Gender Relations, Empowerment and Microcredit: Moving on from a Lost Decade

Abstract

Assessments of the impact of microcredit targeted towards women have tended to focus on evaluating whether women have become ‘more empowered’, rather than on the dynamics of gender relations in which they are embedded. This paper reports evidence from Malawi that shows how aspects of gender relations, both within the household and more widely, both facilitate and constrain the impact of microcredit. The failure to address and incorporate analysis of gender into microfinance practice over the past decade means that opportunities have been lost to enhance its empowerment impact. However, such failure is also symptomatic of the huge difficulties in getting gender onto the agenda of development organisations in general. The paper concludes by suggesting that the new interest in client-led microfinance presents an opportunity that must now be seized to make these programmes more gender-responsive by also appealing to microfinance institutions' financial bottom line.

Les études des impacts du micro-crédit ciblant les femmes ont eu tendance à évaluer si ces dernières voient leur pouvoir s'accroître, plutôt qu'à évaluer les dynamiques des relations de genre dans lesquelles elles sont impliquées. Cet article s'appuie sur des témoignages provenant du Malawi qui démontrent comment, tant à l'intérieur du ménage que plus globalement, les relations de genre à la fois facilitent et limitent les impacts du microcrédit. Cet échec à adresser ou à incorporer une analyse genre dans les pratiques de microfinance au cours de la dernière décennie, signifie que des opportunités d'accroître les effets de l'appropriation ont été manquées. Toutefois, cet échec est également symptomatique des immenses difficultés à mettre la dimension genre à l'agenda des organisations de développement. Cet article conclut en suggérant que le nouvel intérêt pour la micro-finance orientée client, incarne une opportunité à saisir afin de rendre ces programmes plus réceptifs à la dimension genre mais également plus intéressants pour les institutions financières de micro-finance de base.

Acknowledgements

This paper draws on impact assessment research carried out for the UK's Department for International Development of FINCA, Malawi, by the Centre for Development Studies, University of Bath, UK, and Kadale Consultants, Blantyre, Malawi. The research team included James Copestake, Sheena Orr, Gillian Mann, Donata Saiti and myself. I am grateful to Monique Cohen, James Copestake, Laura Foose, Thalia Kidder, Lisa Kuhn, Sarah White and Katie Wright, and two anonymous referees, for comments on earlier drafts of this paper. Errors and omissions are my own responsibility.

Notes

Susan Johnson is Lecturer in International Development at the Centre for Development Studies, University of Bath, UK. [email protected]

1. A method of calculating effective interest rates that includes compulsory savings is the Internal Rate of Return method (IRR). This takes into account the equity deposit and compulsory savings requirement to produce a net cash flow position for the borrower and hence a calculation of the IRR on the basis of cash flow over the period. Given savings and repayment requirements FINCA's interest rate converts to a nominal declining balance interest rate of 168 per cent for a loan of MK3,000, and implies a real interest rate of 116 per cent in 2000 when inflation was 25 per cent. This rate falls with larger loan sizes. An alternative method of calculation which omits compulsory savings and deposits gives an effective interest rate of 94 per cent, or a real rate of 55 per cent. These rates compare to official nominal lending rates of 56 per cent, which with inflation at 25 per cent produced real interest rates of 25 per cent in 2000.

2. However, the exit rate was in fact higher as the majority of those who did not respond to the second survey had left the programme.

3. The exchange rate was MK72=US$1 in 2001.

4. In fact the difference in working capital is likely to be even greater between the groups since the data collected were on the working capital of the main enterprise and continuing clients were also more likely to run more than one business. However, departing clients also have no loan capital from the programme in their business, so this also exacerbates the difference.

5. Interestingly, national data comparing the incidence of joint businesses between the 1992 and 2000 Gemini surveys suggest that the proportion with mixed proprietorship had increased from 2.6 per cent to 18.2 per cent, and that this was roughly matched by a comparable fall in male only proprietorship [Ebony Consulting International et al., 2001]. The report tentatively wonders whether this might be the result of improved access to credit for women. However, we might have expected that the proportion of women conducting independent businesses might have increased with the availability of credit. Hence it may be the case that these figures also suggest that women find it useful to cooperate with their husbands once business is of a certain scale because of the gendered constraints to operating independently.

6. When a member of the group cannot pay, other members are expected to make good the repayment and later recover the funds from that member.

Additional information

Notes on contributors

Susan Johnson

Susan Johnson is Lecturer in International Development at the Centre for Development Studies, University of Bath, UK. [email protected]