Sustainable Micro-finance for Women's Empowerment

Micro-finance programmes not only give women and men access to savings and credit, but reach millions of people worldwide bringing them together regularly in organised groups.  Although no ‘magic bullet’,  they are potentially a very significant contribution to gender equality and women's empowerment, as well as pro-poor development and civil society strengthening. Through their contribution to women’s ability to earn an income these programmes have potential to initiate a series of ‘virtuous spirals’ of economic empowerment, increased well-being for women and their families and wider social and political empowerment. Micro finance services and groups involving men also have potential to question and significantly change men's attitudes and behaviours as an essential component of achieving gender equality.

Targeting women became a major plank of donor poverty alleviation and gender strategies in the 1990s. This was the result of a number of factors:

• women's human rights: official commitments to gender equity and gender mainstreaming on the part of most governments, donor agencies, NGOs and the Microcredit Summit Campaign itself.
• poverty reduction: increasing evidence that not only are women overrepresented amongst the poorest people, but are also more likely than men to spend their incomes on the welfare of children and dependents. Therefore poverty reduction programmes which target women are likely to be more effective.
• financial sustainability: increasing evidence in micro-finance of much higher repayment and savings discipline among women than men.

Not only reaching, but also empowering women, is the second stated goal of the Microcredit Summit Campaign. Literature prepared for the international and regional Micro-credit Summits from 1997, many donor statements on credit and NGO funding proposals present an extremely attractive vision of increasing numbers of expanding, financially self-sustainable micro-finance programmes reaching large numbers of poor women borrowers.

Donor funding for micro finance has generally been conditional on compliance with some variant of CGAP’s Guidelines for Best Practice aiming at financial sustainability. Although gender equality and women's empowerment can significantly contribute to financial sustainability, gender impact has not been a consideration in choosing between the different policy options for financial sustainability. Worryingly also, funding for programmes which place prime emphasis on women’s empowerment continues to decrease.

There is evidence of significant potential for micro-finance to enable women to challenge and change gender inequalities at all levels if there is a strategic gender focus. There have also been many important recent innovations in products and services to enable women to better benefit. Nevertheless benefits cannot be assumed and even financially sustainable micro-finance if it is gender blind may seriously disempower women and increase inequality. It is clear that most micro finance programmes have a long way to go before they make their full potential contribution to gender equality and empowerment. Many of the strategies promoted for financial sustainability may exacerbate the negative impacts of debt, because of overrapid expansion, rigid product design inappropriate to women’s economic activities, cutting of necessary support services and lack of attention to local economic contexts.

Rethinking 'Best Practice': Core Elements of a Gender Strategy

If micro-finance programmes are to fulfill their very significant potential, evidence indicates there is a need to rethink current 'Best Practice' to ensure that women have equal access to all types of financial services. Gender ‘Best Practice’must also be integral to micro-finance design rather than a marginal and marginalised add-on to financial sustainability or poverty reduction. There is also a need for innovation to ensure that access translates into a significant and sustainable contribution to women’s empowerment. Different women have very different needs, even though they are often subject to similar forms of discrimination and disadvantage. Some are extremely successful businesswomen, others are labourers struggling to raise a family on their own or with a violent husband but still capable with support to improve their situation with appropriate savings and credit. There is a need for a whole spectrum of service provision from private sector banks giving large loans to established female entrepreneurs on an equitable basis with men to small local community-based organisations with savings and credit for the very poor.

There is no 'one-size fits all' and there are many possible strategies to increase gender equality and women's empowerment can be increased. The precise forms a gender policy should take will depend on the particular micro-finance model and particular client groups being targeted and the context in which they operate. However gender policy does need to go further than a few 'female products' and a bit of gender training. In the sector as a whole there is a need for:

• Greater clarity in the underlying gender and empowerment vision of microfinance programmes.
• Building on the organizational base provided by micro-finance (both individual lending and group-based) to promote wider organization to challenge gender inequality.
• Innovation in product design to respond to women’s needs and change rather than reinforce gender inequalities.
• Innovation in cost-effective provision of non-financial services.
• Commitment to internal gender policy to ensure organizational capacity to realize the full potential of micro-finance to empower women.
• Mainstreaming gender concerns in policy advocacy by the micro-finance sector and the financial sector in general.

Women are not a minority, but the 'marginalised majority' and gender Best Practice must become a fully integral part of programme design. This is not only a women's human right, but necessary for any serious agenda for poverty reduction, economic growth and civil society strengthening.

This website brings together resources which can inform such a rethink and innovation. The website complements more detailed discussion and weblinks for development concepts, gender, livelihood development, participatory methods and other material for empowerment-focused NGOs to be found on Lindaswebs. This website is intended as ongoing resource which will grow over time to enable gender experts and micro-finance specialists to work together to develop realisable ways forward.

The material builds on work on gender, empowerment and micro-finance by Linda Mayoux since 1997 for Open University UK, Action Aid, Hivos, Icco, Novib, One World Action, DFID, UNIFEM, ILO, Care-India, Cameroon Gatsby Trust, CODEC Bangladesh, SHDF Zimbabwe, ANANDI India, PASED_LEAP Sudan, KRC Uganda. It also includes material produced for a gender training for NGO-MFIs in Pakistan in 2004 and 2005: 'Sustainable Micro-finance for Women's Empowerment' supported by Aga Khan Foundation Canada and the Canadian International Development Agency through the Pakistan Social Institutions Development Program (SIDP) and coordinated and organized by Aga Khan Foundation Pakistan.