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.
2.4.3.1. 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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