FACT: Women account for the vast majority of people who receive microcredit loans. Studies have shown that women have higher repayment rates and are more likely to maintain sustainable businesses.
Since it was first developed in the 1970s, microcredit has emerged as a tool for empowering people living in poverty, especially women. It has enabled millions of women in developing countries to become self-reliant business owners who have more control of their lives and futures. The potential benefits of microcredit can be far-reaching and surpass mere increases in incomes. Successful initiatives serve to promote gender equality and reduce vulnerability created by poverty. Women who seek microcredit loans are often, but not always, in situations where they are the sole income earners, or must earn vital supplemental income, for their families. She may be widowed, a single mother, or the caregiver of a sick husband who is unable to work. In these cases, for example, microcredit programs enable women to become income-earning entrepreneurs who are decision-makers for their businesses as well as their families. As a result, they enjoy a boost in self-confidence; their contributions as business owners can improve their social status and, in some cases, help change traditional views of women’s roles in society. Studies have shown that increasing women’s incomes through such programs is more likely to result in benefits for the entire household than when men are the recipients of microcredit. Women balance the diverse needs of the family—food, clothes, education, and health—while also putting money aside to increase profits and establish a safety net for the future. Women, as recipients of microcredit, often forge alliances with other women to form networks of personal and professional support. Forming these “self-help” groups to mobilize savings and gain access to credit creates conditions for collective action by women. In many instances, such groups have been able to effectively stop domestic violence and abuse. Group meetings have become valuable forums for discussing both business and social issues, including those relating to health, education and human rights. Women’s empowerment, however, is not an automatic outcome of microcredit. There are complex obstacles—cultural and political—which keep women from accessing and benefiting from such programs and which deserve appropriate consideration. In some cases, women have suffered repercussions, including violence, as a result of their participation in microcredit programs. Challenging male-dominated environments while allowing women more personal freedom demands government and civil society action along many fronts. Microcredit programs must also go hand-in-hand with other provisions. Women borrowers must be allowed to control their loans and the incomes generated from their small businesses (microenterprises). It is also important to have complementary services that enhance the skills of borrowers, serving to strengthen and grow their ventures. Again, microcredit programs may not provide solutions to the very poorest in society—especially individuals who cannot afford to pay back their loans, and those who lack the entrepreneurial capabilities to start and maintain even a small household enterprise. To learn more about microfinance, please visit: Resources:
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