The biggest cultural constraint on women's empowerment
through microfinance programmes doing research is the culture of patriarchy
pervasive throughout Asia. The patriarchal culture is dynamic and thus
exercises constraints in different contexts, in varied forms and at various
stages in the empowerment process. These include bargaining power and the
ability to make decisions on economic issues within the household, ability to
make decisions outside the household, control over loans, building of social
networks, responsibility for household chores, and power over one's time and
physical and emotional health and energy.
2.5. Critical literature views
But Burger (1989) observed that microfinance tends to
stabilize rather than increase income, and tends to preserve rather than create
jobs. In the same view, Arbuckle et al (2001) cited by Nalunkuuma (2006)
indicates that studies carried found little to recommend that micro credit has
any significant impact on enterprise incomes. Evidence by Coleman (1999)
suggested that the village bank credit did not have any significant impact on
physical asset accumulation; production and expenditure on education. The women
ended up in a vicious cycle of debt as they used the money from the village
bank for consumption and were forced to borrow from money lenders at high
interest rates to repay the village bank loans so as to qualify for more loans.
However, impact for women who had access to bigger cheaper loans from the
village bank was significant. The main conclusion of the study was that credit
is not an effective tool for helping the poor to enhance their economic
condition and that the poor are poor because of other factors (like lack of
access to markets, price shocks, un equitable land distribution) but not lack
of credit. A study of 13 MFIs in seven developing countries concluded that
households' income tended to increase at a decreasing rate, as the debtors
income and asset position improved (Mosley and Hulme 1998) cited by Okurutet al
(2004).Similarly, Hulme and Mosley (1996) cited by Lont and Hospes(2004) in a
study made on Twelve lending institutions providing micro-lending services in
seven countries found that the impacts of microcredit on the poor were on
average small or negative relative to the control group.
Results by Diane and Zeller (2001) in the study done in Malawi
also suggested that microfinance did not have significant effect on household
income. Fisher and Sriram (2002) stress that access to microfinance services
protects the poor against the often severe consequences of fluctuating incomes,
ill health, death and other emergency expenditures. Despite the overwhelming
claims that microfinance credit works best for the poor people, Johnson and
Rogaly (1997) argue that poorest borrowers become worse off as a result of
credit and that it makes them vulnerable and expose them to high risks.
Using gender empowerment as an impact indicator, some studies
argue that microcredit has a negative impact on women empowerment (Goetz and
Gupta, 1994). Goetz and Gupta (1994) as cited by Kabeer (2000) using a five
point index of `managerial control» over loans as their indicator of
empowerment. At one end of their index are women who are described as having
`no control' over their loans: these are women who either had no knowledge of
how their loans were used or else had not provided any labor into the
activities funded by the loan. At the other end are those who were considered
to have exercised `full' control, having participated in all stages of the
activity funded by the loan including the marketing of the produce. The study
found that the majority of women, particularly married women exercised little
or no control over their loans by this criterion.
Sebstad and Chen (1996) as cited by Lont and Hospes (2004) in
their summaries of the thirty-two research and evaluation reports found that
micro lending to women had positive impacts on their empowerment in Asian
countries. However, reports from African programs found very little or no
impacts of microcredit on the empowerment of women. In the same studies, credit
had a positive impact on households' income, but the impacts on health, on the
nutrition level of family members, and on children's attendance at schools were
not conclusive.
Also the view that it is the less badly-off poor who benefit
principally from microfinance has become highly influential and for example was
repeated in the World Development Report on poverty (World Bank, 2000) cited by
Montgomery and Weiss ( 2005).
Simanowitz and Alice (2002) put it clearly that, the
microfinance industry has concentrated not on reaching the poor but rather on
financial and situational performance. Meanwhile Mayoux (2001) argues that
microfinance institutions are undergoing a period of rapid innovations. They
are coming up with products and new methodologies for reaching the broader
category of poor people including the poorest of the poor. This will enable
microfinance to have a significant impact in achieving poverty reduction.
Also where group lending is used, the very poor are said to be
excluded by other members of the group, because they are seen as bad credit
risk, jeopardizing the position of the group as a whole. Similarly, it's argued
that when professional staff operates as loan officers, they may exclude the
very poor from borrowing, again on the grounds of the repayment risk
(Montgomery and Weiss, 2005).
Simanowitz in regard to groups points out that while the use
of the groups has the potential to build social capital, develop skills; the
way they are used varies considerably between MFIs. Some use them solely as
means for creating peer group pressure while others use them more deliberately
as vehicles of the empowerment (Simanowitz, 2003).
From the above discussions, we realize that core issues
remain how to make microfinance accessible to the poor and ensure that the
benefits are positive. For the purpose of this study, the above theoretical
debates form the bedrock to explore into the role of microfinance in poverty
reduction in Rwanda.
This analytical framework is build on the ground that if the
MFI mission and objectives are geared towards poverty reduction, then the
terms, conditions and methodology and product design have to be favorable for
the poor to access the microfinance products and services which will be
reflected in the outreach; how many poor people are reached (scale of
outreach), how poor are the clients (depth of outreach), in which economic
sectors are they engaged (breadth of outreach), where do they live
(geographical outreach) and the quality which is how the services fit the needs
of potential clients. Depending on whether the poor have been reached with
microfinance, then impact may be expected in terms of:
(i) Income generation,
(ii) asset building and reduced vulnerabilities defined as
increases in ownership of household's physical assets and reduced
vulnerabilities as the poor are encouraged to save and diversify their
livelihood activities,
(iii) empowerment which means enabling the poor to have
greater control over the resources and their lives and taking part in family
and community decisions,
(iv) Building social capital implying reduced isolation,
opportunity to share information and building the bond that was not previously
there.
(v) Good health in terms of improvement in nutrition and
afford medical care, and education of clients' children which is investing in
children's education as a result of new income from micro-enterprise. This will
in turn lead to poverty reduction on women and all family members.
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