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Poverty alleviation to women's empowerment: The challenges of micro finance
Nazmunnessa Mahtab

          Women constitute not only half of the world's population, but also sway the growth of the other half. They produce half of the world's food supply and account for 60% of the work force, but comprise 10% of the world's economy and surprisingly own less than 1.0% of the real estate. They have little access to productive resources and negligible control over family income. This discrimination is the consequence of gender bias which forms an inherent part of the global society.
Examples from survey will validate the statement. The index ranking of 151 countries on gender inequality in addressing poverty, education, basic health, employment (income), violence and political participation, contained in various Human Development Report prepared by the United Nations Development Programme since 1995 until 2003, shows that "no country treat women as well as men."
Despite such investments in time and labour by women, why is there so much discrimination, inequality and why are women termed as "poorest of the poor"?
Women and poverty:
Of the world's I.3 billion people living in abject poverty, it is estimated that nearly 70% are women. (Platform for Action, para.16). Over the last three decades, there has been a dramatic increase in concern with developing and adopting strategies to address the question of feminization of poverty. Women in Third World countries, like Bangladesh, face many social difficulties and economic deprivation. Despite several positive interventions and affirmative actions undertaken by the Government over the last three decades, the position of women has not improved up to the level of expectations desired by the society.
Poverty is the primary economic problem in Bangladesh. The importance of raising women's economic productivity has been increasingly recognised as a crucial element in the design and implementation of development projects to create alternative strategies for reducing poverty and achieving sustainable economic growth. The real challenge in poverty reduction is to create conditions in rural areas and among the urban poor so that those affected by the evils of poverty can steadily create assets, increase income opportunities from existing or new activities and retain their gains. (Khan, 2004).
As regards employment, women in Bangladesh are far behind men. In Bangladesh about 46% of the population live below the poverty line of which two-thirds are females. According to the 1995-1996 Labor Force Survey, the total activity rate was 56% for women and 89% for men. Nearly 43% women are involved in agricultural activities but 70% of them work as unpaid family labour. This is because women's participation and contribution to the economic sector has not been adequately evaluated. Women's work in the family and household economy has not been recognised as a productive activity since long. However, with increasing poverty and the breakdown of the supportive kinship umbrella, and also due to the demand generated by some sectors of the economy, women's participation in the labour market has become a key factor in the growing independence of women, economically, socially and legally from 1980.
In recent times, "gender equality" and "women's empowerment" have been two of the most pervasive themes in development. The empowerment and autonomy of women and the improvement of their political, social, economic and health status is highly and important end in itself. The full participation and partnership of both women and men is required in productive and reproductive life, and for achieving sustainable development.
To overcome the problems of discrimination and oppression, and achieve gender equality in all spheres of life, Third World Feminists Group, notably-DAWN had fixed two long term goals-"freedom" and "empowerment." (APCWD: 1979). These were: a) the achievement of women's equality, dignity, and freedom of choice through women's power to control their lives within and outside the home; and 2) the removal of all forms of inequity and oppression through the creation of a more just social and economic order, nationally and internationally. To achieve these goals, "Power," was essential for women. However, this power referred to the sense of internal strength, as a right to determine one's choices of life and the right to influence the direction of social change.
Over the past 20 years, World Conferences on Women, held in Mexico City, Copenhagen and Nairobi have contributed to the progressive strengthening of the legal, economic, social and political dimensions of the role of women. Women's access to education and proper health care has increased, their participation in the paid labor force has grown and legislation that promises equal opportunities for women, and respect for their human rights has been recognised (PFA, 1995). International Conferences held during the last decade of the twentieth century, such as the UN Conference on Environment and Development (1992), the World Conference on Human Rights (1993), the International Conference on Population and Development (1994) and the World Summit for Social Development (1995), have all highlighted at international level the various outstanding issues related to the improvement of the status of women.
Strategies for poverty alleviation : In order to begin the fight against poverty, three competing paradigms -- Micro-credit for Poverty Alleviation, Micro Enterprise Movement and Women's Entrepreneurship Development have been introduced. All these have been viewed as important economic development strategies for reducing poverty and achieving gender equity in all sectors of the economy, at the local, national and international levels, and finally empowerment of women.
Women and micro-credit: Income generation and poverty alleviation paradigm:
The most common strategy for poverty alleviation, specifically for the marginalised women is micro-credit. Over the past few years, micro-finance has become the endorsed solution to poverty alleviation. Internationally, microfinance has been advocated as the formal route to pulling the poor out of poverty traps. As small sums of credit are given to persons (specially poor women) who are supposed to put the money to productive use, thereby guaranteeing repayment, women are found to be more credit worthy than men. Hence the bulk of microfinance is directed towards them.
Micro-credit operation is intimately related to the concepts of microfinance, poverty alleviation and micro entrepreneurship. Micro-credit has emerged as an important development paradigm, which is being used as an effective tool for poverty alleviation of about 60 million people, nearly 46% of the country's population. Out of this about 13 million people mostly women (90%) are receiving micro-credit services.
Bangladesh's spectacular progress is attributed to the pioneering job done by the Grameen Bank Model of micro-credit by introducing collateral free credit to the poor as a key factor for addressing the problem of poverty. Encouraged by the enviable success of the Grameen Bank (GB) in providing collateral-free small loans to the poor for income generating activities, increasingly large number of NGOs, not less than 1000, joined the micro-credit programmes creating a "silent micro-credit revolution" in Bangladesh.
Impact of microfinance on poverty alleviation:
Access to micro-credit has helped to mitigate the scarcity of household resources by reducing the credit constraints faced by poor households, allowing households to raise income from self employment. The particular strength of micro-credit has been its capacity to empower women in social contexts that devalue women's work, allow gender based discrimination and favour women's seclusion. Micro-credit programmes have demonstrated a tremendous capacity to reach poor women because of their innovative social mobilization strategy of working through groups of women in villages and urban slums. By bringing women together for the first time in non-kin related relationships and associations they have developed new kinds of social relationships that provide an alternative to the old and helped to weaken the some of the existing web of patriarchy which have entailed the total subservience of women. Women's discussions of social and individual problems in group meetings, their taking loans and making regular repayments, their contribution to a secure savings pool, have given them a recognition, visibility and significance that they had never received before.
There is no doubt the micro-credit programmes enhance the opportunities of rural women to earn a livelihood and increase the woman's physical space due to her membership and activity in the NGO group programmes. Although the findings of these studies have shown that micro-credit programmes have been successful in improving the economic condition of the members, some studies have indicated that there has not been any significant decline in the overall levels of poverty. The micro-credit programmes have not been very successful in including the hard core poor, who constitute about half of the poor in Bangladesh. But the study findings also show that there are still many borrowers who have become more vulnerable and trapped by the system. Men often use their kinship relations to approve loans in favour of males obstruct women's loan (Goetz and Gupta, 1996). Furthermore, female borrowers may have trouble meeting their weekly repayments because their husbands fail to use the loan profitably. (Khan, 2004). It has become clear too that empowerment does not take place when incomes are generated or when livelihoods are enhanced or, for that matter, when groups are formed.
Some research studies have also concluded with the notion that "Micro-credit is no panacea for poor women."
movement: The
growth paradigm:
Both women and micro-enterprises are seen as an underutilized and currently underperforming resource to be tapped for growth, poverty alleviation and employment creation. Targeting women in micro-enterprise development is seen as an important strategy for economic growth. Research also indicated that women's enterprises might have a greater contribution to stimulation of local economy than those of men because of women's greater tendency to purchase local inputs. (Downing,1998). These efficiency arguments are strengthened, particularly in the case of micro-finance because of the widespread finding that women are better repayers than men. Some have further argued that women adopt more effective enterprise strategies which respond to the needs of flexibility, social responsibility and environmental concerns, and therefore have better prospects for the future development of enterprise development. (Mayoux, 1990).
The focus on micro-enterprises is an attempt to give value to the interests of some of the poorest women in Bangladesh, especially for the women who are doing their best to improve the wellbeing of their household through a micro business venture. Indeed in some instances, the efforts of women involving in micro-enterprises is to seek self employment as a response to bringing about change in their existing conditions of poverty.
The micro enterprise movement, both internationally and domestically has been viewed as an important economic development strategy for economic growth. This paradigm is based on the premise that gender discrimination is an economic phenomenon and, therefore, the generation of employment and income through micro-enterprises would empower women. At the same time women's enterprise development has been seen as making a positive contribution to individual economic empowerment and improving women's wider social and political position.
Micro-enterprise can be defined as a tiny business usually with one owner started by the poor in cities, towns and villages, commencing with minimal investment and not requiring a formal establishment. Owners of micro enterprises do not generally use formal financial institutional channels for credit or any other financial transactions. Employees, if any, are usually or family members who are easy to monitor.
Generally, micro enterprises of NGO-MFIs are the expansion of income generating activities (IGAs) of graduate or progressive borrowers. Most of the micro-enterprisers go into business of their own after having worked in the same sector for someone else for a number of years. In this capacity they have the opportunity to build their technical, managerial and marketing skills to the point where they are prepared to start on their own. In doing this they save funds to launch small businesses, which may start as a part-time activity, and gradually they may join targeted micro-enterprise programmes of NGO-MFIs.
Another category of micro enterprise are developed by women on their own initiative, for starting a small business of their own. The types of micro enterprises operated by women include the following: Traditional crafts, such as handicrafts from jute, cane and bamboo works, weaving, sewing, knitting, poultry and cattle Non-traditional rural and informal non-farm activities cover areas such as trade and commerce, transport and construction. Household family Trade like food processing, tailoring, chanachur production, sweetmeat shops and even running restaurants business.
On the other hand, it has been argued that micro-enterprises do not help to augment the income and employment of women labourers, but accentuate the process of women's labour exploitation. This finding has been made evident by studies concentrating on the experiences of sample households engaged in certain micro-enterprises managed by women themselves. For example many women who have started their own micro-enterprise in the textile sector (for example, making clothes,) usually employ poor women to work for them at a very low cost.
Economic hardship was found to be the main push factor for women working in the micro-enterprises. The initial driving force to start micro enterprise for the majority of women micro-credit borrowers is to supplement their existing, insufficient, family income to meet the basic necessities of life. The experiences of Palli Karma Shahayak Foundation (PKSF) from the field revealed that among the poor marginal women involved in family businesses, the percentage of forced women in micro-enterprise is quite high. These women are compelled by circumstances, that is, the prolonged illness or death of the head of the family, and abandonment or divorce by the husband are the main causes for women's involvement in family businesses.
Women entrepreneurship development: the
empowerment paradigm:
Women entrepreneurs may be defined as the woman or a group of women who initiate, organise and operate a business enterprise. In business the entry of women is a relatively new phenomenon. A woman may start her own business due to several reasons. She may not be able to find a job in the market place or she may not be able to work outside her house. In the feminist empowerment paradigm, the dominant development aim is the eradication of gendered resource and power inequalities and women's empowerment.
Entrepreneurship offers a number of potential advantages for women. Firstly, where women have been able to set up economic activities, this success has helped many women to build up an independent resource base. Recently, in Bangladesh this is particularly important as women are widely expected to provide substantial support for themselves and their children. Some promising young business women in Bangladesh mentioned their ability to be financially independent as the most important change in their lives in recent years. Entrepreneurship has enabled some women to have an income which they may control themselves and contribute to the household and improve their status. Women entrepreneurship is also seen as an attractive to wage employment.
Reasons given by women for becoming entrepreneurs include: personal ambition; creativity; a desire for independence; to be one's own boss; self realisation and an ambition to improve the quality of working conditions; to raise economic returns; and to develop a flexibility that caters to the needs of family responsibilities. For many women, working as managers in larger organisations, the frustrations of the glass-ceiling effect has motivated them to look towards business creation.
The expansion of women entrepreneurship, coupled with women's increasing gender awareness and increasing influence of women's movements, has led to the formation of Bangladesh Women's Entrepreneurs Associations. These have helped in increasing the visibility of women in economic decision-making, although influence is still far from equal to that of men.
Another very recent phenomenon in Bangladesh is the management of family business by the wives of industrialists. Previously, the wives were designated as Directors or shareholders of large companies, as "hidden transcripts", or silent partners. But nowadays, it has become evident the wives of the big industrialists are holding the positions of Directors and are being involved in all the major decision-making process of the businesses. Today, in Bangladesh we even find educated daughters taking over the responsibility of family businesses being confident and assertive and aiming towards achieving empowerment.
Contraints/barriers to women enterprise development: In Bangladesh, although there is an increase of women entrepreneurship at the top, women are mainly clustered in a narrow range of low investment, low profit activities for the local market. Institutionalized inequality at the macro and household levels seriously limits the ability of women entrepreneurs to take advantage of the opportunities offered by market growth. In addition, they are faced with the following problems:
Low Investment;
·Low Profit Activities;
·Slower Growth Rates of Women Owned Enterprise;
Institutionalised Inequality at the Macro-level and Household levels;
Women's Restricted Access to Property, Income and Credit;
Institutionalised Discrimination in Legal Systems;
Access to and Control Over Resources ;
Gender-based Social Impediments;
Unfavourable Infrastructure and Support Systems.
From all these constraints, limited access to productive resources, (particularly capital, labour, time and technologies), transport constraints, lack of market knowledge, lack of basic literacy and numeracy skills can restrict the capacity of women to participate effectively in business activities. For women, lack of access to and control over property constitute serious barriers. In many countries, including Bangladesh, women are seen -- both in customary and formal legal systems -- as dependents of men and subject to their authority as fathers, husbands, brothers and even sons. Women have independent legal rights, but the traditional systems of marriage and inheritance coupled with corrupt and expensive legal systems, make it difficult for most women to enforce their legal rights. Although in both traditional Hindu and Muslim laws, property was given to women on marriage, these customary rights have been increasingly eroded and exorbitant dowry payments to husbands and in-laws have become the norm. This lack of formal ownership rights in property creates additional barriers to registration of women's businesses. (Koda et al, 1997).
The lack of formal ownership rights in property is also a central factor in limiting women to those businesses and trade which require little start-up capital.
Researches have also shown that access to start up, acquisition and growth of capital remains a big obstacle for women business owners. Experienced women entrepreneurs face greater difficulties than men in obtaining loans, even when they have collateral, business plans and plenty of experience. Even when women receive credit they have to prove themselves in order to get their business skills recognised by the banks.
Although women may enjoy some marketing advantages in products and services where the majority of customers are female, in most markets they face a range of types of discrimination which prevent them from taking advantage of many opportunities opened up by free market economic system. Market information systems about inputs and marketing tend to be targeted to men.
Women's ability to enter new markets is seriously limited by lack of technical skills and experience. Even in female preferred industries women lack managerial and business skills, and the skills they have are often undervalued.
Social attitudes concerning the value of traditional women's work activities and their potential abilities also limit their participation rates and ultimate commercial success of women entrepreneurs. Rural women frequently have primary responsibility for agricultural production, in addition to domestic responsibilities and childcare. These responsibilities place heavy demands on women's time, and micro-enterprise activities can potentially increase the workload of women. These problems affect women's ability to expand their enterprises.
Again the informal sector is an important and growing sector of economic activity in Bangladesh. Women feature prominently in the informal sector, be it street vendors, domestic work, or sub-contract or piece work (part-time) in the home. Some studies have asserted although the informal sector may provide initial opportunities for women with no or low levels of education and skill levels to earn income, these women tend to have even less access to education and skill upgrading opportunities than those in the formal sector. It was pointed out that in addition to low levels of income, their obstacles include, heavy time commitments, and inadequate information about better work possibilities.
The significant increase in self employment is an important feature of small business development in Bangladesh. Women, both in the informal and formal sector with low incomes, lesser formal education and also in some instances from ethnic minority backgrounds, are constrained in their opportunities for paid market employment as wage and salary workers. So for these women, self employment can become an accessible means of enhancing entitlements. Additionally, women in Bangladesh are less likely than men to run a full-time business, indicating that the need to manage the mix of family responsibilities and work, fits in better with part-time-business activity due to the flexibility and adaptability this system offers.
Challenges and opportunities:
According to the International Fund for Agricultural Development (IFAD), there are four key criteria for micro-enterprise development schemes aimed at poor rural women, which can both improve demand for credit and reduce the risks of indebtedness. These are:
Modest Financial Investment;
Low Investment Risk;
Short Gestation Period between Investment and Generation of Regular Income;
Availability of Local Markets. (IFAD, 1991).
Conclusion: The feminisation of poverty is a direct consequence of women's unequal access to economic opportunities. In recent years, micro-financing for women's small and micro-scale enterprises has been an effective way to promote and support women's self-employment and access to credit. The promotion, financing and strengthening of micro-enterprises was also highlighted in the Beijing Platform for Action as an important way of increasing the productive capacity of women, and breaking the "cycle of poverty." (Platform for Action, 1995).
Micro-enterprise development has, in some circumstances, contributed positively to women's empowerment and helped extremely poor women survive economic crisis in the short term. However, certain structural issues that are far more pertinent to the long term problem of women and poverty have been ignored. These are: agrarian reform; programmes favouring export production (typically male dominated) over subsistence crops (typically female dominated), and trade agreements structured in the interests of multi national corporations.
Entrepreneurship is a Herculean task which needs to be fraught with struggle, entailing both risks and profit. Women have to go through certain stages in setting up an enterprise and face challenges, irrespective of gender-based social impediments like social stigma, unfavourable infrastructure, support systems, etc., which block their entry and reduce their pace of growth. Removing these impediments to the existing set-up of micro-enterprise development has assumed a critical significance for the economic development pf women. The need today is to help women overcome these blockades and draw maximum participation from them to set up micro-enterprises, which will help them, achieve self-reliance, and ultimately empower them and place them at par with their male counterparts in all spheres of life.
Bangladesh, with a population of 140 million, is an example still fighting tenaciously to alleviate poverty and eliminate hunger. The pangs of poverty appear to have deepened in the country over the past three decades. In recent decades the micro-enterprise sector has expanded in Bangladesh by changes in the industrial sector and government commitment to encourage new forms of economic activities in the public life. Women's micro-enterprises are now regarded as a vital element in the attempt to increase the rate of job creation, which is expected to contribute to reduction of poverty in the society.
Today, in Bangladesh, women are increasingly entering the micro-enterprise sector but unfortunately, lack of social security, and failure to establish an informal network for accessing resources and marketing their products leads to failure of many of these ventures. However, despite lack of funding and resources, grassroots women's organisations have become increasingly vocal around the empowerment agenda. Micro-enterprise development is seen as contributing to a process of empowerment through enhancing women's productive role and enabling them to challenge inequities within the household, and as a very useful entry point for wider mobilisation.
Financial services for the poor have proved to be a powerful instrument for poverty reduction women's empowerment, enabling them to build assets, increase incomes, and reduce the vulnerability to economic stress, violence and exploitation. As the micro-credit movement goes ahead, we have a clearer idea of what its strengths are and what are its limitations. To move forward, it is essential to be more effective, and increase outreach, design products to include the poorest of the poor, and also provide finance for growth and employment oriented small and medium enterprises (SMEs) which are needed to spread the poverty alleviation net wider, so that we envisage a significant decline in poverty levels and achieve the Millennium Development Goals by 2015.

(The writer is Professor and Chair, Department of Women's Studies University of Dhaka)


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