The Illusion of Women Empowerment in Microfinance: A case study
Lakshmi Kumar*
Abstract
At the core of all development, poverty eradication and progress lies women. It is believed that their empowerment can bring about the positive change in society. Traditional literature implies women to be empowered when they can exercise choices and are aware of alternatives- microfinance (MF) being one of the most important catalysts. This research attempts to understand the impact of microfinance on women empowerment through a case study by semi-structured interviews in Tamil Nadu.
It is found that even though women have experienced increase in income and consumption, yet, not surprisingly, the main bread winner of the household continues to be their spouses. They still have very little control over resources, assets and do not equally participate in major household decisions. However they have significant influence on the choices that their children make. Given their semi literate stature, their husbands’ complete support and their mediocre entrepreneurial ability, the confidence of these women to act alone and to make choices by themselves is still lacking as they feel that it is less risky to act in conjunction with the spouse on any decision.
The returns from the business are small and most of the same accrue to her family. We found in this research that the real bottleneck is the hierarchical nature of the society, the lack of entrepreneurial talent and risk taking ability in these women. This is also due to the lack in market linkages and network ability. We also found a self selection bias in the group formation comprising of safe members or risky members but a mix of the two were rare.
Ultimately nothing feeds and frees like money. To these women MF seems maybe a path or transformation to economic independence. For MF to effectively contribute to women’s empowerment, or facilitate it at some level, the women involved must perceive themselves as being deprived of choices, which will be taken care of by access to finance. Unless and until this mindset is present, we are not likely to find empirically that MF leads to women’s empowerment.
*Lakshmi Kumar
Faculty, Institute for Financial Management and Research, 24 Kothari Road, Chennai 600010
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The Illusion of Women Empowerment in Microfinance: A case study
The claims of poverty reduction due to microfinance are still a matter of debate among relevant interest groups. The fundamental question that we face right now is has microfinance has actually contributed to the development. The reason the development paradigm becomes important to pursue- particularly in the area of microfinance- is because this involves lending to the poor. Essentially, even if we do not elevate them from their present status we at least should not lead them into a quagmire of loans. The majority of Micro Finance Institutions (MFIs) lend only to women as it is believed that women are disadvantaged both sociologically as well as economically. It could be possible that women are chosen for these loans because of their non-migratory behavior or for they being perceived as more family oriented and responsible compared to their male counterparts. Additionally since MF necessitates attendance in weekly meetings institutions trust women more than men as they are likely to be more disciplined than men. If these are the reasons for selecting women for loan disbursements, it is even more important to raise a question if providing loans to the poor women is resulting in women empowerment as suggested and followed by several microfinance institutions in their mission statements.
In the words of Amartya Sen (1999) ‘development is increasing freedom’. Has microfinance increased freedom and the choices women face? Put differently has microfinance empowered women? Empowerment is a complex word to define in an economic sense and more complex to measure. The central theme of this paper is to question what empowerment is in the context of available literature and in terms of what it means to the women who take loans by an empirical investigation. Specifically, this paper seeks to answer what empowerment is to women who take loans from MFIs and whether these women are empowered by microfinance.
Section 1 discusses the literature in relation to women empowerment, poverty reduction and microfinance. Section 2 brings out the interrelated research questions which form the basis of the questionnaire (Appendix 1). Section 3 discusses the questionnaire and its implementation related issues. Section 4 analyzes the data collected and discusses it. Section 5 concludes the paper arguing what women empowerment means at an individual level in discussion with the literature.
Section 1: Literature Review
The 1990s saw the expansion of micro finance and its significant access of small loans and savings to women. It was believed that this will contribute to poverty reduction and economic empowerment of women. The basic premise behind lending to women is that they are not only creditworthy but are less likely to misuse the money and are more likely to share the fruits of the investment with the entire household. In addition to the economic benefits, it is argued that women’s increasing role in the household economy will lead to their empowerment. During the past few decades micro credit has enjoyed tremendous growth and there is great hope that such programs will contribute to the achievement of the Millennium Development Goals (Kabeer, 2005a and Littlefield, Morduch and Hashemi, 2003).
Despite several methodological variations, evaluation studies fairly widely accept that microcredit does improve household incomes and also linked with other associated benefits like increased livelihood diversification, more labor market activity, more education and better health (Hulme and Mosley, 1996, Vol.1 and 2; Khandker, 1998; Littlefield, Morduch and Hashemi, 2003; Morduch and Haley, 2002; Mosley and Rock, 2004; Todd, 1999 and Zaman, 2002). There is, however, little consensus regarding the empowerment potential of microcredit and studies have made diametrically opposite claims. While some claim that microcredit has helped women increase their income earning capabilities leading to greater confidence and ability to overcome cultural asymmetries ( Hashemi, Schuler and Riley, 1996; Kabeer, 2001; Pitt and Khandker, 1998 and R. Rahman, 1986); others contend that loans made to women are usually controlled by their husbands which leads to women’s dependence on their husbands for loan installments and may also result in domestic dissension and violence (Goetz and Gupta, 1996; Leach and Sitaram, 2002 and A. Rahman, 1999). Disregarding the conceptual and methodological differences among these studies, the suggestion other studies suggest that while lending to women benefits their households, its beneficial impact on women themselves is somewhat uncertain. (For a discussion on conceptual and methodological issues see de Aghion and Morduch, 2005; Kabeer, 2001 and Morduch, 1999).
The segregation between microcredit, poverty reduction and women are inseparable. Often while looking for literature on studies on the definition of women empowerment, its conceptual clarity is ambiguous as can be seen from the above quoted literature where there is a clear evasion on the central theme. As for example, most of the above mentioned studies suggest that the families are benefitting from microcredit but these studies do not discuss women empowering or disempowering status. Even though while connecting poverty reduction and microcredit, inevitably the focus is women as 90% of the lending goes to women, but issues relating to women empowerment are sidelined.
A conceptual study that defines and tries to measure women empowerment due to microfinance is by Kabeer (1999) who reflects on the ability of a woman to make strategic life choices when she did not have the opportunity to do so before. Her paper describes the three interrelated indivisible dimensions of women empowerment namely resources, agency and achievements which are vital in the process of empowering women. Further the idea of choice that a woman can now exercise is further qualified by referring to the condition of choice, its content and consequences. Hence an attempt at understanding the woman at the individual level is sought here.
Another equally interesting research tries to explain women empowerment as a process is by Mayoux (2009). The inter linkages as identified by her is explained as a series of “virtuous spirals”. In her work she explains that when a woman gets access to the finance, she can either start her own economic activity or invest in existing activities. This can directly increase her income and bring about potential increase in her assets. Alternatively, she could use the finance for her household well-being such as better food for the family or better education for her children, which results in increasing her status in her family. A combination of women’s increased economic activity and increased decision making in the household over a period of time could make her socially and politically active. She could thereby be a positive contributor to change in society. Hence from individual empowerment through micro finance it is potentially possible that she make make significant contributions by increasing her visibility as agents of economic growth and economic actors in policy decisions.
However, Mayoux cautions by adding that women can get caught into a quagmire of these loans. This could happen for several reasons and could make them positively disempowering. Some of the reasons are:
· Misuse of credit.
· Use of credit for non economic activities.
· Use of credit by people with low entrepreneurial ability.
When we critique Kabeer (1999) or Mayoux (2009), the focus is on the process of change and the availability of change agents. Both of them reiterate the need for the presence of low cost microcredit which can act as the trigger of change for the woman because she would and is the focus also whom we can call as change agent. We however see two potential problems- firstly, the time lag of change it takes for her to get empowered before her family gets empowered by her and secondly, her desire to exercise independent choices when it is seems less risky to make choices in consultation with her spouse. However, this paper uses the framework provided by Kabeer (1999) and Mayoux (2009) as a starting point to develop a questionnaire (Appendix 1), which is used as a basic discussion tool to collect information from respondents. The analysis of the respondents is then discussed. Subsequently, we try to compare the framework provided by the above authors in the context of whether we find women empowerment among these semi literate women at the individual level.
Section 2: Research Questions
The basic research question of this paper is “Are women microfinance clients empowered?”
The interrelated sub themes to be investigated are:
· What were the conditions of these women before microfinance? What was their skill level? Did the MF institution provide skill building training or support? How useful was the same?
· Why did they resort to microfinance? Who supported them?
· Did MF lead to income generating activities to them, their family etc.?
· Did MF lead to increased assets to them, their family etc.?
· Did MF lead to their social and political empowerment?
Section 3 Questionnaire Discussion
Our methodology used in data collection is Q squared (Hulme, 2007). We felt that a question as complicated as women empowerment needed both a qualitative as well as a quantitative understanding so as to capture the essence of the sample. Merely qualitative will be anecdotal, but wholly quantitative would be just a number crunching exercise. Hence we feel that the present research question warrant a Q squared research. Many of the questions are demographic; many involving capturing numbers but as can be seen from Appendix 1 a lot of questions involve discussions.
In studies that involve soliciting more than just quantitative information, it is believed that the respondent is likely to be candid and give close to right answers on familiarity (Collins, Morduch et al, 2009). In our first meeting with the women clients, we just sought demographic data and got familiar with them. In our second meeting, we asked them about the nature of their MF loans and how they put the loans to use, how they benefitted from it and the problems they faced with the same. In addition, we also sought to get some quantitative information regarding their family income and consumption. In our last meeting, we pointed out to them the anomaly in their under reporting of income as compared to their consumption. We also collected some information on their weekly consumption. Many of them sought to correct their incomes upwardly and were more open to answering questions related to their role in their household, and the restrictions they face, their business, their family relations etc.
Section 4: Analysis of Data
Samples of 121 clients were interviewed from January 2010-July 2010, a breakup of which is given in Figure 1. First 70 clients who had taken loans 1-2 times were interviewed both in rural and urban areas. Another sample of 51 clients who had taken a median of more than 3 loans was interviewed in rural and urban areas. Reasons for selecting new1 (1 to 2 loans) and mature2 (above 3 loans) clients were to check if these mature groups had similar or different characteristics from the nascent groups and if they exhibited differences in being urban and/or rural too in relation to women empowerment.