Feminism Friday Guest Blogger - Matthew, littlewoodenman
October 27, 2006 by thinking girl
My friend Matthew over at littlewoodenman has a new post up about microfinance (AKA microcredit), and offered it up as a guest post here. I thought I would use it for Feminism Friday, since it definitely has a focus on women and empowerment.
Microcredit has been lauded by the development world - recently the inventor of the concept was awarded the Nobel Peace Prize. Matthew provided me with this quote to explain the relevance of microcredit for women and feminists:
“Microfinance programs have generally targeted poor women. By providing access to financial services only through women—making women responsible for loans, ensuring repayment through women, maintaining savings accounts for women, providing insurance coverage through women—microfinance programs send a strong message to households as well as to communities.
Many qualitative and quantitative studies have documented how access to financial services has improved the status of women within the family and the community. Women have become more assertive and confident. In regions where women’s mobility is strictly regulated, women have become more visible and are better able to negotiate the public sphere. Women own assets, including land and housing, and play a stronger role in decision making.
In some programs that have been active over many years, there are even reports of declining levels of violence against women.”
Source: Kiva website , CGAP website
Here’s what Matthew had to say about microcredit:
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I just read about this over at La Gringa’s Blogicito and think it deserves everybody’s attention. Kiva is a microfinance organization that facilitates the lending of money to poor people in several countries around the world. Microfinance has been in the news recently—Muhammad Yunus, who created the Grameen Bank and the idea of microfinance, was just awarded the Nobel Peace Prize for 2006.
So why is this such a fantastic idea? Because it’s a loan, not a donation. I’m usually hesitant about donating to charities because I just don’t believe handouts solve the problem. But Kiva isn’t a charity. You can give as little as $25 to help someone’s small business grow. But here’s the kicker: you get your money back. You can then keep your money or reinvest it into another small business. Just think how many people the same $25 can help. Talk about bang for your buck!
What I really like about microfinance is that it capitalizes on the abilities of the poor. Most people don’t find themselves impoverished for lack of initiative or work ethic. In fact, they are entrepreneurs in every sense of the word. They have to be just to get by. They want to work hard, learn and grow. They don’t want to receive handouts any more than you want to give them. Microfinance empowers them, instead of treating them like victims.
I could lend $25 to a friend and they’d spend it on pop, chips and BBQ chicken pizza. A good time, to be sure. But if you have $25 to spare I suggest you to support any of the businesses in Honduras that need help (and the list seems to update many times a day). Kiva makes it really easy and it’s all handled online. I just lent $25 to Agusto’s auto paint and repair business and it took me 3 minutes.
Matthew, littlewoodenman
What do YOU have to say about microcredit?
I would first like to make a small correction: Muhammad Yunus didn’t invent the concept of microfinance as such; he actually came up with the idea of microfinance in a institutionalize context (which in no way diminishes his accomplishment).
Microfinance between women has a long history, especially in Western African countries. Women pool their money and give it to one and, when she can, she gives it back to the group, which then helps someone else. That way, each in turn, they can establish a small business.
There’s a very successful bakery in a fashionable part of town; been there for years. Started smaller, grew just enough. Has a few imitators too. When the onwer, a breadmaker, decided to launch his own business, he naturally went to the banks for a loan. Declined. When to the Caisse populaire (a sort of Savings and Loans). Ditto. So he decided to create a microcredit system. Got a bunch of people to back him up; established his business; paid people back (with interest, I think) and decided to keep that microcredit thing working for other people. I don’t know if this one’s still around, but it got a few people thinking…
So, in the summer I took a course called Gender, Development, and Empowerment, with a wonderful professor who is quite well-known in academic development circles and has done a ton of great work in Africa, named Jane Parpart. We did look at microcredit, and actually, the consensus was that it wasn’t all it was cracked up to be in terms of empowering women.
The argument was that microcredit acted as a form of disciplinary power over women who were clients by turning them into efficient economic actors to be inserted into the market economy, rather than being a tool for women’s empowerment. Women’s participation in the economy doesn’t necessarily empower them - not unless other barriers to full gender equality are also removed. Women’s time in the developing world is seen as elastic if they are not participating in the economy, which simply is not true: women are responsible for caring for the home and raising children, and often that means travelling several miles on foot to get water every day, tending to a garden to provide food, cooking and cleaning, travelling to market to buy food because storing food isn’t an option for them, etc. Many development schemes have been aimed at getting women to participate in the country’s economy, which means adding more work to their already work-laden day without encouraging men to take on a more equitable workload in the home. Sometimes, these schemes are meant to alleviate economic depression in an area where there is a high rate on unemployment for men, and men still aren’t encouraged to work more inside the home - the entire burden of providing for the family in both senses is put on the women in the community, and men aren’t pleased about having their traditional gender role usurped by their wives, which can lead to strain in the marriage and home. Alternatively, men encourage women’s economic “empowerment” so their own burdens and responsibilities are lifted, and place pressure on their wives to give or lend them money for their own purposes.
In any case, what does this have to do with microcredit? well, *most* microcredit schemes are run by semi-formal financial institutions operating under governments, and funding usually comes from donors and/or formal financial institutions WHO EXPECT REPAYMENT. That IS indeed the key, as Matthew writes above. Unfortunately, this repayment is often expected very quickly - sometimes women are expected to start repayment within a week, at quite high interest rates, and sometimes they are taxed by their government on the loans they receive (Cameroon does this). Microcredit has allowed women to take on more responsiblity without an increase in their status or position in society - they are still subordinated by traditions and customs within their community.
Microcredit usually involves not only lending money, but also a selection process by which some are excluded and some are included, based on their ability to repay the loan. This is a common Western way of lending I’m sure we’re all familiar with - to get money, you have to have money. Usually women receiving loans have to show they can save money before they even are eligible for receiving a loan. This, of course, means that this money is not being used for the needs it is usually used for, and women sometimes have to hide this money from their husbands, who would not willingly allow their wives to take it. This money would be seen as “extra money,” and extra money within a household is generally kept by the husband to use as he wishes.
Loans are small - if someone defaults, it’s not a really big deal for the institution. Here’s the catch - the interest rates take into account that MANY people will not be able to repay, or will repay over a longer period of time than the loan is actually termed. So, those who are repaying are paying back in interest what others could not pay in principle.
There is also a constant pressure to conform to the all-powerful Market Economy. The compulsory savings aspect of the loan FORCES women to save some of their earnings - leaving them with LESS money with which to pay back the loan AND support their family. It’s not like these women are working for pocket money for buying lipstick and going to the movies. In many cases, these are women who have had their burden to their family increased two-fold. Even when men are working, because women are still subordinated within the home and marriage due to traditional gender roles, the household expenses for which he should be and always was responsible are now taken from her earnings, which leaves even less left over for her own purposes.
Women are also usually made to participate in training sessions run by the lending group, which once again assumes the elasticity of women’s time - and now takes time away from the time she can earn money with which to repay the loan.
Many women who become market actors or “micro-enterpreneurs” if you will are not able to become enterpreneurs in the usual western sense of the world. They are still bound by traditional gender roles, and the types marketable goods and services are very gendered - and they are excluded from large-scale enterprise as a result, increasing their reliance on lending institutions.
Now, the type of group credit Marc Andre mentions above are actually MORE empowering for women, because the women themselves are repsonsible for coming up with the “rules” for lending and borrowing from the pot. These are referred to as rotating savings and credit associations (ROSCAs) within development literature.
So there, I could have made a whole post out of that, but the gist is that microcredit doesn’t necessarily empower women. Empowerment is about changing structural aspects of society that maintain women’s inferior social status. Microcredit takes women and places them into the already-existing economic framework, places a higher burden on them than on male borrowers to repay from gendered work that is low-tech and provides a low economic return, and does nothing to alleviate their burden within the private sphere. However, microcredit does offer the chance to alleviate some of the financial need women face, and can mean the difference between a next meal and going hungry for a family, and that is a benefit that cannot be argued.