelter, being sick and not being able to see a doctor, not being able to go to school and not knowing how to read, not having a job, fear for the future, living one day at a time, living in an unhealthy environment, powerlessness, lack of representation and freedom (www.worldbank.org).
However one may choose to define poverty, there is a sense of lack and deprivation that dominates and makes the one experiencing it quite vulnerable. It has been cited that children, women and the aged are the most vulnerable groups affected by poverty, and according to Obiageli Ezekwesili, World Bank Vice President for the Africa Region, “the face of poverty is female” (web.worldbank.org). It is for this reason that empowering women, especially those in rural areas who are more prone to poverty than their urban counterparts, is essential in reducing the levels of poverty.
As poverty is most extreme in rural areas, microfinance has played an important role in the development of these areas. If poor people are to be assisted in overcoming poverty, it is vital to recognise the importance of means by which they can find their own solutions. Microfinance is a powerful tool in doing this as it assists very poor households to take care of their basic needs while also protecting them against risks (Wrenn, 2005). Because the institutions target the poor, microfinance gives poor people access to resources in such a way that enables them to identify their own livelihood projects. For example, create sources of income that are sustainable and provide self-employment for themselves and their children. It also organises under-used local resources for the sustained benefit of even the poorest microfinance participant and local resident.
Microfinance services are a component of the fight against poverty and make a significant difference to the economic welfare of poor households and the capacity for self-reliance. Access to microfinance has made a significant difference to poor households. Studies have shown that income of households of families with access to credit is much higher than those households that do not have access to credit. Those poor households that do have access to microfinance services have been shown to accumulate more assets, and this provides them with both a safety net against accidents, as well as resources for self-help investments.
The fact that microfinance institutions are highly unregulated enables them to be flexible and to adapt to meet the needs of poor households, giving them an advantage over formal financial sector institutions. Clients’ voluntary savings with microfinance institutions is used to meet their own community’s needs. Microfinance institutions empower the poor as they encourage active participation in their own development (Remenyi, 2000).
At household level, microfinance provides a greater opportunity for children of microfinance participants to go to school. Studies have shown that microfinance participants’ children are more likely to go to school and stay longer in school than children of non-participants. Microfinance programmes enhance the quality of life of the participants as they also give these families an opportunity to obtain insurance and to make choices that best suit and serve their needs (Wrenn, 2005).
For women, microfinance has proven to be a powerful tool for social change. In the context of heterosexual relationships, especially in South Africa where there is a high rate of violence, HIV infection and poverty, it has been argued that women have little power to assert their needs or to negotiate sexual relations, because of gender power inequality that characterises these relationships (Shefer,2006). Many microfinance interventions aim to empower women, and their focus on women gives these women the power to set up their own businesses and to negotiate sexual relations from a not-so inferior position.
Because poverty and gender inequalities are shaping the nature of sexual relationships, if a woman is in a violent relationship, she may feel powerless to, for example, ask her husband to use a condom, as this could make her husband suspicious and provoke further violence. Microfinance benefits women in that it helps enhance their status, both in the home and communities, especially when they are the ones responsible for managing loans and savings. This ability of women to generate and control their own income creates an environment for further empowerment of poor women. Microfinance helps women set up their own businesses and become self-sufficient, impacting significantly on the families’ quality of life, especially the children.
Although microfinance has many strengths and benefits as an instrument for rural development, it also has its weaknesses. There seems to be an unintentional leakage of microfinance resources to people who are not so poor, making the poorest clients benefit least from microfinance institutions loans. Microfinance institutions concentrate on the higher layer of the poverty triangle to ensure they achieve financial growth, but the poorest of the poor are left to benefit from the little that is generated by the spread of microfinance to an increasing number of poor households in poor communities. Also, because microfinance places an over-emphasis on scale, this may compromise the microfinance institutions’ capabilities to adapt to its socio-cultural environment (Remenyi, 2000). Nevertheless, microfinance is increasingly becoming a vital tool for women empowerment.
References
• Remenyi, J. (2000).”What is Microfinance”.In Remenyi,J.&Quinones,B.(eds).Microfinance and Poverty Alleviation.New York:Bookens Ltd
• Shefer, T. (2006).”Heterosexuality”.InRatele,K&Duncan,N.(eds)Social Pshychology:Identities and relationships,pp289-302. South Africa:UCT Press
• www.worldbank.org/poverty/mission/upl.htm
• http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:22182932~menuPK:258657~pagePK:2865106~piPK:2865128~theSitePK:258644,00.html
Poverty, it has been said, has many faces and its definition and measurement can be quite hard to pin down. Some have defined poverty as lack of income or being denied choices and opportunities for living a quality life. The World Bank has defined poverty according to the following circumstances: hunger, lack of shelter, being sick and not being able to see a doctor, not being able to go to school and not knowing how to read, not having a job, fear for the future, living one day at a time, living in an unhealthy environment, powerlessness, lack of representation and freedom (www.worldbank.org).
However one may choose to define poverty, there is a sense of lack and deprivation that dominates and makes the one experiencing it quite vulnerable. It has been cited that children, women and the aged are the most vulnerable groups affected by poverty, and according to Obiageli Ezekwesili, World Bank Vice President for the Africa Region, “the face of poverty is female” (web.worldbank.org). It is for this reason that empowering women, especially those in rural areas who are more prone to poverty than their urban counterparts, is essential in reducing the levels of poverty.
As poverty is most extreme in rural areas, microfinance has played an important role in the development of these areas. If poor people are to be assisted in overcoming poverty, it is vital to recognise the importance of means by which they can find their own solutions. Microfinance is a powerful tool in doing this as it assists very poor households to take care of their basic needs while also protecting them against risks (Wrenn, 2005). Because the institutions target the poor, microfinance gives poor people access to resources in such a way that enables them to identify their own livelihood projects. For example, create sources of income that are sustainable and provide self-employment for themselves and their children. It also organises under-used local resources for the sustained benefit of even the poorest microfinance participant and local resident.
Microfinance services are a component of the fight against poverty and make a significant difference to the economic welfare of poor households and the capacity for self-reliance. Access to microfinance has made a significant difference to poor households. Studies have shown that income of households of families with access to credit is much higher than those households that do not have access to credit. Those poor households that do have access to microfinance services have been shown to accumulate more assets, and this provides them with both a safety net against accidents, as well as resources for self-help investments.
The fact that microfinance institutions are highly unregulated enables them to be flexible and to adapt to meet the needs of poor households, giving them an advantage over formal financial sector institutions. Clients’ voluntary savings with microfinance institutions is used to meet their own community’s needs. Microfinance institutions empower the poor as they encourage active participation in their own development (Remenyi, 2000).
At household level, microfinance provides a greater opportunity for children of microfinance participants to go to school. Studies have shown that microfinance participants’ children are more likely to go to school and stay longer in school than children of non-participants. Microfinance programmes enhance the quality of life of the participants as they also give these families an opportunity to obtain insurance and to make choices that best suit and serve their needs (Wrenn, 2005).
For women, microfinance has proven to be a powerful tool for social change. In the context of heterosexual relationships, especially in South Africa where there is a high rate of violence, HIV infection and poverty, it has been argued that women have little power to assert their needs or to negotiate sexual relations, because of gender power inequality that characterises these relationships (Shefer,2006). Many microfinance interventions aim to empower women, and their focus on women gives these women the power to set up their own businesses and to negotiate sexual relations from a not-so inferior position.
Because poverty and gender inequalities are shaping the nature of sexual relationships, if a woman is in a violent relationship, she may feel powerless to, for example, ask her husband to use a condom, as this could make her husband suspicious and provoke further violence. Microfinance benefits women in that it helps enhance their status, both in the home and communities, especially when they are the ones responsible for managing loans and savings. This ability of women to generate and control their own income creates an environment for further empowerment of poor women. Microfinance helps women set up their own businesses and become self-sufficient, impacting significantly on the families’ quality of life, especially the children.
Although microfinance has many strengths and benefits as an instrument for rural development, it also has its weaknesses. There seems to be an unintentional leakage of microfinance resources to people who are not so poor, making the poorest clients benefit least from microfinance institutions loans. Microfinance institutions concentrate on the higher layer of the poverty triangle to ensure they achieve financial growth, but the poorest of the poor are left to benefit from the little that is generated by the spread of microfinance to an increasing number of poor households in poor communities. Also, because microfinance places an over-emphasis on scale, this may compromise the microfinance institutions’ capabilities to adapt to its socio-cultural environment (Remenyi, 2000). Nevertheless, microfinance is increasingly becoming a vital tool for women empowerment.
References
• Remenyi, J. (2000).”What is Microfinance”.In Remenyi,J.&Quinones,B.(eds).Microfinance and Poverty Alleviation.New York:Bookens Ltd
• Shefer, T. (2006).”Heterosexuality”.InRatele,K&Duncan,N.(eds)Social Pshychology:Identities and relationships,pp289-302. South Africa:UCT Press
• www.worldbank.org/poverty/mission/upl.htm
• http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:22182932~menuPK:258657~pagePK:2865106~piPK:2865128~theSitePK:258644,00.html