Microfinance and development Focus on women empowerment Over 3,300 microfinance institutions reached 133 million clients with a microloan in 2006. 93 million of the clients were among the poorest when they took their first loan. 85 percent of these poorest clients were women. Microcredit Summit Campaign Report 2007 Microcredit plays a critical role in empowering women, helps deliver newfound respect, independence, and participation for women in their communities and in their households. Juan Somavia, ILO Director-General Content Introduction

I – The role of women in the economy II – Why focus on women? III – How to facilitate the gender equity by the microfinance? IV – How to increase and support women’s participation in micro-finance activities? Conclusions Bibliography Introduction The microfinance addresses the persons who have no access to the classic banking and financial system, by proposing them financial products adapted to their needs and their situation. The microfinance is not the miracle solution for development, but it can allow persons who have a viable economic project to realize or develop it.

To most, microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their very small businesses. Many poor people need and use

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financial services all the time: they save and borrow, invest in home repairs and improvements and meet occasional and domestic expenses such as food and school fees. However, there are some 500 million low income entrepreneurs in the world and about 5% have access to financial services. Indeed, the financial services available to the poor often have serious limitations in terms of cost, risk and convenience.

Over time, microfinance has come to include a broader range of services (credit, savings, insurance, etc. ) as the industry has come to realize that the poor and the very poor that lack access to traditional formal financial institutions require a variety of financial products. The Bangladeshi professor of economy Muhammad YUNUS along with the bank he created, the Grameen Bank, enormously contributed to the development of the microfinance and obtained as such the Nobel Peace Prize in 2006. Even if it exists also in the developed countries, it is in the developing countries that the microfinance is most implanted.

It finds its foundations mainly in trust and solidarity and although most modern microfinance institutions operate in developing countries, the rate of payment default for loans is surprisingly low – more than 90% of loans are repaid. I – The role of women in the economy For decades, the participation of the women in the economic life has been steadily increasing. This provokes deep changes in the organization of the family, the society and the labor market. Particularly women have always actively participated in their local economies.

In Africa, for example, women produce 80 percent of the food and in Asia 60 percent and in Latin America 40 percent. In many cases, women not only produce the food but market it as well, which gives them a well-developed knowledge of local markets and customers. In developing countries, the women assure a good part of the food production and their profitable economic activities constitute an important source of supplementary income for the family. The participation of the woman in the economic life gives her a double role, in particular, one of producer of goods and services and the other as a housewife.

For instance, in Africa all tasks related to a family’s support are the responsibility of women. Due to cultural and traditional aspects, a woman’s presence has been a question of survival of her family. Women, especially poor mothers, must divide their time between work « productive role » and family « reproductive role », and balancing all the demands. Time is valuable for these women, as their livelihoods depend largely on their ability to fulfill the multiple demands of the household and the marketplace.

Besides, in developing countries, the feminine work is more considered as an « extra income » for the family rather than as a supplementary real income. The labor market offers to the women less favorable conditions than to the men with the same qualifications. A series of obstacles that makes their access difficult to the labor market: * Legal obstacles. * Social and practical obstacles. * Traditional laws. * Lack of education. Women have had to fight against an adverse environment, which traditionally had been minimizing and exploiting their capacities.

II – Why focus on women? The question of the genre and the particular role of the women is recurring in microfinance as in most of the other domains of the development. Several researches have already dealt with this subject and numerous case studies tell profits and limits of the programs targeted to the women. Experience shows that the microfinance can facilitate the autonomy of the women by allowing them to stabilize a generative activity of income and to free themselves from certain links of dependence.

Seen the ascendancy of the women in the poor population of the world and the essential role which they play in the satisfaction of the basic needs of the households, it is important that the operators and the financiers take the question of the disparity of the sexes in account during the conception of the programs of microfinance. Actually, many institutions of microfinance have already identified the women as their main target of clientele. Seventy percent of the poor people in the world are women.

Now, traditionally, the women were disadvantaged in access to the credit and the other financial services. On the other hand, the microfinance often targets the women, sometimes exclusively and the women represent eighty five percent of the poorest customers benefiting from services of microfinance. That is why it is recommended to assist women in accessing loans and even on a business level, it is perfectly justified to address to the women because the rates of recovering are higher than that of men. They also dedicate a bigger part of their income to the consumption of the household compared with men.

Moreover the children of the women who have appeal to the microfinance also gain advantages from it because they may more follow a school full-time program and they are less many to abandon their studies. Studies show that the new incomes generated by small businesses are invested often at first in the education of the children, and that it is the girls who benefit from it particularly. Although the positive incidence of the microfinance on the empowerment of the women is evident, the service providers of the microfinance also have to show caution to avoid possible negative results.

Studies showed that the women sometimes have little or no control over their loans, the husband being the one who makes all the decisions. III – How to facilitate the gender equity by the microfinance? The strategies to facilitate a positive impact on the women represent a base for the adaptation of policies, the practices and the products in microfinance to facilitate better the equality between the genders and encourage the empowerment of the women. To adapt financial services to better meet the needs of women.

The products of the microfinance generate different results for the men and for the women. The MicroFinance Institutions (MFI) should thus adapt the specifications of their products, as the amounts and the schedules of the loans, to the diverse needs of the customers. The various loans specifically conceived for the women are also important for facilitating the growth of businesses. Products in savings conceived for the women are a fundamental element of the risk management.

An offer of products diversified on behalf of the MFI should also include the other financial services which help to reduce the vulnerability, as the micro insurance. Services other than financial. The services others than financial for the access to credit, as the programs of illiteracy alleviation and training in commercial skills for the adults, can allow women to obtain more easily jobs of better quality and that may constitute one of the most effective means to promote the equality between genders.

Outside commercial promotion for the awareness of the community. Promoting commercial campaigns from the MFI and centered on women can exercise a positive influence on the attitudes of all towards the status of the women and their employment, by helping the people of the community to accept the economic possibilities offered to them and by strengthening their confidence. IV – How to increase and support women’s participation in micro-finance activities? Identify the customers: in the programs which succeed best in reaching(affecting) the women borrowers, the agents of credit are very dynamic: they or they fetch the customers on markets, in districts, streets, private hospitals, the religious assemblies and the modest zones of house. As we find strongest percentage in commercial companies and of services, the agents of credit have to look beyond zones concentrated in companies of manufacturing. Make sure of the convenience of the place of the MFI and of the opening hours: the transactions of financial services intended for the women must be able to take place near their place of residence or near their work and be fast. The women tend to have less spare time than men and tend to be less mobile. – Communicate with the women about the finance departments: in the majority of countries women often have a lower level of education and have less access to the media. The visits of credit agents in the public places and gathering can be very profitable. To encourage the recruiting of women agents of credit and to sensitize with the problem of the parity man-women: the choice of men agents or women for the loans depends largely on the local conditions. It is necessary to charge the women with this function in the Islamic zones like Pakistan, certain parts of the Middle East and the African zones where the women remain strictly apart. However, in the urban areas with strong criminality, it is necessary to take into account the security. Think about intended programs including men and women: certain programs still specifically focus on women for a whole series of reasons (impact on the wellbeing of the hearth and the children, perception of the greatest responsibility for the women as customer, concern that in mixed groups women are not left apart, etc). Special programs must be considered when the cultural context prevents the women from reaching the services but when the culture allows it, the aim in view must be the parity of access.

Certain organizations start by privileging the women then widen their services with the men once they succeeded in establishing permanent customers women in the community. In the countries where the women have more possibilities than the men to obtain microcredit it is thought that the women often divert the loans towards their husbands. Although that is not always negative if one regards the household as an economic unit, that is also likely to add a weight on the shoulders of the women if they are responsible for refunding without having their word to say on the use or the management of the funds obtained. To encourage the participation and to measure satisfaction: the MFI, backers and researchers developed a whole series of methods to obtain the opinion of the customers on the existing services, the design of a product, their preferences etc. When they are integrated in the daily operations, these methods have the advantage of having a minimal cost for the MFI. Conclusions Traditionally women have been marginalized. A high percentage of women are among the poorest of the poor. Microfinance activities can give them a means to climb out of poverty.

Microfinance could be a solution to help them to extend their horizon and offer them social recognition and empowerment. On the other hand, thank to women’s capabilities to combine productive and reproductive roles in microfinance activities and society has enabled them to produce a greater impact as they will increase at the same time the quality of life of the women micro-entrepreneur and also of her family. Short-term assistance programs might aim at increasing the productivity of women’s labor by providing credit, technology, and skill training.

Long-term objectives could emphasize eliminating institutional constraints which limit women’s access to productive resources, creating social, technological, and economic mechanisms to reduce conflicts between women’s productive and reproductive roles, as well as defining strategies to address traditional and legal barriers that hamper or preclude the active participation of women in the productive sectors of the economy. The key issue for successful micro finance program focused on women should consider them in a broader context, as a family nucleus, that is vital for societal improvement and progress.

Following this idea, micro finance programs should provide women with specific adapted products through appropriate methodologies, which can offer competitiveness to their business but also well being to them and their families. Bibliography Microcredit Summit Campaign Report (2007) Asif Dowla, Dipal Barua (2006) “The Poor Always Pay Back, the Grameen II story” Zeller Manfred, Manohar Sharma (2000) “Many borrow, more save, and all insure: Implications for food and micro-finance policy”, Food Policy Mayoux L. (2000) “Microfinance and the Empowerment of Women, A review of key issues”