Women's Empowerment and Micro-Finance Programmesapproaches, Evidence and Ways Forward
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..........._....___......_.................LIBRARY 1 JULoitik 1 ,.i41 FOUNDATiON OF AGRICULTURAl. ECONOM!C' Women's Empowerment and Micro-Finance ProgrammesApproaches, Evidence and Ways Forward Linda Mayoux DPP Working Paper No 41 Development Policy and Practice Research Group Faculty of Technology The Open University July 1998 Women's Empowerment and Micro-Finance ProgrammesApproaches, Evidence and Ways Forward by Linda Mayoux DPP Working Paper No 41 1 PREFACE This paper is based on workshop discussions and material collated during a pilot research project entitled 'Micro-Finance Programmes and Women's Empowerment: Strategies for Increasing Impact'. The project was funded by the Small Enterprise Development Fund, ODA UK(now DfID) and sponsored by a steering committee of UK-based NGOs headed by Action Aid and including ACORD,CAFOD, CARE -International, Christian Aid, Friends of ASSEFA, Oxfam, Opportunity Trust, Save the Children, WOMANKIND and World Vision. Workshops were hosted by Action Aid in Ethiopia (January 13th-15th 1997) for East Africa region, India (April 9th to 11th 1997)for South Asia region and Ghana (April 28th to 30th 1997) for West Africa region. A grant from HIVOS enabled substantial revision of the original draft as Background paper to a fourth workshop in Harare March 1998 funded by HIVOS and participating organizations and hosted by Opportunity Trust. I would like to thank all the organizations who took part in the pilot study for their enthusiasm and generous sharing of information. I am particularly grateful to Susan Johnson of Action Aid for co- ordinating the project so professionally and her continual support and guidance through the literature, to Mary Locke of Opportunity Trust, Kate Young of WOMANKIND, Mavis Owusu-Gyamfi and Orlanda Ruthven of SEDF/DfID for their comments on earlier papers and to the many other NGO and staff who assisted the project in various ways. I am also very grateful to Alan Thomas of the Open University for his support throughout the project and his detailed comments on the final draft. Full details of participating.organizations and workshop discussions from the DfID project can be found in East Africa Workshop Report: Mayoux and Johnson eds (1997), South Asia Report: Mayoux ed (1997) and West Africa Report: Owusu-Gyamfi et al eds (1997) available from: Resource Centre, Action Aid UK, Hamyln House, Archway, London N19 5PG, UK Tel +44 171 281 4101. Fax +44 171 281 7599 E-mail:[email protected] 2 The Southern Africa report will be available from: HIVOS, Regional Office for Southern Africa, 25, Philips Ave, Belgravia, Box 2227 Harare, Zimbabwe. Tel +263 4 706704/727197 Fax +263 4 791981 E-mail: [email protected] Finally, this is the first publication of the new Empowerment, Sustainability and Micro-finance (ESMiF)initiative with the Open University and NGO collaborators and I would welcome any comments on the paper as this will be invaluable for our future work. For details of further research and publications contact: Linda Mayoux, 61, Cheney Way, Cambridge CB4 lUE, UK Tel +44 1223 501030 Fax +44 1223 561322 E-mail [email protected] or Alan Thomas Director, Centre for Complexity and Change The Operi University Walton Hall Milton Keynes MK6 7AA Tel +44 1908 653651 Fax +44 1908 654825 E-mail [email protected] or Development Policy and Practice Web Pages on http://www-tec.open.ac.uk/ccc/dpp 3 CONTENTS Page INTRODUCTION 5 PART I: WOMEN'S EMPOWERMENT AND MICRO-FINANCE 8 PROGRAMMES: CONTRASTING PARADIGMS • Types of Micro-finance Programme: models and dimensions of 12 variation • The financial self-sustainability paradigm 14 • The poverty alleviation paradigm 19 • The feminist empowerment paradigm 22 PART II: VIRTUOUS SPIRALS AND VICIOUS CONSTRAINTS: 26 A FRAMEWORK FOR LOOKING AT EMPOWERMENT • The nature of existing evidence: a caveat 26 • Questioning economic empowerment: women's individual capacities 29 and structures of gender subordination • Questioning relations within the household: household well-being 35 and women's empowerment • Questioning social and political empowerment: women's aspirations 37 and strategies for change • Gender analysis of micro-finance programmes: a framework for looking 40 at empowerment PART III: WOMEN'S EMPOWERMENT VERSUS SUSTAINABILITY? 47 ISSUES AND WAYS FORWARD FOR BEST PRACTICE • A gender policy for micro-finance: essential elements . 47 • Empowerment versus sustainability? widening the debate 51 • Conditions of micro-finance delivery: access, poverty alleviation and 54 empowerment questions • Complementary services: ways of resolving some of the tensions 59 • Participatory programme management: the key to best practice? 62 4 • Can or should micro-finance be empowering? some tentative conclusions 66 REFERENCES 68 LIST OF ACRONYMS 75 APPENDIX 1: ANNOTATED BIBLIOGRAPHY OF GENDER IMPACT STUDIES 76 IN SOUTH ASIA APPENDIX 2:WOMEN'S EMPOWERMENT INDICATORS AND MATRICES - 82 APPENDIX 3:PARTICIPATORY LEARNING AND ACTION: TECHNIQUES, 87 PITFALLS AND WAYS FORWARD 5 Introduction In the 1990s micro-finance has become a key strategy for poverty alleviation and women's empowerment. Throughout the decade there has been an increase in funding for micro-finance channelled through NGOs and governments from large international donors. Targeting women in these `malestream' programmes has been increasingly promoted as a means for both increasing cost- efficiency (because of higher female repayment rates) and more effective poverty alleviation (because of evidence of women's prioritisation of expenditure on family welfare) as well as equity (because of the increasing strength of gender lobbies).' Funding for micro-finance programmes targeting large numbers of women is set to further increase under initiatives by CGAP2. Literature prepared for the Micro-credit Summit in Washington in February 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 women borrowers and making a significant contribution to global poverty alleviation and women's empowerment(see Note 1 and other references below). Such programmes would become independent of donor funds within a given time-frame and also avoid politically sensitive issues of resource redistribution and focused feminist mobilisation. This linking of micro-finance with women's empowerment is neither new nor is it a Northern imposition (Mayoux, 1995a). Building on the work of SEWA in India and other organizations in the South, the problem of women's access to credit was given particular emphasis at the first International Women's Conference in Mexico in 1975. Access to credit was seen as vital to women's ability to earn an income, in turn seen as central to their wider status and autonomy. However parallel to, but to a large extent marginalised by, the current enthusiasm some researchers have questioned the degree to which micro-finance services in fact benefit women (Everett and Savara, 1991; Goetz and Sen Gupta, 1996; Mayoux, 1995a). Some have argued that for some women in some contexts programmes may even be disempowering, reducing women to unpaid debt collectors for development agencies and increasing tensions in the family (Goetz and Sen Gupta, 1996). Some argue strongly that micro-finance programmes divert resources and/or the attention of women themselves from other more effective strategies for empowerment(Ebdon, 1995) and/or poverty For example in the Declaration at the Micro-credit summit in a section entitled 'Micro-credit: Empowering Poor People to End their Own Poverty' one finds the following: 'empirical evidence has shown that women, as a group, are consistently better in promptness and reliability of repayment. Targeting women as clients of microcredit programs has also been a very effective method of ensuring that the benefits of increased income accrue to the general welfare of the family, and particularly the children. At the same time, women themselves benefit from the higher status they achieve when they are able to provide new income.'(RESULTS, 1997 p8) Consultative Group to Assist the Poorest is a major international collaborative initiative arising from the 1993 International Conference on Actions to Reduce Global Hunger and was formally constituted in 1995. The 9 founding members are Canada, France, the Netherlands, the United States, the African Development Bank, the Asian Development Bank, the International Fund for Agricultural Development, the United Nations Development Programme\United Nations Capital Development Fund and the World Bank later followed by Australia, Finland, Norway the United Kingdom and Inter-American Development Bank. Approximately US $200 million (including existing budget commitments) was pledged to Micro-Finance programmes for the poorest groups in low income countries, particularly women (World Bank, 1996). 6 alleviation (Rogaly, 1996). Views regarding the potential contribution of micro-finance programmes to women's empowerment currently fall into four main (not necessarily mutually exclusive) camps: • those who stress the positive evidence and are essentially optimistic about the possibility of global development of sustainable micro-finance programmes which empower women • those who recognise limitations to empowerment but see the question as one of programme design and seek to identify models and strategies which can minimise negative impacts and enhance contribution to empowerment •