Women empowerment in Microfinance:

MICRO-FINANCE AND WOMEN'S EMPOWERMENT:

Micro-finance programmes targeting women became a major plank of

donor poverty alleviation and gender strategies in the 1990s. Literature
prepared for the international and regional Micro-credit Summits from
1997, many donor statements on credit and NGO funding proposals
present an extremely attractive vision of increasing numbers of
expanding, financially self-sustainable micro-finance programmes
reaching large numbers of poor women borrowers. Through their
contribution to women’s ability to earn an income these programmes are
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. Funding for programmes which
place prime emphasis on women's empowerment has decreased.

Donor funding has generally been conditional on compliance

with Guidelines for Best Practice aiming at financial sustainability.
However assumptions that any 'trickle up' from financially sustainable
microfinance in itself will be sufficient to bridge the gap left in 'trickle-
down' from macro-economic policies are misplaced. Female targeting
without adequate support networks and empowerment strategies may
merely shift all the burden of household debt and household subsistence
onto women. This has adverse implications not only for women
themselves, but also for children and the men's role in the household and
society. There are serious dangers that microfinance governed solely by
financial sustainability concerns will further disadvantage the very poor
who are excluded from such programmes without any alternative safety
nets.

Why should we worry? Gender impacts

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.

However an increasing body of evidence suggests that the

contribution of women's empowerment is generally less than assumed:

• Credit is also debt. Savings, loan interest and insurance premiums

are potentially also foregone investment in businesses, children’s'
education and health or necessary consumption.
 • In many cases women continue to work in saturated markets
earning very low incomes.
• Women's access to these very small incomes may lead to men
withdrawing their contribution to household expenses.
• Group formation for debt repayment may increase tensions between
women within the community and does not necessarily lead to
changes in women's status.

Empowerment versus Sustainability?

Women's empowerment is an important contribution to financial

sustainability through increasing demand for services and repayment
capacity.

However evidence indicates that negative impacts of programmes will be

further reinforced by unthinking replication of many principles of financial
sustainability 'Best Practice' currently is 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, ensure repayment and decrease costs of service
delivery
• failure to incorporate empowerment indicators in Management
Information Systems.

For women, by women – Profiles of six outstanding

women in Microfinance by BT

Microfinance Institutions (MFIs), in India and elsewhere, work mostly for poor
women—those labouring in the informal sector, those who are self-employed and
those who need a bit of help to become self-employed and survive. But, as the
sector grows bigger and bigger, managements of MFIs tend to be dominated by men
for a variety of reasons.
BT picks out six outstanding women who are at the top of their
organisations. Almost all of them are highly qualified and could have ended
up as whitecollar professionals, but were drawn into microfinance.
G. Padmaja Reddy
G. Padmaja Reddy
40, Managing Director, Spandana Sphoorty Financial

Organisation’s key objective: To be the leading service provider.

G.Padmaja Reddy almost had to wind up her first venture in 1998 but was saved at
the last minute with a loan from the Friends of Women’s World Banking. Today,
Spandana disburses about Rs 10 crore a day. Recently, when it wanted to raise Rs
200 crore, it got the money from PE players, through word of mouth, in 15 days.
Spandana is now the secondlargest MFI in India with 1.8 million loan accounts,
covering eight states. Its aim: to be present in 15 states with 5 million clients and
have loans outstanding of at least Rs 5,000 crore within three years.

Renana Jhabvala
Renana Jhabvala
66, National Coordinator, Self-Employed Women’s Association

Organisation’s key objective: To widen the scope for microfinance at SEWA. Getting to
know Renana Jhabvala is a gently enlightening process, like the subtle screenplays of Ruth
Prawer Jhabvala, her more famous writermother. The National Coordinator of SEWA has
postgraduate degrees in Mathematics (Harvard University) and Economics (Yale University)
and would have done her PhD had she not been hooked by SEWA’s work. Over the years,
she has helped set up many cooperatives of women. She has also been doing work in policy
advocacy and formulation. “Offering small loans to people doesn’t help. You need a lot of
other things,” she says.

Vijayalakshmi Das
Vijayalakshmi Das
55, Chief Executive, Friends of Women’s World Banking, India

Organisation’s key objective: Nurture start-up microfinance institutions. One can consider
her the mother of the microfinance industry,” says Sitaram Rao, a board member of SKS
Microfinance, India’s largest microfinance company. In 2000, when SKS was still dependent
on donors, Das, at FWWB India, gave it its first loan (FWWB India has done this with most
successful MFIs). Armed with two post-graduate degrees, Das started off as a management
consultant but joined FWWB India in 1989. FWWB India is now deep into issues like social
responsibility of MFIs and creation of sustainable livelihoods. She feels microfinance is also
about helping the poor take up sustainable livelihoods and create assets.

Jayshree Ashwinkumar Vyas

Jayshree Ashwinkumar Vyas
55, Managing Director, Shri Mahila Sewa Sahakari Bank (SEWA Bank)
Organisation’s key objective: To help poor self-employed women with financial
services and guidance on building assets and businesses. Jayshree Ashwinkumar
Vyas a.k.a. Jayshreeben has been devising and implementing innovative products
for 19 years as SEWA Bank’s Managing Director. Ex Examples: an integrated social
security scheme for women in the informal sector and a micropension for self-
employed women. “Rather than look at pure credit needs, we have taken a life-cycle
approach and address all the financial needs of our customers,” says Jayshreeben.
Her goal: to increase her depositor base in Gujarat to 1 million from 3,50,000 now.
Praseeda Kunam
Praseeda Kunam
33, CEO, Samhita Community Development Services

Organisation’s key objective: Innovative provision of economic, primary health

and essential social services. One of the principal architects of SKS Microfinance,
Praseeda Kunam joined after picking up an MBA and Masters in information
management from the US. From SKS, she moved to ABN AMRO Foundation to work
for MFIs and then pooled her savings to set up Samhita Community Development
Services in end-2007, at Rewa, Madhya Pradesh. Kunam is using open-source
software to track her customer household’s performance. Her goal: take
microfinance and primary health services to half a million poor households.

Kalpana Sankar
Kalpana Sankar
44, Managing Trustee & CEO, Hand in Hand

Organisation’s key objective: Entrepreneurship, capacity building and training. A double

doctorate in theoretical nuclear physics and women’s development, Kalpana Sankar laments
that India has many highly qualified professionals but few in the field of development. The
Tamil Nadubased Hand in Hand, set up in 1988, works in five interconnected areas. “We
have so far organised about 326,000 women into 22,613 self-help groups,” says Sankar, who
joined in 2004 and helped scale up the organisation. Hand in Hand is trying to consolidate its
microfinance institutions into a registered company.