Microfinance has become one of the favoured interventions for poverty alleviation and economic development for poor households across both the developing and developed world.
There has been a rapid increase in the number of microfinance programmes over the last two decades. The Microcredit Summit Campaign documents 2,186 microcredit institutions operating in 131 countries reaching 54,904,102 clients with affordable credit (Microcredit Summit Campaign 2002). Microfinance interventions are attractive for economic development planners because of their market orientation, whereby the supply of access to affordable savings and credit services enables the poor to help themselves out of poverty by starting or stabilising microenterprises. The most notable feature of the explosive outreach of microfinance is that 79 per cent of the borrowers worldwide are women (ibid). In many programmes women are being intentionally targeted on both equity and efficiency grounds.
On equity grounds, women increasingly comprise a larger portion of the poor across the globe. Women are more disadvantaged relative to men within the economy and they are perceived as more in need of financial resources to strengthen their productive roles. It is hoped that access to the scarce resource of credit will empower women, not only in the workplace, but also in the home and wider society. On efficiency grounds, practitioners note that women are easier to organise, and they are more disciplined in repaying. It is also argued that women make more productive decisions regarding the use of their income to improve family welfare compared with men, so that targeting women is linked to improving living standards within households.
Many programmes claim that microfinance not only results in economic welfare gains for women such as lower debt levels, improved incomes or more stable livelihoods, but also higher levels of empowerment. Indicators of empowerment most frequently cited include: greater control over resources, increased participation in household and community decision-making, greater mobility in the public sphere, as well as improved feelings of self worth and efficacy and better treatment in the home and community. Many of these claims have been made based only on anecdotal evidence. In recent years, however, several systematic studies from South Asia have backed up these empowerment claims (Schuler and Hashemi 1994; Kabeer 2001; Noponen 1991, 1992, 2003) while others have questioned them (Goetz and Sen Gupta 1996; Rozario 2002). Some researchers claim that the potential for empowerment effects is being weakened by the trend of donors to emphasise the financial sustainability of programmes and the profitability of the loan funds that leads to an emphasis on large-scale, streamlined, “minimalist” programmes and a corresponding de-emphasis on promotion of women’s empowerment as an integral part of services (Mayoux 2002: 2003; Hashemi et al. 1996). However, the Grameen Bank, which falls into the above category of “minimalist” programme, actually had higher empowerment outcomes for women, compared with a more holistic programme emphasising broader aspects of social change.
This article first briefly reviews several conceptual issues in the debate regarding the effects of microfinance on women’s empowerment. Second, it provides a description of a tool, the Internal Learning System (ILS – introduced in article 6 of this Bulletin), for development organisations to track the extent to which their programmes have an empowering effect on women borrowers over time. Because the tool is currently being tested and refined in several Indian NGOs using a village-based Self-Help Group model, the system can also track the effect of group efforts to empower and improve local communities. Third, preliminary results are presented of the enhancing effects on women’s empowerment of using the ILS tool based on the experiences of the two Indian NGO ILS adaptors. The argument presented here is that the tool that can track empowerment outcomes of microfinance over time can also enhance them.
This article comes from the IDS Bulletin 34.4 (2003) The Internal Learning System – A Tool for Tracking and Enhancing Empowerment Outcomes and Wider Social Impacts of Microfinance