Microcredit and Women's Empowerment
By Stacey Cordeiro 22/01/2004 At 09:34
report back from a WSF workshop
Here are my notes from another workshop I don't really have time to synthesize the information here, I can only really type up what I have.
OK but here's some background. Microcredit programs grew out of a finding maybe in the 1980s that poor women were having a hard time getting access to credit with which they could start small businesses. The economic development world decided that providing very small loans to poor women would be a good poverty reduction strategy, and since then, there has been an explosion in these microcredit programs all over the world.
Speaker: Alfonso Castillo from Mexico
Critical Issues in Microenterprise:
1. Homogenization of models - needs of people all over the world are very diverse, yet development agencies are applying a cookie-cutter solution.
2. Devaluation of the group focus - originally, microcredit programs lent money to groups of women, who were then collectively responsible for paying it back. The social pressure made it more likely for the loan to be paid back. Now loans are going to individual women.
3. Concentrating on financial issues rather than health and social issues - you can't just throw money at poverty and expect it to go away.
4. Most places are only giving loans for production (starting a business). His organization makes loans for whatever women need to buy.
5. The state has taken on its own microfinance strategy. The state is not worried about justice and empowerment, only about giving credit to poor people to turn them into better consumers.
Another danger is the secondary role of savings in microfinance. Extending credit is a form of dominance, a way to control others. Savings is a way of doing something for yourself. At his institution (sorry, don't know what this is), 80% of customers are savers, 20% borrowers.
The facilitatator (Soma K.P. from an organization called Nirantur) added: Banks want savings groups to be homogeneous across caste and tribe. But women are trying to build bridges over these divisions - this prevents them.
Speaker: Norma Sanchez, Argentina
Microcredit became very popular in Latin America in the 1990s as a strategy against structural adjustment policies. Accion International (based in the US) works in 16 countris in Latin America - minimum loan is $100, average is $680 - short term loans have 30% interest rates. 65% of beneficiaries are women.
The emphasis of these programs is on the sustainability of the program, so they build in high overhead costs. Development agencies target women for these loans because they believe women will spend the money better, and that it is harder for them to get mainstream loans.
The most notable of these banks if Banco Sol (I think) in Bolivia, which is also the biggest bank in the country. 70% of clients are women, mostly street vendors and small restaurants. They also have savings accounts.
Microcredit is supposedly closing an inequality created by a gap in the market. Rates on these loans are market rate or higher - they can reach 40 to 50% annually. The assumption being made is that benefitting the family will also benefit the woman personally.
Fallacies on which this strategy is based:
- Equal participation along gender lines
- The programs equal empowerment
- They neglect the balance of power between men and women - men often decide on the use of the money even though it's in the woman's name
- Doesn't take into account the reproductive work of women (see my earlier post on Feminist Economics and Globalization)
- Doesn't consider broader supports, like technical assistance and business planning needed for women to turn the loan into a profitable business
Women are not saying that credit is a priority for them. The obligation of debt is leading them to self-exploitation (they are working too hard to pay back the loans) and greater stress. Women need more equal power relations in families and a more equitable division of labor.
From 1989 to 1992 she ran an initiative that had a low interest rate and built in training with a gender perspective, including women's empowerment, entrepreneurial training, division
of household work between men and women, domestic violence, solidarity among women, and marketing support. This program didn't fit with structural adjustment policies and was cancelled.
Soma: Women are saying these programs are making more work for them. They have homework to do and are rushing around to meetings. There is no longer the demand for microcredit that there (maybe?) once was.
Selita from Uruguay
She has 13 + years as an organizer and educator. Currently, the coordinator of a popular education network and Latin America and the Caribbean which includes 140 NGOs, activist and professional women. Their mission is to advocate for social and gender justice. One of their programs is a lifelong learning economics course, where they talk a lot about microcredit, although they don't have a position on it up or down.
Maybe people in some countries need loans equivalent to US $ 30-50, but in Latin America, this is sometimes so small, it's disrespecful to offer. (What's microcredit varies from country to country.) They believe women don't need microcredit, they just need credit. "We deserve big things".
Women are also having a hard time with the bureaucracy involved - they get frustrated and confused when they have to fill out multiple forms and visit multiple counter to do their banking. Women have work in the home, work outside of the home, education and training programs, and now microcredit. This is just adding one more thing to their lists of obligations.
Microcredit is one part of micro-enterprisethe most important part is education for the right to exercise our rights. Women need to do advocacy for public policies - at local and bigger levels. Need for women to have experiences locally and globally and balance the two.
Soma: they have done a study on microcredit. Some of the points:
- Only 30% of banks have given loans to savings groups more than 2 years old (see my post on SEWA for explanation of savings groups). This means the bank is sitting on 70% of this money, revolving it out and making more money on it. They should be using it for development purposes.
- Literate women tend to be leaders in credit & savings groups, but organizations are not doing literacy training. 50% of those going for training are already literate, when only 30% of women overall are literate.
Srilatha (I think from Andra Pradesh in India)
She's working with a filmmaker on this subject
The complex of myths:
- Microcredit started as a feminist demand because of lack of access to credit. Has since become a silver bullet - single strategy used politically to pacify a poor constituency without addressing the root cause of marginalization, the disparity in power and resources.
Experience in AP
The Chief Minister (he calls himself the CEO) of AP launched a restructuring policy in 1999 - sent a message to his administrators to target rural womens groups for aid. He equated these with "the poor" and "the community". They have now identified every village women's group in 20 districts, and have gone in and done education on gender roles. Aid is supposed to go to groups, but they ended up making loans to individuals. This is called District Poverty Initiatives.
More of what's happening and its impact on women:
- pressure to distribute more and more loans - some have taken up to 4 loans. They are working more hours to pay them back.
- Girl children are working more at home.
- None of these loans translate into profits more than the equivalent of the minimum wage.
- SOme women are suffering with multiple loans but are being highlighted as success stories.
- Effects on men - now they are having trouble getting loans!
- Effects on gender relations - women handling money leads to resentment from men. Women are working so much they don't have the time to address their relationship problems.
- the reduction of citizenship of women to instruments of rural poverty alleviation
- every little village in S. Asia now has one of these microcredit programs.
OK sorry I have to go and will keep typing this later (maybe be a couple of days, stay tuned)
Category: Payday loans