World Savvy Monitor

As mentioned in the previous section on Women and the Economy, one of the main barriers to women’s economic empowerment is lack of access to capital.  This is particularly true in developing countries where land ownership and family law favors men.  Women often cannot get title to family land; inherited land or money tends to go to brothers or directly to women’s husbands.  Not only does this make women’s financial situations insecure, but it also means they have no collateral with which to obtain credit – a critical underpinning of any entrepreneurial activity. 

Microfinance, as illustrated by the activities of the Grameen Bank, attempts to address this critical shortcoming at the heart of gendered poverty.  Grameen’s model is now replicated in many other microfinance institutions.

Overall, the results for women have been impressive and have added to the body of research indicating that women who are given the necessary tools are often more effective agents of family, community, and national development than men.

• Microfinance, also known as microcredit and microlending, provides banking services to people whom the banking industry typically does not reach – people who are risky borrowers because they lack collateral and people who are not as profitable to the lending institution because they seek small loans. 

• Grameen’s specialty is loans to poor women, who comprise 97% of its 7.56 million total borrowers.  A local community of borrowers is established with clear guidelines on how loans are to be used, and the community is responsible for repayment.  Employing peer pressure and sense of communal purpose is the innovation that is at the heart of Grameen’s 98% repayment rate. 
  

• Studies show that 65% of Grameen’s female clients have clearly improved their socio-economic conditions.  

Women’s microfinance institutions have proliferated, though some believe that their success has been overstated.  

• Skeptics point to studies that show while microcredit has helped women to lift themselves and their families out of poverty, few of the loans have contributed to the growth of larger female-owned businesses.  Few entrepreneurial ventures started by women using microcredit employ other people or grow to be engines of job creation.  Even in the U.S., Lisa Belkin of the New York Times has reported, women start businesses at twice the rate of men, yet 70% of them fail to grow revenues beyond $50,000 per year.

Experts within the development field generally agree that microfinance alone will not solve the problem of poverty – female or otherwise.  It must be combined with systemic approaches to address the larger burdens that fall on entrepreneurially-inclined women. The bottom line is that, even if a woman has access to credit and has a superlative work ethic, lack of development generally in her country will hamstring her success. 

Consider the time use dilemma of women living in poor countries – hours spent looking for firewood, traveling to water sources along bad roads, caring for children and the elderly, and time lost to poor health will diminish a woman’s productivity.  Lack of access to education and training will limit her economic growth.  To significantly promote women’s economic empowerment, therefore, macro strategies must complement micro strategies.

Next:  Women in Power and Decision-Making:  Overview