Thursday, May 24, 2018

Microfinance - no cure

Giving small loans to people for small household purchases or to invest in businesses has been an integral part of aid programs for decades. This is called “microfinance”, and the aim is not only to alleviate poverty but also to empower women.

But simply improving a woman’s economic situation does not necessarily result in greater equality. Increasing women’s economic engagement often increases their work burden on top of all the unpaid labour they do. It can also challenge established gender roles and power hierarchies, causing conflict in the home and even domestic violence. Empowering women needs to be about more than economics and requires changing the power dynamics and other cultural factors that repress women. So that they can make decisions about their life and mobility, control their money and have access to information, transport, tools and land.

Several studies have shown a link between women’s increased access to credit and increased domestic violence. Development agencies have been forced to develop “do no harm” procedures to try to prevent thisSanti Rozario from Cardiff University found that after 25 years of microfinance programs in Bangladesh, “ingrained gender values are still essentially unchanged”. And on top of all this, some microfinance programs only have a minimal impact on development outcomes like health and education.

Microfinance programs do nothing to challenge or transform the structural conditions that create poverty in the first place. It is like putting a band-aid over a deep wound. Indeed, microfinance shifts responsibility for poverty alleviation onto the poor and marginalised. There has been a trend toward profit-making microfinance institutions that charge higher interest rates, extracting the little surplus poor people are able to raise from their meagre livelihoods.

Empowerment requires addressing women’s lack of control over their own lives. Professor Naila Kabeer defines empowerment, as “the ability to exercise choice” where previously people could not. This kind of empowerment requires structural change within both families and societies. This includes greater access to and control of resources, as well as new norms for women both individually and within families and society. If development programs don’t challenge the structural causes of gender inequality, at best, microfinance will just continue to reinforce poverty and inequality.

https://theconversation.com/why-microfinance-as-aid-isnt-enough-to-empower-women-96632

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