For this installment of Yin vs. Yang, I asked undergraduate students in my microfinance & financial inclusion course at Lehigh University what they thought about the blatant and expressly intentional–indeed celebrated–gender bias in global microfinance. Good? Bad? Ugly? Pick a side said I, and blog it. Argue it well, but acknowledge the other. Here’s a couple of the best, one on each side.
Perpetuating Second Class Status
by Joseph Lucia
Currently microfinance serves millions of women across the globe. In fact more than 75% of all microcredit borrowers are women. Many people argue that this is a wonderful thing. They believe that women should be the absolute focus of microfinance. It is true that women make up more than 70% of the poor in the world. They are also almost half as likely to have access to traditional financial services compared to men. They currently have less financial freedom, and they also tend to make payments on their loans much more frequently. In a perfect world with no side affects microfinance exclusively for women would be ideal. However, this is not that world. In reality serving only women only perpetuates their second class citizen status in many poor countries, fails to empower them the way MFIs would prefer, and causes more tension in the home.
The first issue with serving only women is that it doesn’t make them equal. It perpetuates the idea that women aren’t worthy enough to receive the same financial services as men. They must get loans from MFIs rather than from traditional banks or moneylenders. This sounds beneficial to the women because generally they can get a better deal out of MFIs than men can get out of other institutions or informal lenders, but the opposite is true. The society sees it as validation that women can’t be as strong or financially successful as men. They must resort to working in groups with other women and getting charitable loans. They then will just continue investing in their smaller less profitable enterprises because they haven’t removed themselves from the low societal status. The idea that this will empower women is good on paper but false in reality. Women only remain locked in a lower level of society.
The second issue with only loaning to women is that it doesn’t always work out as planned. In fact it often times backfires. Since these loans are so much more available to women, husbands have been known to either take the money from their wives or take out a loan in their name without their knowledge. This causes men to have even a stronger hold on women. They don’t even have access to their own loans in these situations. An example of this happened in the early Grameen Bank model. In some regions with established Grameen lending it has been found that more than half of the loans were actually taken out under women’s names. In addition almost three out of four women claimed that acquiring a loan led to increased violence against them within their home. This shows that women aren’t always being helped by being the sole recipients of Microfinance lending. In fact it leads to husbands using their wives names instead of allowing their wives too. This isn’t empowerment. In addition, even when the loans actually go to women, many suffer from more violence from their husbands who fear losing control of the household.
Lending to women could be a great thing if the focus wasn’t on them. If MFIs didn’t put all of their energy into giving credit to women and spread it evenly, women could actually benefit. In this case they would actually be receiving a service equal to what men receive. This would help them with societal status. Men would also be far less likely to try to push them into getting loans for them or using their name to get loans. These men would just get their own loans. This would reduce the second issue of men controlling women. MFIs would end up with women on the same playing field as men without being pressured by them.
Progress Doesn’t Have to Be Perfect
by Ellen Schaaf
Microfinance institutions around the world have focused on creating microcredit programs specifically targeting women. The reason for this gender specific targeting is two-fold: it’s good for the bottom line, and there’s some evidence to suggest that giving women microloans creates more of an impact for household consumption and well-being than if the same service is given to men. However, despite the high repayment rates experienced by MFIs, and what seem to be good effects on the lives of women at home, the real impact of microfinance on women is a bit more complex. This blog post is going to focus on the competing evidence of whether microfinance is a good—or bad—thing for poor women, and whether something should be used in its place.
We see microcredit as a way to empower the world’s poor. Considering that 70% of the poorest people in the world are women, we could take this logic one step further and use microcredit to empower women and help them achieve financial autonomy. Women have fewer alternatives to microfinance in many regions of the world. Indeed, in all regions, men have greater access to formal financial services accounts than women, ranging from 1.06 times higher rate for men compared to women in OECD countries to a drastic 1.77 times higher for men than women in the Middle East and North Africa. Microfinance institutions like Bandhan, with 6.5 million female borrowers in 2014, seek to change this skew in access to services by solely serving women. We must take Bandhan’s and other MFIs’ gender data with a grain of salt, though; a 2011 study by Elena Bridgers found that 24 of the 90 women she interviewed did not control the microloan that was taken out in their name; their husbands actually controlled the loans. This still means that 73% of the borrowers Bridgers studied did have at least some control on their microloan, so a majority of the women in that study did experience some financial autonomy by utilizing microfinance. However, just because a woman might gain financial autonomy doesn’t mean no problems area created in the household; new data suggest microfinance may increase the prevalence of domestic violence.
Linda Mayoux relays a story collected by Rahman in 1999 of a woman named Bahar in Bangladesh; while she is a Grameen Bank borrower, she did not choose to take out a loan of her own accord—her husband forced her to by threatening divorce. In order to avoid that, she gave into her husband’s demands. Unfortunately, in cases like this microfinance may be doing more harm than good for poor women. Indeed, Aminu Rahman found that 70% of the women he surveyed that were Grameen Bank clients experienced increased domestic violence after getting a microloan. This may be due to repayment pressures, and men may feel threatened if their wives suddenly gain financial autonomy. While things may get worse with husbands, there is a positive side to microfinance targeted specifically toward women; they tend to spend more of it on their families. Mark Pitt and Shahidur Khandker found that, while all households experienced consumption expenditure increases regardless of the loan recipient’s gender, giving the loans to women increased household consumption 60% more than when the funds were given to men. Investments by women in their family’s health and education do not see immediate returns, but they could lead to lasting long term economic gains.
Finally, let’s analyze some of the reasons MFIs target women to boost their business—repayment rates and risk aversion. As Linda Mayoux notes in her guide Women’s Empowerment through Sustainable Micro-finance: Rethinking ‘Best Practice’, just because a microfinance institution is experiencing high repayment rates on its loans to women does not actually mean that the women have personally used them. Women also tend to use microloans on less productive business ventures than men, a choice that keeps women close to home and low profile, so as to keep their husbands from slacking. The risk averse choices women investors make are not a flaw in the microfinance system, though; they are trends seen in women around the world, so we can’t really blame MFIs for conservative investment choices. Rather, they are filling the cash flow needs poor women need to support a family on uncertain income.
All in all, there’s still debate about whether microfinance is doing more to hurt or help women. Personally, despite evidence of some drawbacks, I see microfinance filling niches where women had insufficient alternatives. Progress doesn’t have to be perfect to still be progress, and with many women gaining access to formal funding, a little help in alleviating poverty is better than no help at all. As microfinance rolls out more “microfinance plus” products as the industry continues to innovate, I think the mission to raise women out of poverty will become even more successful.