Gender Action Mainstreaming for Empowerment to Change

empowerment vs


Women's empowerment through financial services is neither a new concern, nor is it a Northern-imposed agenda.

However the potential contribution of financial services to women's empowerment has often been undermined by gender-blind policies for financial sustainability and commercialisation.

It is often assumed that gender strategies are inappropriate in commercial banks and/or conflict with financial sustainability. However there are many ways in which contribution to gender equality and women's empowerment can be increased even within financial sustainability constraints. Some formal sector banks have been at the forefront of equal opportunities policies and product innovation.

Micro-finance and women's empowerment

The focus on women's empowerment and micro-finance is not new, nor is it a Northern imposition. Although empowerment definitions and frameworks have varied, the concern with gender equality has a long history in many countries.

It dates back to the 1970s and the beginnings of the international women's movement. In the 1980s many women's organizations worldwide set up credit and savings components as a way of both enabling women to increase their incomes and come together to address wider gender issues. In the 1990s micro-finance targeting women expanded rapidly because of evidence of higher loan repayment by women. In promotional literature it is frequently stated that women will be empowered by these services.

Since 1997 the second official goal of the MicroCredit Summit Campaign has been not only 'reaching women' but 'empowering' them. All donor agencies in CGAP have a gender policy. Most governments are signatories of the Convention on Elimination of Discrimination Against Women (CEDAW).

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Evidence of Gender Impact  

Gender impact assessments of credit programmes were conducted in India in the 1970s and already raised many concerns about the effects of increasing indebtedness and limited impact on incomes. Since then there have been many gender impact studies in different countries. The a range of different frameworks and methodologies together with inherent challenges of gender research make any firm comparative conclusions difficult.

Most studies find that some women, including some very poor women, have been able to set up enterprises, bring about change in gender relations in the household and become leaders in their community.

Nevertheless, the evidence indicates that all the linkages assumed between women's access to financial services and empowerment need to be questioned.

An important gap in gender impact studies is any consideration of potential negative gender impacts of financial services for men in diverting male income from household wellbeing and consolidating their ownership of household assets and resources.

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Financial Sustainability and commercialisation

From the mid-1990s there has been increasing emphasis on financial sustainability of micro-finance institutions in order to increase scale of impact. This was also because of decreasing aid budgets. The particular policies introduced included one or more of the following:

  • Rapid expansion and increasing the ratio of clients to staff
  • Group-based delivery and particularly mutual liability groups, to cut the costs of identifying and reaching clients and to increase the pressure for repayment.
  • Microfinance product design to maximize revenues and minimize risk for the programme: increasing loan interest rates, introduction of savings, shares and loan insurance.
  • Minimalist services: separation of microfinance from other development activities and cutting non-financial services to a minimum

The disciplines imposed by these financial sustainability criteria improved the cost-effectivess of some badly run microfinance programmes where claims of development and empowerment were mainly masks for inefficiency.

More recently entrance of large players like commercial banks, potential of new technologies have in some cases enabled more cost-effective delivery of tailored products. There are some very positive developments:

  • potential for much bigger and more rapid expansion
  • possibilities of a much greater range of products tailored to individual needs to increase contributions to livelihoods
  • participatory market research tools for product development
  • interest in consumer protection and financial literacy to protect clients against bad products

However there are some very worrying trends in micro-finance - as in the global financial sector:

  • the biggest players as they mature decrease the proportion of female clients.
  • rapid expansion of poorly designed products increases indebtedness and in some places has led to widespread default and in others to significant rise in client suicide.
  • there is little concern for client empowerment and benefit.
  • the combined impacts of many providers seeking the same 'profitable clients' can negatively impact on markets.

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Widening the sustainability debate

For the whole microfinance sector, financial sustainability must be seen not as the prime goal in itself but as one element in sustainable financial services for development. Different women need access to different types of financial services, some of which can be financially sustainable through following current 'Best Practice with a gender lens'. Even here there are many different ways of attaining financial sustainability. Some can even contribute to women's empowerment. Others have serious negative gender implications for many women.

The most serious consequences of the unthinking replication of some 'Best Practice' policies for short-term financial sustainability are for poverty reach and impacts for the poorest women. In MFIs claiming to have a development role and using development funds there is a need not only for a longer term conceptualisation of financial sustainability itself in combination with gender analysis, but to widen the sustainability debate to include:

  • Sustainability of client livelihoods and households which is dependent on women's empowerment and gender justice
  • Financial sustainability of financial institutions which can be achieved in many ways, some of which enhance client empowerment and some of which undermine it.
  • Sustainability of financial services and relationships which will continue to exist through linking of clients to diverse sources of finance, capacity-building of clients - even if any one FSP or NGO disappears.
  • Developmental sustainability: contribution to sustainable changes in inequalites, client wealth creation and civil society development which will continue even if financial services cease to be available.

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Sustainable strategies for empowerment: ways forward

However there are many ways in which contribution to gender equality and women's empowerment can be increased even within financial sustainability constraints through:
  • having a clear vision and commitment to gender equality and women's empowerment throughout their advertising and promotion in order to attract women clients and also change attitudes towards women's economic activities in the wider community.
  • this vision and commitment should also underlie the types of questions asked during loan assessment of both women and men e.g. about family circumstances.

Many formal sector banks have been at the forefront of product innovation. This does however require more than introduction of a few small loan products of the man activities. It requires:

  • mechanisms to enable women to graduate from small to larger loans without discrimination provided they have a good credit record.
  • loan products and sponsorship of enterprise competitions to encourage women's enterprise in non-traditional activities and also in services needed by women.
  • introduction not only of products specifically targeted to women, but revising the loan conditions for all products to ensure that there is no gender discrimination.
  • encouragement of male savings for education of girls, assets for their daughters to take with them on marriage so that men's responsibility for the future of their daughters is encouraged and enable female savings to be used for enterprise investment.

Banks generally use individual rather than group-based lending and may not have scope for introducing non-financial services. This means that they cannot be expected to have the type of the focused empowerment strategies which NGOs have. Nevertheless, they can be actively involved in collaboration with other service providers giving for example:

  • enterprise and business development services for women and providing loans to female trainees
  • legal aid services for women
  • reproductive health services for women

This collaboration could be formal partnerships or merely having literature available on these services for clients to read while they are waiting to see bank staff.

Banks can, and do, also enter into partnerships with NGOs and provide loans to groups or federations organised. This however presumes that the NGOs are not expected to be sustainable but have secure support for their organisational role.

Many formal sector banks have gender or equal opportunities policies for staff. Many also have childcare facilities and proactive promotion policies for female staff. Increasing the numbers of female staff is essential to increasing the numbers of female clients in many social contexts. Both female and male staff will however require gender training integrated into general induction training.

Most of these measures have minimal cost but would enable expansion of numbers of female clients and increase repayment rates. They would therefore enhance, rather than detract from, financial sustainability. The best way of integrating gender policy within existing practices and contexts can be assessed through a gender audit or a well-designed participatory process. This would entail some initial cost, but could be expected to recoup these costs through better outreach to good female clients.

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