Thursday, November 16, 2006

Microcredit and Women Empowerment

Are the microcredit programs that everyone is abuzz about overrated? Apparently this is a hotly debated issue.

My first inclination is to dismiss microcredit because it doesn't change the structural causes of poverty. Microcredit brings poor people into the existing global system of exploitation, and might even mask that very real exploitation, putting even more onus on the poor to get themselves out of the hole others have dug them into. It doesn't speak to social justice at all.

BUT, as I was reminded by The Rebel Sell, something that actually works shouldn't necessarily be dismissed so quickly, for solely ideological reasons. It is important to also look at the real and measurable results. Our fight for justice can, and does, occur in parallel to all sorts of development activities; indeed, as people rise out of the most devastating of poverty, they may have more resources and power with which to fight.

So microcredit needs to be examined on a functional basis: does it work? Does it help alleviate poverty? Does it empower women financially and/or within the family?

The answer is not so clear.

Increasing the burden of debt is one potential problem. As long as microcredit is managed by NGOs like Save the Children, this is a fairly small risk, as there are a whole host of additional helpful programs that accompany the actual money lending transaction. Unfortunately with high interest rates, especially when the private sector gets involved for profit, there can be grave consequences.

If not necessarily effective at improving poverty levels, what about the situation of women? Improving women's equality is vital to so many other progressive goals, that this alone might validate microcredit. If it could improve women's economic position, reduce the birth rate, and improve health, then there might be something to it.

Proponents of these micro-loans list the ways they help women, but results are mixed. According this journal article, "the effects of interventions such as microcredit loan programs—which empower women economically and socially—on domestic violence are ambiguous. Participation in such programs can, on the one hand, reduce a woman's risk of domestic violence by making her life more visible and by increasing her perceived value in the family; on the other hand, if the woman's economic empowerment results in her acting more assertively, her husband may respond with violence."

There does seem to be some preliminary evidence that involvement in one of these microcredit programmes does improve contraceptive use by women, which is a fairly significant marker of progress. There are a lot more articles here.

I can't claim to make a definitive conclusion. Although I would prefer to see the end of the disastrous SAPs and an expansion of important social programs, if microcredit energizes a discouraged development sector and elicits more money for the groups on the ground, then for that reason alone, it is worth pursuing.

More on Poverty and Women's Issues


Larry Gambone said...

We are not in this to impose an ideology, but to free people from domination whether economic, political or social-cultural. Even if micro credit and other non-revolutionary programs only help a minority, they are still worthy of support. Furthermore, people want jam today - or even a TASTE of jam today, not in a distant and unseen future. Lives have to be improved NOW. And there is no real contradiction between a small reform and major social change, if that reform is empowering, for empowerment is what it is all about...

Red Jenny said...

Agreed, small reforms can make a big difference in people's lives, and should be encouraged and supported.

But it isn't totally assured that they are actually helping, Nobel Prize aside, the studies tend to be mixed. I think so far the benefits appear to outweigh the problems, though.


I too have blogged on the challenges faced by microcredit, both pro and con.
Though overall the movement itself is far more positive than any other welfare reform or development aid program.
Esepecially for women.

Unknown said...

A good post, and far better one than I put up. You definately articulate the reasons why it should be looked at (even with a cautious eye). Good links. I look forward to reading more about them. Thanks for letting me know.


Anonymous said...

It's amazing how the repayment rates of microloans is currently greater than 90%. Kind of ironic that larger financial institutions choose not to enter this arena due to the "risks" involved, yet, are content to claim success when they can achieve 32% repayment in debt-ridden countries like Canada. Part of the reason why microloans in developing countries "work" is BECAUSE most of these loans go to women. Supported by a community idea that is foreign to affluent societies, groups of women will often keep each other accountable, even bearing the other's burden should one of their members suffer. What an amazing concept!

There's no doubt in my mind that there are more than just a handful of empathetic people out there. I also believe that one doesn't have to be a Nobel Peace Prize winner to make a difference in healing the world. Perhaps the right conduit just hasn't been available for individuals to connect with. Thank goodness for how the internet is evolving. May I introduce you to an initiative that seeks to connect much needed capital from first world nations to businesses in developing countries who are intentional about escaping poverty? uses the idea of peer-to-peer lending to bypass typical beaucratic plinko boards that usually result in money getting "lost". US PBS recently aired a documentary on this concept:\

No doubt, Yunus and his innovations have touched and heal many lives. Our government has just made a very timely pledge at the Global Microcredit Summit in Halifax (although further scrutiny into the numbers show that it is not any more than what was already earmarked within CIDA) but large programs can be slow. I think that the way microcredit is viewed must change in order for it to become an effective tool for complete poverty eradication. I sense that the emergent technology is at hand to allow us to do this.

For your consideration.


Tim (volunteer with