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Contribution of microfinance on women empowerment case study of Vision Finance company ltd Nyaruguru

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Protestant institute of arts and social sciences - Bachelor's degree in Business studies with education 2016

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2.4.3. Challenges to Empowerment through Microfinance

While the empowering potential of microfinance programmes remains strong, the evidence of challenges, ineffectiveness and limitations of the potential is equally compelling. Although microfinance has the ability to empower women, the connection is not straightforward or easy to make. Significant research and much anecdota evidence suggests that this link is certainly not automatic (Hunt and Kasynathan 2001, 2002; Kabeer 1998; Mayoux 1998). Just handing money to women and giving them access to financial assets and resources creates a new set of challenges for women, thus balancing the experience of empowerment with the experience of extra burdens. Others argue more strongly that access to microcredit actually affects women's empowerment experience negatively by leading to a certain kind of disempowerment. Yet another set of analyses indicates that the goals of microfinance and its empowering potential are intrinsically of conflicting natures. The argument is that focusing on women's empowerment leads to dilution of efficiency and sustainability of MFIs, and these results in reluctance to focus on women's empowerment when designing their systems and programmes. Impressive literature exists that records the challenges and gaps between the goals challenges emanate in the economic, politico-organizational, ideological and cultural domains within which microfinance institutions and microcredit lending programmes are embedded. This section discusses the multidimensionality of these challenges. Economic and Political - Organizational Challenges

The central issue here is whether the economic goals of efficiency and sustainability of MFIs are rationally compatible with the goals of empowerment. There are arguments pro and con. Those who support a finding of compatibility have argued that targeting women is in fact more judicious, because: (i) women's repayment rates are higher than men's; (ii) women are more cooperative; and (iii) awareness of what clients have and what they need - and empowering them - can actually increase sustainability, because MFIs can offer loans that are appropriate and sustainable (Cheston and Kuhn 2002).

In the views and experience of Damian von Stauffenberg, founder and chairman of Micro Rate, the first rating agency to specialize in microfinance, "MFIs which concentrate exclusively on women may place ideological goals ahead of technical competence. Whether this is true remains to be proven". A related argument is that: MFIs fear that building empowering elements into their programmes will threaten their financial sustainability ratios and limit their access to funds from major bilateral and multilateral donor agencies. Many donor agencies' funding criteria focus primarily on outreach and institutional sustainability criteria and do not 'reward' programmes that are able to demonstrate greater and more sustainable impact on their clients. The incentive structures lead many MFIs to consider including programme elements intentionally empowering for women as 'extras' or 'luxuries' rather than as an integral part of their programme design and goals.

- Cheston and Kuhn 2002 While there are certain studies showing that better lives can be built by integrating microfinance programmes with programmes such as education and health (Dunford 2001, 2) - certain microcredit programmes such as WWF in India and Women's World Banking in the Dominican Republic do combine empowerment goals with goals of 3 Quoted in Cheston and Kuhn (2002).

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