Microfinance has played an important role in bringing the issue of women’s empowerment to the forefront of the development agenda across continents. Microfinance has not only addressed the need for financial access to women, but also reinforced the credibility of poor women through figures such as those of high repayment rates among female microfinance clients. Issues were brought forward, beneficiaries were targeted, interventions made. The question to be asked now is, “So what has financial access done to empower women?” Variations of this question have been addressed with mixed findings about the impact of microfinance across the world. This study looks at the Nepalese case.
The study paints a rather modest picture of the impact of the sector in empowering women beyond financial access. At the same time, it also highlights the unused potentials of the sector in pushing forward the goal of gender equality at all levels of society. Assessing gender gaps and empowerment status of women at the organizational as well as the client level, the study finds that there is ample room for innovations, and a further need for gender-sensitivity within the Nepalese microfinance institutions. Assessments were made along four main categories: i) Women’s Representation in Microfinance; ii) Gender-sensitivity of Institutional Operating System, Policies, and Programs, iii) Loan Utilization and Entrepreneurship Development of Women, and iv) Women’s Access to and Control over Economic Resources.
Women’s and Men’s Representation in Microfinance
At the organizational level, women’s representation in decision-making is still low among MFIs, excluding women’s cooperatives. On average, women were found to represent 31% of the governing body of MFIs (not counting women’s cooperatives). This figure paints quite a positive picture in terms of women’s representation. However, a third of these MFIs had no women in the governing board. Similarly, excluding women’s cooperatives, about 65% (17 out of 26) of the MFIs had no women in senior level management.
As clients, although women represent almost 75% of the clientele of MFIs, these women are rarely involved in the decision-making processes of matters such as interest rate structure or the repayment schedule. The common approach of MFIs is a top-down delivery system whereby women are given the details of the loan mechanism fixed by microfinance service providers.
Gender-Sensitivity of Institutional Operating System, Policies, and Programs
Most MFIs reported having no formal gender policy in place, even though informally they may be practicing positive discrimination towards women in matters such as recruitment. Only 34% of the MFIs surveyed reported as having a formal gender policy in place. Some of the cited material in formal gender policy documents includes maternity leaves, positive discrimination towards women during recruitment process, and quota for women’s representation in the executive committee.
At the program level, one of the most common feedbacks that came from female clients on the role of microfinance in women’s empowerment was to make larger loans accessible to women. It is the general conviction among MFIs that women “prefer” or can only handle small loans to start up small businesses. However, studies find that this is true only in the initial phases of financial access, and that such an outlook can carry the risk of keeping women in lower income economic activities compared to men. The study finds that almost 90% of the loans taken most recently by respondents were below Rs 25,000.
In terms of a loan monitoring system, the presence of a formal monitoring mechanism was not reported by any of the MFIs surveyed. Moreover, one of the main complaints from the clients was regarding the lack of a monitoring process to ensure productive usage of loans. This was particularly the case in cooperatives. Loan misuse can have the negative effect of indebting women if the loans are used for unproductive purposes. It can also give rise to duplicity of loan-intake among microfinance clients.
Some positive trends adopted by MFIs towards gender equality at the client level include inclusion of women, Dalit, and indigenous groups in membership, priority to women in loan disbursement, and provision of childcare facilities for female participants.
Some of the MFIs had innovative loan products that were particularly targeted towards women’s wellbeing and empowerment, for example, pregnancy loans and loan for daughter-in-laws’ education. Such loans can be easiliy monitored and have the potential to directly enhance women’s living standards.
About half of the clients surveyed reported having received some form of skill trainings from the MFIs. Most trainings received were conventional skill trainings, rarely challenging the preconceived notion of “women’s role” in society. For instance, the most common trainings were either farming-related or those related to provision of products and services used predominatntly by women, such as beautician training and tailoring.
Loan Utilization and Entrepreneurship Development
The study finds that although most women work on farm-related activities, only 29% of them own any land, which means, many women are still dependent on their husbands who are often the owners of household property. About 80% of the husbands had some amount of land registered in their names. Likewise, half the women also reported having limited control over any asset that they have besides land, such as livestock or bank account.
Women’s Access to and Control over Economic Resources
As far as access to economic resources are concerned, although, more than 90% of the women have loans registered in their names, most women were found to be involved in joint decision-making about loan utilization. The burden of repayment, as such, lies primarily on the women, even though both men and women may use the loan. Similarly, most women also reported as being involved in independent/joint decision-making in matters such as household finances, profit utilization, and child education. Although, joint decision-making is a valued feature of any household or society, power-inequalities can surface in such decision-makings.
The study finds some major areas where the microfinance sector can improve its services to empower women. Some of the recommendations include:
- Institutionalization of a Formal Gender Policy: A formal policy on gender equality must be designed and communicated with all levels of staff in a participatory, inclusive process. The content of the gender policy should portray both practical needs of men and women and must aim to promote gender equality within the institution. Measurable gender-disaggregated indicators must be used to monitor progress and identify gaps on a regular basis. A designated position for a Gender Expert may be necessary to oversee progress in gender mainstreaming in the organization. Finally, gender trainings must be followed up with pre- and post-evaluations.
- Access to Markets: A careful market assessment and a demand-driven skills package should be provided to the clients to guarantee highest returns to their investment.
- Non-traditional Activities and Economies-of-Scale: For women who do not own land, promotion of collective land ownership or setting up of producers’ cooperatives to benefit from greater market monopoly versus increased competition may be needed.
- Promoting Women’s Entrepreneurship
a. Risk-taking behavior: Group guarantees often discourage risk-taking behavior because the risk is borne by the entire group. Therefore, for promising entrepreneurs with good track records, independent loans should be made available.
b. Flexible Repayment Schedules: Depending on the type of entrepreneurial activities, women may or may not have weekly/monthly cash flow required to meet the repayment schedule fixed by the microfinance service providers. Studies show that when women are allowed to set their own repayment schedules, repayment rates are higher and women invest more strategically.
c. Larger Loans: Although the larger MFIs do have a provision for larger loans, the smaller cooperatives often lack the capacity. In such cases, the cooperatives should provide women with a channel to tap into resources offered by larger MFIs or other financial sources. In any case, such larger loans often require collateral which the women may not be able to provide. Savings account is one form of collateral commonly used by MFIs. Based on case studies collected by Mayoux, she finds that many women prefer to have larger loans which she argues should be given on the condition that they register any assets purchased in their names, and are involved in loan activity such as accounting, managing, and business planning (Mayoux, 2002, p.29). This meets the dual goal of promoting women’s entrepreneurship as well as their access to and control over economic resources
d. Skills Trainings: Most skills trainings provided by the MFIs such as beautician training and tailoring training, training on agricultural and livestock farming, rarely challenge gender roles and are often catered towards married women. In fact, majority of the clients interviewed were married. Such skill sets do little to move women up the economic ladder. Non-traditional trainings such as computer training or off-seasonal vegetable farming may have a better scope of increasing women’s economic empowerment.
- Monitoring of Loan Use: One of the feedbacks that came form the clients themselves was the need to monitor the use of loans in purposes that the loans were taken for initially. Without a formal monitoring mechanism, loans taken for productive purposes may end up being used for household consumption, and the clients end up indebted. Such misuse of loans also fosters duplication of loan services. One way to counter misuse of loans is by offering diversified loans such as those for healthcare only. However, without strict monitoring, even such loans were found being used for other purposes.
- Increasing Women’s Asset Ownership: Mayoux suggests that for an empowerment approach, MFIs should go beyond offering financial access to women based on social collateral in the form of group guarantee. Instead, MFIs should go a step further to register any assets bought by women using the loans in their own names, which can also be seen in the form of collateral, but more importantly, which will guarantee a way forward in women’s control over assets.
- Shared Liability of Loans: About 91% of the respondents have loans registered in their names. However, when it came to decision-making about loan utilization, more than 70% of the said they are involved in joint-decision making about loan usage. In such a case, it calls for loans to be a liability for both the husband as well as the wife.
- Gender-Disaggregated Data Collection : For MFIs and researchers to say anything positive or negative about the contribution/impact of microfinance towards gender equality and women’s empowerment, collection of gender-disaggregated data from the clients’ households is crucial.
- Non-complacency towards increased household income: Joint decision-making, it was argued by some, is already a progress from the position that women held in the past. This notion is true to some extent; however, the final decisions in such types of agreements are more likely to be made by the husband. It’s not bad at all in terms of increasing family income, but because microfinance service providers are in a position to possibly make women more independent and self-reliant, and by doing that to challenge centuries old gender inequality, complacency over increase in household income is not the best position to take. On the other extreme, by doing so, MFIs may even be perpetuating discriminatory gender roles in society. The wisdom of the phrase “question everything” applies to microfinance practitioners as much as it does to development practitioners. In fact, microfinance practitioners are inevitably development practitioners themselves and it’d be the best-case scenario for MFIs to train staff not as commercial banking staff, but those who are more inclined towards development studies.