Do microfinance schemes shape gender relations in developing countries? Insights from a critical review of the literature
Over the past three decades or so, there has been significant interest on the role of microfinance in promoting socio-economic development, especially in developing countries. Of particular importance to this trend has been the well-documented emphasis on how microfinance can shape gender relations, empower women and ultimately address gender inequality. Many researchers and practitioners have argued that providing access to credit for women is a quintessential approach to strengthening their bargaining position within the household (Guérin, 2010). Others have also stressed the point that microfinance serves as an avenue to developing income-generating activities which could release women from power structures in which their lives are domiciled (Khandker, 2003; Pitt et al., 2006).
While the role of microfinance has almost unquestionably been hailed, we also need to ask the extent to which micro credit shapes gender relations in developing societies. In this review, we aim to bring to the fore a more nuanced perspective relating to the certainty held in the mainstream academic literature and policy circles regarding microfinance and women empowerment discourse. We focus specifically on examining the role of microfinance in shaping gender relations.
Micro-finance programs targeting women have become the central means of donor poverty alleviation strategies. In view of the renewed focus on post-millennium development goals (MDGs) poverty reduction strategies, there is the likelihood that donor agencies might increase funding in the next coming decades to support different initiatives. In this paper, we critically review the evidence of the nexus of microfinance and gender inequality in developing societies. One aim for providing and reaching out to women with credit methodologies is to increase women’s bargaining power and challenging existing gender subordination thereby releasing them from power structures which dominate their lives. This paper suggests that relying on microfinance alone, as a strategy in addressing gender inequality in developing societies is insufficient. Drawing on several empirical cases on the microfinance literature from numerous contexts, we show that the empowerment potentials of microfinance schemes in addressing gender inequality are not straightforward. Failure to incorporate other household members (men) and a lack of recognition of the socio-cultural elements in societies constrains the empowerment potentials of microfinance programs. We conclude by suggesting pathways for improving the design and implementation of microfinance schemes in relation to addressing gender inequality in post-2015 development era.
There is a dearth of evidence to support the claim that microfinance schemes offer a means in empowering poorer women groups although actual empowerment does not follow a straight course. The purported areas of economic, enhanced decision-making and wellbeing as well as social or political empowerment are ambiguous and show uneven outcome. Our review also suggests that challenges of loan repayment, the financial sustainability paradigm, a lack of gender strategy to incorporate men and explain the agenda behind given credit to women as well as little recognition of the cultural context have all contributed to worsening the plights of poor women groups. In view of the renewed focus on post-MDGs and poverty reduction strategies, the following recommendations are proposed in the design of microfinance schemes. The relevance of the larger social matrix suggests that microfinance needs to be designed not only as an economic model but also as a holistic approach to development, in which the role of culture becomes essential.