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Term Report

Microfinance

Title

The Role of Microfinance in Women Empowerment in

Bangladesh

Prepared For

Hossain I. Adib

Course Instructor

Masters in Development Studies

United International University

Prepared By

Prepared By: Shanita Ahmed

ID: 125121003

Date of Submission

December29, 2012



Table of Content

Content Page

Abstract … … … … … … … … 03

1. Introduction … … … 04

2. Objective 05

3. Scope … … … … 05

4. Methodology 05

5. Looking on to The Issue … … … … … … … 06

5.1. Gender … … … … … … … 06

5.2. Basic Concept of Gender Conflict … … … … … 06

5.3. Women Empowerment … … … … … …… 06

5.4. Situation in Bangladesh… … … … … … … 07

5.5. Microfinance and Women Empowerment … … … … 07

5.6. Debate on Positive and Negative impacts of Microfinance on

Women Empowerment 08

6. Recommendation … … … … … … 10

7. Conclusion …… … … … … … 11

8. Reference … … … … … 12

9. Annex 14

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Abstract

The NGOs, in Bangladesh has come up with many different concepts to give the poor people

monetary stability. Among those all, microfinance is the most popular and effective concept

that has successfully put a remark of poverty alleviation. Bangladesh has one of the longest

histories with microfinance. Now, Bangladesh boasts a large number of well-known

microfinance institutions (MFIs) including Grameen Bank, BRAC, and the Association of

Social Advancement (ASA). Microfinance mainly aims to empower the rural women and it

has mostly successful in doing so. However, there are some small dark spots on the

successful surface of microfinance in case of women empowerment. Although, the spots are

in insignificant shape at present, but lack of attention can influence them to decrease the

positivity of the microfinance in women empowerment. In general, the objective of the report

is to measure the role of the microfinance in women empowerment. However, the specific focus

will be given in to identify the negative effect of microfinance in women empowerment.

Although microfinance as a concept is too wide with many wings to discuss on, but the report

will confine it within a defined perimeter.It will just focus on the negative impact of

microfinance in case of women empowerment. The report will not look for any primary data,

it will completely based on secondary data. Throughout the entire report, the effort will be

involved to bring out the actual scenario regarding the negative effect of microfinance only in

women empowerment. Micro-finance is a very useful development tool for women in

Bangladesh but the evidence showed the picture has a mixed view of both positive and

negative shades. Microfinance projects can therefore be strengthened by specifically

addressing gender issues. The microfinance projects that most successfully address the issue

of women’s status do their homework first regarding possible gender impacts. This will help

microfinance to address the other hidden issues that drop the negative spots on women

empowerment process. Thus microfinance can work more efficiently on their goal of womenempowerment process.

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1.0 Introduction

If development is the stair to reach the success then Bangladesh is definitely climbing up the

stairs toward success. In present time, any discussion for development focuses on poverty

alleviation by empowering the poor in different ways. The researchers, development workers

and donors are undertaking different sectors to stabilize the poor, this includes- shelter, food,

employment, education, women empowerment, child mortality, child labor, disaster

protection, domestic violence etc.

The last decade has been the notionofemergingmany new NGOs who are playing a vital role

in the development of Bangladesh. NGOs can reach to the mass people more deeply than

government organizations, and people tend to trust them more as they find NGOs beside

them in every necessity. As a result it becomes easier for the NGOs to execute any concepts

specially in case of monetary issues.

The NGOs, in Bangladesh has come up with many different concepts to give the poor people

monetary stability. Among those all, microfinance is the most popular and effective concept

that has successfully put a remark of poverty alleviation.A good definition of microfinance as

provided by Robinson is, ‘Microfinance refers to small-scale financial services for both

credits and deposits that are provided to people who operate small or micro enterprises where

goods are produced, recycled, repaired, or traded, provide services, and to other individuals

and local groups in developing countries, in both rural and urban areas’.

Bangladesh has one of the longest histories with microfinance. Now, Bangladesh boasts a

large number of well-known microfinance institutions (MFIs) including Grameen Bank,

BRAC, and the Association of Social Advancement (ASA). Microfinance mainly aims to

empower the rural women and it has mostly successful in doing so. However, there are some

small dark spots on the successful surface of microfinance in case of women empowerment.

Although, the spots are in insignificant shape at present, but lack of attention can influence

them to decrease the positivity of the microfinance in women empowerment.

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2.0 Objective

In general, the objective of the report is to measure the role of the microfinance in women

empowerment. However, the specific focus will be given in to identify the negative effect of

microfinance in women empowerment.

It is clearly visible and understandable that microfinance is working like a blessing for the rural

people. It has brought a drastic change in rural livelihood in terms of education, employment,

financial, social status as well as mental strength. On the other hand a big fact is waiting with

hidden appearance and that is no good comes without a bad. This is what actually happened in

case of microfinance practice in rural Bangladesh. In the course of availing all the positive

aspects of microfinance, the negative aspects have been ignored from the attention.

The focus of the study will be to find out the negative aspect of microfinance in case of women

empowerment. It is true that microfinance has empowered the rural women significantly, but

there is evidence that, sometimes the process of empowerment creates conflict in the household

and turns out the result innegativity. The report will try to bring out the actual situation in this

regard.

3.0 Scope

Although microfinance as a concept is too wide with many wings to discuss on, but the report

will confine it within a defined perimeter.It will just focus on the negative impact of

microfinance in case of women empowerment. The report will not look for any primary data,

it will completely based on secondary data. Throughout the entire report, the effort will be

involved to bring out the actual scenario regarding the negative effect of microfinance only in

women empowerment.

4.0 MethodologyThe report will be qualitative in nature and it will use the secondary data only to draw out the

scenario. The analysis portion will be compiled in the literature review focusing on the

following facts-

1. The existing gender conflict in rural household, where women face power of men in

case of financial matters

2. The overall women empowerment agenda and process of microfinance to manage the

poverty situation of Bangladesh

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3. The negative effects of microfinance in women empowerment process faced by the

rural household

5.0 Looking on toThe Issue

5.1 Gender

This term, of course, refers to the cultural constructions through which the differences and

relationships between the sexes are understood in a given society (cf. Ortner and Whitehead

1981). As such, the concept of gender has as much to do with men as with women. As

Flaxnotes, “From the perspective of social relations, men and women are both prisoners of

gender, although in highly differentiated but interrelated ways” (1987:630). Moreover, the

concept of gender extends beyond the social roles and relations of the sexes. As an analytical

tool, the concept of gender helps us look at the ideological constructs as well as everyday

practices that express, reproduce, and sustain unequal distribution power, prestige and

resources between boys and girls and between men and women in various spheres of society.

5.2 Basic Conceptsof Gender Conflict

Patriarchy is defined as the male-dominated structures and social arrangements where women

are systematically excluded from the product or economic spheres of life and where women’s

sexuality is always a matter of scrutiny. Here, dominance is not always coercive, rather it

leads to a passive consent of the subordinated group where this group (women) accept to be

dominated considering their status as natural (Hartmann 1981). Patriarchy is composed of six

structures: paid work, the household, the state, male violence, sexuality, and culture, to which

special attention must be paid (Walby 2010).

5.3 Women Empowerment

Empowerment is defined as an “institutional environment that enables women to take control

over their material assets, intellectual resources, and ideology” (Fernando 1997). Also, “a

process aimed at changing systemic forces which marginalize women in a given context.”

(Batliwala 1994).Women’s empowerment is thus defined by the United Nations Population

Information Network (POPIN) who have ‘based it on five components, which are as follows:

Women’s sense of self-worth. Their right to have access to opportunities and resources.Their

right to have the power to control their own lives, both within and outside thehome.Their

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right to have and to determine choices.Their ability to influence the direction of social

changes to create a better social and economic order, nationally and internationally.

5.4 Situation in Bangladesh

Women and men are by constitution equal of the People’s Republic of Bangladesh, but in

reality they are not (Islam, 2000).There is a gross disparity between women and men in every

sphere of life, especially in economic aspects, since the agricultural sector which dominates

the national economy is controlled mostly by men. Traditionally, men are the breadwinners

and economic dependence makes women socially backward and considered to be a burden on

the family. However, the subordination of women in Bangladesh is a consequence of the

existing patriarchal social system which determines power relations within households and

the bargaining power of household members through the organization of the family, kinship

and marriage, inheritancepatterns, gender segregation and associated ideologies (Khair, 1998;

Kabeer 1999; Naved, 2000). Women’s powerlessness arises from their illiteracy, lack of

awareness, poor knowledge and skills and also from their lack of self-esteem and confidence

(Lazo, 1995). Thus, even though women constitute almost half of the population in

Bangladesh, their status has been ranked the lowest in the world on the basis of twenty

indicators related to education, health, marriage, children, employment and social equality

(NCBP, 2000).

Bangladeshi women are the most battered in the world, an estimated 47 per cent have

suffered from different types of assault (Mahmood, 2004). As a result of these norms and

practices, women lack choice and agency decisions that shape their welfare (Mahmud, 2003).

Thus, most aspects of women’s lives, particularly women’s freedom of choice, decision-

making power and access to resources are controlled by the norms of the patriarchal society

(Sebstad and Cohen, 2002). Consequently, they are marginalized as production units for

bearing and rearing children (Ahmad, 2001). The empowerment of women could be the

principal strategy to tackle these crises and upgrade their status.

5.5 Microfinance and Women Empowerment

Microfinance attempts to address the lack of access to financial markets by the poor. It

focuses on providing micro-credit - small collateral free loans – to the very poor for self-

employment. Around two thirds of microfinance clients around the world are women. Under

the first rationale for investing in microfinance (integrated poverty program) the focus tends

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to be on women because they are often the poorest and are responsible for household welfare,

whereas in the second, women are the focus because they tend to have higher repayment

rates.

Microfinance empowers women by addressing their economic vulnerability through self-

employment and training. Research performed by Nobel laureate AmartyaSen indicates that

female support through work and educational strategies (the premise behind most

microfinance programs) leads to higher social standing and increased bargaining power

within their households. This claim is bolstered by Jude Fernando, who states that

improvement in economic status has a positive effect on women’s empowerment allowing

them to interact within a group, initiate educational programs, and pursue other dimensions of

social change (Fernando 1997). Laurie Garret, Pulitzer Prize-winning science journalist and

Senior Fellow in Global Health Council on Foreign Relations further claims that microcredit

is not only a tool for empowerment but a life-saving mechanism against spousal abuse and

disease.

5.6 Debate on Positive and Negative impacts of Microfinance on Women Empowerment

Positives-

One of the most important studies by Hashemi, Schuler and Riley with sample survey data

from interviews and observations of 120 households and a survey of 1,300 married women,

finds evidence of empowerment across several indicators: including mobility, reduced

domestic violence, purchasing, decision making, political awareness and activism. Similarly,

Kabeer’s mixed study of quantitative data from 700 households and the testimonies of 50

women, reports positive findings, that micro-finance had given women ‘courage and

‘confidence in their dealings with others,’ promoted ‘greater social inclusion,’ reduced

‘tension, violence and conflict within the household’ increased ‘voice’ in household decision-

making, created ‘secret savings’, and ‘asset accumulation’, all of which serve to strengthen a

woman’s break-down position.

There is strong evidence for micro-finance participation creating a suitable environment for

public action to thrive. Several studies concur in finding an increase in social capital among

women participants leading to practical collective action against injustices Kabeer (2011),

Moniruzzaman (2007) and Baylugen(2008).Osmani’s positive study says that inter-household

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bargaining power being a key factor for Bengali women. This is strongly linked with the

‘breakdownposition,’ the position a woman would find herself in if the marriage broke down.

Negatives-

One of the main studies that considers micro-finance to be disempowering is Karim’s

ethnographic work which details that it is inappropriate to load up poor women with debt as a

vehicle for development, and states that men control 95% of these loans. Karim advances the

concept ‘the economy of shame’ to explain her findings that rural women are manipulated by

micro-finance owing to their relative insecurity and lack of choices.

These findings are echoed by A. Rahmanas he said that women’s ‘positional vulnerability’

relative to men encourages NGO’s to target women for reasons of profit. Both Rahman andKarimare concerned that granting loans to women that are then appropriated by men,

reinforcing existing patriarchal norms. Cons and Paprocki share some of these views in their

work carried out in Arampur in Northern Bangladesh. They concurreports of abuse by male

field officers and that this adds up to a ’constriction of choices and options’ rather than the

reverse.

Although women are increasingly being targeted in microfinance and microenterprise

projects, this does not necessarily mean that gender relations are being taken into account.

Rather, targeting women raises a host of questions about the context in which women are

operating their businesses or handling microfinance. These questions need answering if we

wish to understand whether women are able to use the services and make the anticipated

improvements in their livelihoods (Mayoux 1999).No intervention can have neutral effects

when the players do not start as equals. Women face a variety of obstacles or constraints to

taking and repaying credit, starting up and developing their businesses, and responding to

policy incentives. These obstacles are the outcome ofexisting gender relations. The matrix

below identifies some of the obstacles which might prevent women from utilizing

microfinance or business development services in the ways they might wish. These

constraints interact and reinforce each other:

• Individual refers to constraints thatoperate because of the woman’ sownendowment of

skills, experience,knowledge, confidence, etc.

• Household refers to social relationswithin the household which are mostlytalked of in

relation to husbandsandwives.

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The relevant table has been given at appendix part.

Thus there are studies large and small, qualitative and quantitative, showing both positive and

negative responses to micro-finance and its empowerment potential. There are several key

areas where authors‘ findings differ; these important contested areas of debate are: loan

control; violence, gender relations, mobility, education; and the concept of ‘do no harm’.

6.0 Recommendation

Empowerment cannot just be about women’s ‘choice’ but must accept that these choices

must incorporate an assessment of the values embedded in agency and choice, values which

reflect the wider context. On the basis of the above discussion about the situation the

following recommendations can be drawn to reduce the negative effect of microfinance incase of women empowerment. These are as follows-

Root level promotional activities to make the rural people understand about the

positivity of microfinance to improve the financial condition of the family

Increasing the number of field workers to reach to every household. So that,they can

deal every familypersonally and counsel them to motivate for women empowerment

through microfinance

A wider awareness has to be created to make both men and women aware about the

facilities of gender equality issues

Design microfinance loan scheme in such a way which will include the participation

of men along with the women. In order to ensure women empowerment, the loan will

be given in a proportionate way where the majority of both loan responsibility and

consequent authority will be women’s

The flow of loan amount can be increased with not only the rate of repayment, but

also considering the increasing productivity of the business run by the loan of

microfinance. This will motivate the entire household to support the woman to

increase the productivity of the business

Microfinance institutions can open a sub-wing of monitoring the emerging domestic

violence or male domination regarding that particular loan amount

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7.0 Conclusion

Micro-finance is a very useful development tool for women in Bangladesh but the evidence

showed the picture has a mixed view of both positive and negative shades. Microfinance

projects can therefore be strengthened by specifically addressing gender issues. The

microfinance projects that most successfully address the issue of women’s status do their

homework first regarding possible gender impacts. They also incorporate specific gender

indicators in their activity monitoring. Regular monitoring helps to track the effectiveness of

the microfinance activity and helps identify potential negative impacts on women early so

that they can be addressed.Strategies to facilitate a positive impact on women form a basis for

tailoringmicrofnance policies, practice and products to better address gender equality and

promote women’s empowerment. Crucial components of a proactive women’s empowerment

strategy include training in gender analysis for MFI staff members, the utilization of female

loan officers and the provision of equal employment and management opportunities for

women. MFIs should also incorporate empowerment indicators, such as the proportion of

women clients in the loan and savings portfolio, into client monitoring and assessment

processes.

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8.0 Reference

1. Ahmad, F. (2001) Gender Division of Labour: Bangladesh Context, Steps Towards

Development, 6 (1): 7-26.

2. Batliwala, Srilata. (1994) The Meaning of Women’s Empowerment: New Concepts

from Action In Sen, G., Germaine, A. and Chen, L. C. (Eds) Population Policies

Reconsidered: Health, Empowerment and Rights. Harvard Center for Population and

Development Studies.

3. Bayulgen, O. (2008) ‘Muhammad Yunus, Grameen Bank and the Nobel Peace Prize:

What Political Science Can Contribute to and Learn From the Study of Microcredit.’

http://ehis.ebscohost.com.libezproxy.open.ac.uk/eds/pdfviewer/pdfviewer?

sid=717cb759-1b93-469b-8b8f-72f010464cf6%40sessionmgr113&vid=2&hid=116

4. Fernando, Jude L. (1997) “Nongovernmental Organizations, Micro-Credit, and

Empowerment of Women.” Annals of the American Academy of Political and Social

Science,Vol.554, The Role of NGOs: Charity and Empowerment, 150-177.

5. Hartmann H (1981). The unhappy marriage of marxism and feminism: toward a more

progressive union. In: Sargent. L (Editor). Women and revolution: the unhappy

marriage of marxism and feminism. Boston: South End Press.

6. Hashemi, S. Schuler, S. Riley, A. (1996) ‘Rural Credit Programs and Women’s

Empowerment in Bangladesh’ World Development, Vol. 24, No. 4.

7. Islam, M. (2000) ‘Women Look Forward’ p. 4, in: M. Ahmad (ed.) Bangladesh in the

New Millennium. Dhaka: Community Development Library.

8. Khair, S. (1998) Struggling against the ‘Doldrums’: the Public-Private Dichotomy and

the Bangladesh Women, Social Science Preview, XV (1): 101-118.

9. Kabeer, N. (1999) Resources, Agency, Achievements: Reflections on theMeasurement of Women’s Empowerment. Development and Change, 30 (3):13-24.

10. Kabeer, N. (2011) ‘Between Affiliation and Autonomy: Navigating Pathwaysof

Women’s Empowerment and Gender Justice in Rural Bangladesh.’ Development and

Change 42(2): 499–528. International Institute of Social Studies. Published by

Blackwell Publishing.

11. Karim, L.(2008) ‘Demistifying Micro-credit. The Grameen Bank, NGOs, and

Neoliberalism in Bangladesh.’ http://bangladesh-web.com/dbimages/212040-0 article

%20on%20Micro%20Credit.pdf

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12. Mahmood, S.A.I. (2004) HIV/AIDS: Socioeconomic Impact on Women, The

Independent, 24 December Issue, Dhaka.

13. Mahmud, S. (2003) Actually How Empowering is Micro-credit? Development and

Change, 34: (4): 577-605.

14. Moniruzzaman, M. (2007) ‘Group Formation and Empowerment: The Case of

BRACandProshika in Bangladesh.’ INTELLECTUAL DISCOURSE, VOL 15, NO

1, 358.

15. Mayoux, L. (1999) Questioning virtuous spirals: Micro-finance and women's

empowerment inAfrica. Journal of International Development 1 1 (7): 957-984.

16. Naved, R.T. (2000) Intra-household Impact of the Transfer of Modern Agricultural

Technology: a Gender Perspective, International Food Policy Research Institite,

Washington, D. C.

17. NCBP (2000) Gender Equality, Development and Peace for the Twenty-first Century

- NGO Committee on Beijing Plus Five. Dhaka: Women for Women.

18. Ortner, Sherry B., and Harriet Whitehead. Sexual meanings, the cultural construction

of gender and sexuality. Cambridge: Cambridge University Press, 1981.

19. Osmani, (2007) ‘A breakthrough in women’s bargaining power: The Impact of

microcredit.’ Journal of International Development J. Int. Dev. 19, 695–716

20. Robinson, Marguerite S, ‘Microfinance: the Paradigm Shift From credit Delivery in

Sustainable Financial Intermediation’, in Mwangi S Kimenyi, Robert C Wieland and J

D Von Pischke (eds), 1998, Strategic Issues in Microfinance, Ashgate Publishing:

Aldershot.

21. Rahman, A. (1999), ‘Women and Micro-credit in Rural Bangladesh: Anthropological

Study of the Rhetoric and Realities of Grameen Bank Lending.’ Westview Press.

Boulder, CO.

22. Sebstad, J. & Cohen, M. (2000) Microfinance, Risk Management, and Poverty. AIMS

Paper, Management Systems International, Washington, D.C.

23. Yuge, Yasuhiko .The Current Situation of Microfinance in Bangladesh: A Growing

Concern about Overlapping Loan Problems – From a Field Visit to Rajshahi and

Comilla. CENTER FOR EMERGING MARKETS ENTERPRISES STUDENT

RESEARCH SERIES : The Fletcher School, Tufts University, March 1998.

24. Walby S (2010). Structuring patriarchal societies. In: Giddens A and Sutton PW

(Editors). Sociology: Introductory readings. 3rd

ed. Cambridge: Polity Press. 30-35.

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9.0 Annex

1. Table: Gender-based obstacles in microfinance and microenterprise

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