reduc-ing poverty and promotreduc-ing growth, microfinance has the potential to change the social status of poor wom-en in the world. These advocates believe that this is
the primary reason it should continue as a preferred method of providing economic assistance.
Over the past forty years, it has become clear that poor women borrow money more efficiently than men do. This is true both statistically (women have a high-er repayment rate than men) and anecdotally (women are more likely to recycle the wealth they generate back into the household). Women borrowers will spend the proceeds generated from a loan on the education and nutrition of their children more frequently than men do, as well as distribute food and education in a more egalitarian way with respect to gender.16
The Virtuous Spirals of Economic Empowerment
The effects of increased empowerment are theoreti-cally very powerful. Sometimes the effects are referred to as the virtuous spirals, as they enhance and build on one another. 17 In fact, one scholar went so far as to refer to economic empowerment as the magic potion of development and the solution to inequitable gender roles. The same author also suggests that empowering women should have a hugely beneficial effect on a na-tion’s wealth.18 In this context, economic power refers to “control of income and other key economic resourc-es (e.g., land, animals…).” The distinction between
“control of” and “earning” income also forms an im-portant part of the underlying arguments supporting women’s economic empowerment.19 Control implies the women have some say as to how money is spent, where simple earning means that women generate in-come but do not necessarily decide how it is allocated.
Control helps women gain increased equality and a higher degree of influence over their own lives. This higher degree of autonomy leads to direct investment
in the human capital of children, direct increases in a nation’s wealth and well-being and indirect improve-ments in a nation’s income growth by corresponding reductions in fertility rates. Some evidence also sug-gests that improvements in female influence may lead to reduced violence, conflict and corruption. 20
Given such bright prospects for positive change, it is no surprise many scholars express such tremen-dous, though at times unrealistic, optimism for the effects of microfinance. Such promise bears further exploration to adequately understand the potential power of microfinance.
Measureable Impacts of Microfinance and Female Empowerment
The prospects for female empowerment because of microfinance are promising, but many of the proposed benefits are largely theoretical. Conflicting reports regarding the capacity of microfinance to empower women exist and come to very different conclusions on the future utility of microfinance and microloans.
Often the results differ from country to country and region to region suggesting culture has a strong influence on microfinance’s overall impact. Nonethe-less, the majority of cases reviewed show that microfi-nance has a positive impact on poverty, but the effects on women’s empowerment are less clear. A compre-hensive analysis of MFIs throughout Africa shows the impact on women’s rights to be very mixed. The author of this analysis attributes the mixed results to a number of cultural factors and the shorter history of microfinance in the region.21 The study found that demand for microloans was high in Africa. However, women who accepted loans did not always use them
for projects that contributed to the empowerment of women and on occasion actually used the loans to re-inforce gender roles and stereotypes.22 For example, a mother might use the unpaid labor of a daughter to assist her enterprise as opposed to using her revenue to educate the daughter.
Additionally, the author recognizes that polygamy in parts of Africa complicates female empowerment.
For example, income contribution by one wife might lead to withdrawal of the male’s contribution as he invests his money in a different wife’s household.23 The author also notes that increases in a woman’s in-come can increase household tensions, in some cases leading to an increased incidence of violence against women. Despite the negatives found in this assess-ment, the author also noted that in Sudan, specifically, borrowers felt that having an independent resource base from their husbands was important and that as a result they now felt more respected and confident.24 While the results of this assessment showed MFIs in these countries to have a mixed record with regard to female empowerment, empowering changes did oc-cur though in lower numbers and at a slower rate than more optimistic studies had predicted.
The numerous case studies of Bangladesh paint a different picture and show more evidence of female empowerment. Bangladesh, as the home of microfi-nance, tends to be the flagship example for all support-ers of microfinance. As theorists postulated, higher fe-male income resulted in marked child health benefits.
This study also indicates that female borrowing helped reduce poverty and had a positive growth impact on the surrounding communities.25 Unlike other studies, increases in household tensions in Bangladesh did not give rise to any significant increase in violence against
women. The improved confidence of Bengali women is evident as well.26 That said no evidence for the claim of reduced corruption has occurred.
As is clear from these two case studies, micro-finance’s empowering effects, while real, are not a foregone conclusion. Effective, efficient, thorough and targeted microfinance can have positive impacts on female social standing; however, inefficient and unmonitored programs can have the reverse effect.
Cultural norms, laws and practices must be consid-ered when designing a microfinancing strategy and forming reasonable expectations. To a certain extent, a degree of experimentation and failure will have to occur in a specific society to see how a culture will adjust to increased female income. As such, the idea that microfinance is a magic bullet to nonegalitarian treatment of women is overstated. Thus, the MFIs should understand gender relations in a society, form reasonable expectations for female empowerment and remain flexible in the design of its programs so it can maximize the empowering effects of microfinance.
BEST PRACTICES AND IMPORTANT