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CSD NGO Women's Caucus Position Paper for CSD-8, 2000 FROM ACCESS TO EMPOWERMENT: GENDER ISSUES IN MICRO-FINANCE By LINDA MAYOUX October 19991 1. INTRODUCTION Micro-finance programmes targeting women have become a major plank of donor poverty alleviation strategies in the 1990s and funding is set to further increase into the next century under initiatives by CGAP and member donor agencies2. This expansion is dominated by the ‘financial self-sustainability paradigm’. The most detailed articulati
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  CSD NGO Women's Caucus Position Paper for CSD-8, 2000 FROM ACCESS TO EMPOWERMENT: GENDER ISSUES IN MICRO-FINANCE By LINDA MAYOUX   October 1999 1  1. INTRODUCTION Micro-finance programmes targeting women have become a major plank of donor poverty alleviationstrategies in the 1990s and funding is set to further increase into the next century under initiatives byCGAP and member donor agencies 2 . This expansion is dominated by the ‘financial self-sustainabilityparadigm’. The most detailed articulation of this paradigm is given in Rhyne and Otero 1994, andechoed in publications by USAID, DFID, World Bank, UNDP and increasingly by other members ofCGAP. This paradigm is also the dominant inspiration behind the Micro-credit Summit Campaigninaugurated in 1997. The ultimate aim is programmes which are profitable and fully self-supporting incompetition with other private sector banking institutions and able to raise funds from internationalfinancial markets rather than relying on funds from development agencies.Consonant with the concern for financial sustainability, accumulating evidence of women’s higherrepayment rates has led many programmes to target women. This evidence has been used by genderlobbies within the major aid agencies to justify arguments for female targetting and an emphasis onfacilitating women’s access to micro-finance programmes. Increasing women’s access to micro-finance is assumed to initiate a series of ‘virtuous spirals’ of economic empowerment, increased well-being for women and their families and wider social and political empowerment. The underlyingassumption is that these mutually reinforcing spirals of empowerment can occur following women’saccess to micro-finance without explicit support for women to increase their incomes, to defend theirinterests within the household or for wider social and political changes in gender or class relations.Attempts to mobilise women around feminist concerns are frequently explicitly dismissed as bothunnecessary and ‘maternalistic’. 2. VIRTUOUS SPIRALS OR VICIOUS CONSTRAINTS? CONCERNS ABOUT GENDER IMPACT The concept of empowerment itself is highly contentious (Mayoux 1998; Kabeer 1999). Nevertheless,even gender literature of donor agencies imposing the financial sustainability approach itselfanticipates that programmes will: ! significantly increase incomes from women’s own activities ! enable women to control (have a choice over use of) income from loans and activities generatedby loans ! enable women to negotiate improvements in their well-being within the household ! give women access to support networks which enable them to protect their individual andcollective interests at the local and macro-levels 1   Copies of the papers detailing research on which this article is based can be obtained from theauthor: L.Mayoux@dial.pipex.com 2   Consultative Group to Assist the Poorest is a major international collaborative initiative arising fromthe 1993 International Conference on Actions to Reduce Global Hunger and was formally constitutedin 1995. The 9 founding members are Canada, France, the Netherlands, the United States, the AfricanDevelopment Bank, the Asian Development Bank, the International Fund for Agricultural Development,the United Nations Development Programme\United Nations Capital Development Fund and the WorldBank later followed by Australia, Finland, Norway, Sweden, the United Kingdom and Inter-AmericanDevelopment Bank. Approximately US $200 million (including existing budget commitments) waspledged to Micro-Finance programmes for the poorest groups in low income countries, particularlywomen (World Bank, 1996). Actual amounts disbursed by individual CGAP members is howeverconsiderably higher.    2 Existing evidence of the impact on gender relations of micro-finance programmes is limited, and fewstudies investigate the impact of different programme strategies in any detail. Independent academicresearch has been done only on a few programmes in Bangladesh and India, and conclusions differamong these even for the same programmes (see overview Mayoux 1998). Most other documentedstudies are short 'gender-impact assessments' commissioned by Northern NGOs and donors.Nevertheless, despite its patchy nature, the existing evidence points to the need to question all theassumptions of beneficial impact.Some women do undoubtedly benefit substantially from some programmes, increasing their incomesand using this to raise their bargaining power in the household and their status in the community. It isimpossible to say for how many women, or in which contexts, this is occurring; but success stories arefound in programmes following all three approaches. Women in dynamic market contexts mayincrease their incomes without substantial support services. Women who are already less disad-vantaged may use micro-finance to further their own interests in their families and communities, andoften to improve the welfare of their families. Some programmes with an explicit gender strategy-particularly in India, but also in Sudan-had played a significant role as an entry point for mobilizingwomen around wider gender issues, and challenging domestic violence, alcoholism, and dowry.In most programmes, however, there were serious limitations to the degree to which women benefited: ! in some cases, significant numbers of women did not control loan use; ! most women were involved in low-paid traditionally female activities, and increases in incomewere small; ! women's responsibility for expenditure on household consumption and for unpaid domestic worklimited the resources and time they could invest in economic activity; ! micro-finance programmes were sometimes increasing domestic tension as men withdrew theirown incomes once women were eaming; or women struggled to retain control of their eamings.This had in some cases led to divorce, abandonment, and domestic violence ! group repayment pressures were sometimes increasing tensions between women; ! many (though by no means all) women's main concern was to increase their incomes and welfareof their families rather than wider social and political activity.It is likely that these negative impacts will be further reinforced by some of the commonly agreedprinciples of financial sustainability best practice currently being imposed by donors, in particular: ! high interest rates and service charges to cover costs of delivery ! rapid programme growth to benefit from economies of scale; ! reducing staff and staff costs through narrow focus on micro-finance;   ! reducing complementary services ! use of ‘voluntary’ contributions of clients and groups   to identify eligible borrowers, ensurerepayment and decrease costs of service delivery ! failure to incorporate empowerment indicators in Management Information Systems 3. FROM ACCESS TO EMPOWERMENT: SOME WAYS FORWARD FOR GENDER POLICY These limitations point to the widespread need for more explicit measures to address gendersubordination both at the enterprise and household levels. Innovative strategies in some programmes,including some of those attempting to be more financially self-sustainable, do point to cost-effectiveways of addressing empowerment issues. Elements of a gender policy would include: ã conditions of micro-finance delivery to support empowerment ã cost-effective complementary services ã institutional mainstreaming of gender policy  Conditions of micro-finance delivery affect women’s ability to use micro-finance to increase incomesand control these incomes. Current debates have been pre-occupied with the issue of interest rates,    3 the necessity to cover costs of service delivery and access questions. The current complacency aboutthe levels of interest which may be charged is misplaced, particularly in programmes accessingdevelopment funds claiming to maximise contribution to poverty alleviation and empowerment. Verylittle attention has been given to empowerment questions or ways in which both empowerment andsustainability aims may be accommodated. Failure to take into account impact on incomes also haspotentially adverse implications for both repayment and outreach, and hence also for financialsustainability. There are a number of ways in which women’s empowerment could be increased: ! repayment schedules and interest rates to maximise impact on incomes ! registration of assets used as collateral or purchased with loans in women’s names or in jointnames ! incorporating clear strategies for women’s graduation to larger loans ! 'multiple choice' options based on participatory consultation including loans for new activities,health, education, housing etc ! range of savings facilities which include higher interest deposits with more restricted accessFinancial sustainability requirements of cutting costs to a minimum has led many programmes toseriously cut complementary services. In the past some support services in some programmes,including business training and gender awareness, have been both expensive and had minimal impact.However this does not mean that complementary services are not needed or would not make asubstantial contribution to both all aspects of empowerment and repayment rates if they were betterdesigned. Possible ways forward include: ! initiating and supporting collective mutual learning on economic issues (eg skills, marketing,business development), other service provision (eg literacy, childcare) and social/politicalempowerment (eg legal rights) by clients/members ! linking with and supporting other organizations working for change in gender relations ! cross-subsidy from charging better-off clients for some services and/or charging all clients forsome services once they have reached a certain level of incomeAlongside these strategies for women clients/members there is also a need to mainstream genderand empowerment concerns throughout all the activities of a programme. There is a clear qualitativedifference in programmes where staff are gender aware and empowerment issues are raised as aroutine part of all interactions between staff and clients, and those where staff belittle gender issuesand fail to question gender stereotypes or suggest ways in which women could overcome gender-based problems. Mainstreaming gender is not necessarily resolved by women-only programmes, andthese do not necessarily challenge gender inequality. Importantly, there are definite benefits to mixed-sex programmes where male staff are also working on gender issues with men and women are able totake their concerns before a male organization. Mainstreaming gender will however require afundamental review at all levels: ! review of norms and regulations from a gender perspective ! integrating gender equitable policies into services for men ! empowerment indicators as integral part of MIS ! fully integrating gender and empowerment issues into all client/member and staff training,conditions of staff recruitment and staff incentives 4. ISSUES FOR DONORS Increasing impact will require changes not only at programme and NGO levels as indicated above, butcrucially in donor policy. Donors need to include empowerment concerns in all funding guidelines,monitoring and evaluation and programme supportThis in turn will require an approach to gender mainstreaming within donor agencies themselves whichgoes beyond rhetorical statements of intent in organizational mandates and equal opportunitiespolicies for staff. Finally micro-finance itself can only make a marginal contribution to women’sempowerment and poverty alleviation without explicit support for women’s grassroots movements    4 explicitly addressing gender inequality and mainstreaming the concerns of poor women in all macro-level economic and social policy. REFERENCES  Ebdon, R (1995) NGO Expansion and the Fight to Research the Poor: Gender implications ofNGO Scaling-Up in Bangladesh. IDS Bulletin, Vol 26, No 3, JulyGoetz, A.M. and R. Sen Gupta (1996) ‘Who Takes The Credit? Gender, Power and Control over LoanUse in Rural Credit Programmes in Bangladesh’. World Development, Vol 24 No 1, pp 45-63Kabeer, N. (1998) ‘Money Can’t Buy Me Love’? Re-evaluating Gender, Credit and Empowerment inRural Bangladesh’ IDS Discussion paper No 363, May.Mayoux, L. (1998a) ‘Micro-Finance Programmes and Women’s Empowerment: Approaches,Evidence and Ways Forward’ Discussion Paper, the Open University, Milton KeynesRESULTS (1997) ‘The Micro-credit Summit February 2-4, 1997 Declaration and Plan ofAction’RESULTS, Washington DCRhyne, E and Otero, M (1994) ‘ Financial Services for Micro-enterprises: Principles and Institutions”in Otero,M and Rhyne,E eds ‘The New World of Microenterprise Finance: Building Healthy FinancialInstitutions for the Poor’ IT Publications, London
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