3.6.1. Gender issues in microfinance
It is generally accepted that women have less economic opportunity to improve their livelihood. Mikkola describes how women are often restricted in terms of education, the ownership of wealth, monetary return for their employment, financial and other opportunities to influence decision making at the level of
family and society.313 Concerns about gender issues in financial services is not
new, especially since the 1970s when the women’s movement in a number of countries focused increasingly on poverty credit programs, as reflected in debates at various international conferences. Some aspects of women’s poverty may indeed be rooted in inequality between women and men. In fact women’s risk of impoverishment is greater than men’s in three ways: being disadvantaged in respect of entitlements and capabilities; having heavier work burdens and lower earnings; and facing constraints on upward mobility as well as geographical mobility due to cultural, legal and labor market barriers.314
Johnson identifies a number of obstacles to women accessing microfinance: the lack of access to bank/financial services in their own right; undertaking activities which produce low returns and have a heavy domestic workload; women may not be literate or well educated; and women lack the confidence to claim political/legal rights.315 On the other hand, women are a
313Mikkola, A. 2005, Role of Gender Equality in Development, Helsinki Centre of Economic Research, Discussion Paper, no. 84.
314Murray, U. and Boros, R. 2002, A Guide to Gender Sensitive Microfinance, SEAGA (Socio- economic and Gender Analysis Programme), FAO, Rome.
315Johnson, S. Gender and Microfinance: Guidelines for good practice, viewed 14 February 2007, <http://people.bath.ac.uk/hssaj/gender.htm>.
good credit risk and investment for family. And they benefit from higher social status within the home when they are able to provide income.316
The World Bank research on strengths and weaknesses of women justifies placing a higher priority on increasing women’s access to microfinance services because gender inequalities inhibit economic growth and development.317 Various statistics indicate women have higher unemployment
rates and are the poorest of the poor.318 Women spend more of their income on
their households and maintain good repayment records and cooperativeness.319
On their weaker points, women need empowerment to strengthen their business capability, a prerequisite for achieving better income through microfinance support. The basic theory is that microfinance empowers women by putting capital in their hands, and allowing them to earn an independent income and contribute financially to the household. Mayoux argues women are effective targets for empowerment, supporting poverty reduction and gender
equality.320 As output, this economic growth is expected to generate increased
self-esteem, respect, and other forms of empowerment for women.
3.6.2. Empowerment
Since the mid-1980s, the term ‘empowerment’ has become popular in the development field, especially with reference to women, but it invites confusion. A study by Batliwala indicates women’s empowerment challenges patriarchal power relations, resulting in women having less control over material assets and
316 The Microcredit Summit Campaign 1997, Why target women? Viewed 24 June 2007, <http://www.microcreditsummit.org/aboutmicrocreditsummit.htm#women>, see also Mayoux, L. 2011, Women are Useful to Microfinance: How can We Make Microfinance More Useful to Women? Workshop paper, Global Microcredit Summit, Valladolid, Spain.
317 World Bank, 2001a, Engendering Development: Through Gender Equality in Rights, Resources and Voice Summary, World Bank, Washington DC; <http://www.worldbank.org/gender/ prr/engendersummary.pdf>.
318 See World Bank website, Gender Statistics database, <http://devdata. worldbank.org/genderstats/ home.asp.>.
319Deshpanda, R. 2001, Increasing Access and Benefits for Women’s Practices and Innovations among Microfinance Institutions, Survey Result, UNCDF, New York.
320Mayoux, L. 2006a, Not only reaching, but also empowering women: Ways forward for the microcredit summit’s second goal, viewed 28 June 2007, <http://www.genfinance.info/ Documents/ Reaching%20and%20Empowering%20Women.pdf>.
intellectual resources.321 With new consciousness and solidarity women can assert their rights to control resources and participate equally in decision making. Kabeer explains that women’s empowerment should be about their ability to make self-determined choices.322 Mayoux explains the need for empowerment as it initiates a series of virtuous spirals of economic
improvement and increased wellbeing for women and their families.323
However, a high demand for loans by women may be a sign of social pressure to access resources for in-laws or husbands, rather than an indicator of empowerment. Women need to solve gender inequality to avoid becoming dependent on loans to continue in low paid occupations with heavier workloads. To support women, microfinance institutions need to review repayment schedules and interest rates, so as to reflect the reality of women’s economic activities and life cycles.
Some studies on evidence of empowerment are described in the research reports of Cheston and Kuhn.324 Other studies by the International
Labor Organization (ILO) have also detected negative impacts including an increase in women’s workloads, debt traps and increased social pressure to
ensure loan repayments.325 Empowerment offers a mixed picture, showing
success as well as limitations. Some positive changes for women include increased participation in decision making, more equitable status in family and community, increased political power and rights and higher self-esteem.
321Batliwala, S. 1994, ‘The meaning of women’s empowerment: New concepts from action’. In Sen, G, Germain, A & Chen LC (eds.), Population Policies Reconsidered: Health, Empowerment and Rights, Harvard University Press, Boston.
322Kabeer, N. 1999, ‘Resources, agency, achievements: Reflection of the measurement of women’s empowerment’, Development and Change, 30(3).
323Mayoux, L. 2006b, Women’s empowerment through sustainable micro-finance: Rethinking ‘best practice’, viewed 24 June 2007,<http://www.enterprise-impact.org.uk/pdf/Women Empowerment throughSustainableMicrofinance.pdf>.
324Cheston, S. and Kuhn, L. 2002, Empowering women through microfinance, Draft 7/8/02, viewed 12 February 2007, <http://www.microcreditsummit.org/papers/empowering_final.doc.>. See also Buckley, ME 2000, Beyond the rhetoric of empowerment: A critical analysis of gender participation and empowerment, Dalhousie University, Halifax, viewed 28 June 2007, http://www.collectionscanada.ca/obj/s4/f2/dsk2/ftp03/MQ57274.pdf. and Roy, T.K. and Niranjan, S. 2004, ‘Indicators of women’s empowerment in India’, Asia Pacific Population Journal, 19(3), pp. 23-38.
325ILO, 1998, Women in the informal sector and their access to microfinance. Paper prepared by ILO, viewed 14 February 2007, <http://www.gdrc.org/icm/wind/uis-wind.html>.
Although women maintain business capabilities, microfinance institutions with the financial system approach are reluctant to adopt empowerment because they fear this will interfere with the efficiency and professionalism of their financial operations. They are concerned that it may lead them to include additional activities that could draw resources and energy away from their core business.
Empowerment for women in Indonesia is a need insofar as women play an important role in microbusiness. They have been very active, especially in Java, and have continued to dominate local trade since long before the colonial
period.326 There are secret female entrepreneurs as well as formally recognized
businesswomen; in total, more than one-third of Indonesian small and medium enterprises are in the hands of women. These businesswomen shape invisible,
unrecognized and unexploited societal resources.327 Although women maintain
capabilities in business; for many decades their role was influenced by the thought of inequality with men in technical, social and political spheres. If a problem is tackled merely at the technical level, such as women's lack of land, their lack of literacy, skills training, access to markets and limited access to agricultural information, without solving women’s social and political problems, inequality remains unchanged. There is a longstanding tradition that men are the head of the household, and this leaves women with little control over land and capital, even her own labor. It is therefore to be expected that men will resist any program intervention that seeks to lessen their privileges, power and control over women. Dewayanti and Chotim’s report found that women in business were often marginalized and exploited, which meant there was little progress by women in microbusiness.328 Strong efforts have been made by government and various women’s organizations to reduce women’s subordination, facilitate equal opportunity and promote gender awareness. Since 2000, the government and all local government institutions in Indonesia
326Brenner, S.A. 1998, The Domestication of Desire: Women, Wealth, and Modernity in Java, Princeton University Press, Princeton.
327Berninghausen, J. 2001, Towards Gender Conducive Planning in SME Development, ADB Technical Assistance SME Development, State Ministry of Cooperatives & SME, Jakarta.
328Dewayanti, R. and Chotim, E.E. 2004, Marginalisasi dan EksploitasiPerempuanUsahaMikro di PerdesaanJawa, Yayasan AKATIGA, Bandung.
have promoted gender mainstreaming so that all programs, policies and projects adopt a mainstream gender approach.
Microcredit programs, from commercial banks in Indonesia, mostly adopt supply side principles of customer’s bankability and creditworthiness as normally determined by banking regulations. Consequently, there is no explicit support for women, for example, in Bangladesh. However, Johar and Rammohan found that women play an active role in microbusiness. There is an unmet demand for microcredit by Indonesian women that cannot be met by informal sector lenders.329
The West Java P4K report in 2005 and Panjaitan et al’s study of subsidized microcredit found that 60% of the participants were women.330 A
case study in Lombok also indicates that the women who received loans increased their income substantially; this improved family nutrition and faithfully repayed their loans. The credit also helped its recipients to create work for other members of the family. Women involved in decision making with their husbands, had higher aspirations for their children’s education and were more likely to reduce fertility. Okten and Osili evaluate the 2000 Indonesia Family Life Surveys and conclude that community participation and family networks have an important influence on the individual's ability to access credit.331 The empirical results of their study also shed light on the importance of community participation for women and others in enhancing access to credit.
As will be discussed in Chapter 7, this study found the role of women in microfinance was changing. Generally speaking, the economic status of women is generally lower than that of men. The status of women tends to be better where the woman is the breadwinner in the family. Women enjoy a better social position in the community when they have a business and are supported by microfinance.
329Johar, M. and Rammohan, A. 2006, Demand for Microcredit by Indonesian Women, Working paper, Discipline of Economics, University of Sydney, Sydney.
330West Java RIGP Completion Report, Stage III 2005, SatkerPeningkatanPendapatanPetani- Nelayan Kecil (P4K) PropinsiJawa Barat danBanten, Lembang and Panjaitan, et al. 1999, ‘Gender, self-employment and microcredit programs: An Indonesian case study’, The Quarterly Review of Economics and Finance, 39(5), pp. 769-779.
331Okten, C. and Osili, U.O. 2004, ‘Social networks and credit access in Indonesia’, World Development, 32(7), pp. 1225-1246.
Trusted by the bank, women borrowers are respected in their own communities and enjoy a relatively higher social status. In patriarchal family structures however women need their husbands’ approval for any legal action. The role of women is nevertheless changing. Women in business make their own decisions and patriarchal patterns of behavior in the family are moderate. The double bind issue – lack of control over assets and problematic legal standing of women – make the risk of loans greater than for men, from the bank’s perspective. However, the banks and their officers respect women customers and afford them equal treatment.