the role of microfinance institutions towards empowerment

THE ROLE OF MICRO FINANCE INSTITUTIONS TOWARDS

EMPOWERMENT OF WOMEN: A CASE STUDY OF FINCA

MICROFINANCE INSTITUTION IN LUSAKA DISTRICT

By

STUDENT NO: 000-540

GORRETTE MWEWA

A THESIS PROPOSAL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

AWARD OF A BACHELOR OF ARTS IN BANKING AND FINANCE BY CAVENDISH

UNIVERSITY ZAMBIA

SUPERVISOR: MR. N SERENJE

Year: 2019

i

ABSTRACT

The study focuses on the assessment of contribution of small loans in enhancing the economic

empowerment to women micro-entrepreneurs obtaining loans from MFI’s whereas FINCA in

Lusaka district was used as the case study. The study aimed to assess whether small loans

contribute to women economic empowerment in relation to their current socio-economic

activities they engage in and also to determine relationship between credits offered by FINCA

and the empowerment attained by women entrepreneurs receiving such credits. The samples

were collected from women entrepreneurs obtaining loans from FINCA offices in Lusaka district

by questionnaire where about 50 questionnaires were administered and also from management

staff perspective data were collected through interview.

The study revealed that the loans given by FINCA have an impact on women entrepreneur’s

lives as agreed by 98% respondents as it enables them to grow as business women and also

workers in the society. The positive Pearson correlation of 0.648 was obtained between credits

offered by FINCA and women economic empowerment which indicates large strength between

the variables with coefficient of determination of 0.42 (42%). One of the recommendations

drawn from the study was that that seminars and trainings should be given to women

entrepreneurs on how to effectively manage their loans.

ii

DEDICATION

I would like to dedicate this research to my husband Mr. Chiukepo Gondwe who has been very

helpful and supportive both emotionally and financially.

iii

ACKNOWLEDGMENT

I wish to express my sincere thanks to Finca Zambia Management for providing me with all the

necessary facilities for research.

I am also grateful to my supervisorMr. Serenje. I am extremely thankful and indebted to him for

sharing expertise, and sincere and valuable guidance and encouragement extended to me.

I take this opportunity to express gratitude to all of the department facultymembers for their help

and support. I also thank my parents Mr. and Mrs. Mwewa for the unceasing encouragement,

support and attention. I am also grateful to my partner who also supported me during this

venture. I also place record, my sense of gratitude to everyone, who directly or indirectly, have

lent their hand in this venture.

iv

LETTER OF AUTHENTICATION OR DECLARATION

I Gorrette Mwewa declare that the research work reported in this thesis is my own, except

where otherwise indicated and acknowledged. It is submitted in partial requirement for the award

of a degree of Bachelor of Business Administration by Cavendish University Zambia. The thesis

has not either in whole or in part been submitted for a degree or diploma to any other university

or institution.

Signature of Student: ……………………………… Date: ………………

v

TABLE OF CONTENTS

ABSTRACT .................................................................................................................................................. i

DEDICATION............................................................................................................................................. ii

ACKNOWLEDGMENT ........................................................................................................................... iii

LETTER OF AUTHENTICATION OR DECLARATION ................................................................... iv

LIST OF ACRONYMS AND ABBREVIATIONS .................................... Error! Bookmark not defined.

LIST OF TABLES ................................................................................................................................... viii

LIST OF FIGURES ................................................................................................................................... ix

CHAPTER ONE ......................................................................................................................................... 1

INTRODUCTION ....................................................................................................................................... 1

1.1 Background to the Study ..................................................................................................................... 1

1.2 Problem Statement .............................................................................................................................. 3

1.3 Research Purpose ................................................................................................................................ 4

1.4 Objectives of the Study ....................................................................................................................... 4

1.4.0 General Objective ........................................................................................................................ 4

1.4.1 Specific Objectives ...................................................................................................................... 4

1.5 Research Questions ............................................................................................................................. 4

1.6 Significance of the Study .................................................................................................................... 5

1.7 Delimitation of the Study .................................................................................................................... 5

1.8 Limitations of the Study ...................................................................................................................... 5

1.9 Operational Definitions ....................................................................................................................... 6

1.10 Organisation of the Study ................................................................................................................. 6

CHAPTER TWO ........................................................................................................................................ 7

LITERATURE REVIEW .......................................................................................................................... 7

2.1 Overview of the Literature .................................................................................................................. 7

2.2 Theoretical Framework ....................................................................................................................... 7

2.2.1 Conceptual Definitions ................................................................................................................ 7

2.2.2 Theoretical Analysis .................................................................................................................... 9

2.4 Empirical Review ................................................................................................................................ 9

2.4.1 Impact of MFI on Women Empowerment in Zambia .................................................................. 9

2.4.2 Developing countries: Microfinance and Women Empowerment ............................................. 13

2.4.3 Summary of Studies Reviewed .................................................................................................. 16

2.5 Research Gap Identified .................................................................................................................... 16

vi

2.6 Conceptual Framework ..................................................................................................................... 17

CHAPTER THREE .................................................................................................................................. 18

RESEARCH METHODOLOGY AND DESIGN .................................................................................. 18

3.1 Overview ........................................................................................................................................... 18

3.2 Research Design ................................................................................................................................ 18

3.3 Research Area and Population .......................................................................................................... 18

3.4 Sampling Techniques ........................................................................................................................ 19

3.4.1 Sample Size ................................................................................................................................ 19

3.4.2 Sampling Procedures.................................................................................................................. 19

3.5 Research Variables ............................................................................................................................ 19

3.6 Methods of Data Collection .............................................................................................................. 20

3.7 Data Collection Instrument ............................................................................................................... 20

3.8 Data Analysis Procedures ................................................................................................................. 20

3.9 Ethical Considerations ...................................................................................................................... 21

3.10 Validity and Reliability ................................................................................................................... 21

CHAPTER FOUR ..................................................................................................................................... 23

PRESENTATION OF FINDINGS .......................................................................................................... 23

4.0 Chapter Overview ............................................................................................................................. 23

4.1 Respondent Characteristics ............................................................................................................... 23

4.1.0 Age ............................................................................................................................................. 23

4.1.2 Marital Status of Respondents ................................................................................................... 24

4.1.3 Education Level ......................................................................................................................... 24

4.1.4 Nature of Business That the Women Entrepreneurs Engage ..................................................... 25

4.4 Microfinance Institutions and Women Economic Empowerment .................................................... 26

4.4.1 Loan Accessibility...................................................................................................................... 26

4.4.2 Pearson Correlation between the Credits Offered By FINCA and Empowerment by Women

Entrepreneurs ...................................................................................................................................... 27

CHAPTER FIVE ...................................................................................................................................... 29

DATA ANALYSIS ........................................................................................ Error! Bookmark not defined.

5.0 Chapter Overview ............................................................................................................................. 29

5.1 Discussion of Major Findings ........................................................................................................... 29

5.3. Summary of the Findings ................................................................................................................. 29

CHAPTER SIX ......................................................................................................................................... 31

vii

CONCLUSION AND RECOMMENDATIONS ........................................ Error! Bookmark not defined.

6.0 Conclusion ........................................................................................................................................ 31

6.2 Policy Implications ........................................................................................................................... 31

6.3 Recommendations ............................................................................................................................. 31

6.4 Areas for Further Studies .................................................................................................................. 32

LIST OF REFERENCES ......................................................................................................................... 33

QUESTIONNAIRE ................................................................................................................................... 36

viii

LIST OF TABLES

Table 4. 1: Age of Respondents .................................................................................................... 23

Table 4. 2: Marital Status of Respondents .................................................................................... 24

Table 4. 3: Highest Academic Level of Respondents ................................................................... 25

Table 4. 4: Women Entrepreneurial Activities ............................................................................. 26

Table 4. 5: Respondents Results on the Impact of Small Loan from FINCA in Their Life ......... 26

Table 4. 6: Pearson correlation between credits offered by FINCA and women economic

empowerment ................................................................................................................................ 27

ix

LIST OF FIGURES

Figure 2. 1: Conceptual Framework ............................................................................................. 17

The Role of Microfinance Institutions Towards Empowerment of Women | Gorrette Mwewa

1

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Almost half a century, the empowerment of women has been associated with the development of

economies around the world. Empowerment of women entails leadership in household decision-

making, improved access and control over household resources including physical and financial

assets, enhanced mobility, and acquisition of skills and knowledge (Osmania, 2007; Kabeer,

1999; Sen, 1990). In developing economies, microfinance and microcredit have increased

women’s economic independence and power. For the last twenty years, microfinance institutions

(MFIs\) have gained importance with the successful implementation of microcredit programs

such as the FINCA, Credit Express, Bayport and many more others. These programs are

primarily aimed at people who have difficulty acquiring credit due to their inability to provide

collateral, a requirement of formal lending institutions. By easing the access to credit, MFIs have

reduced the cycle of poverty by eliminating private moneylenders who charge exorbitant interest

rates in lieu of collateral. Such programs are especially vital for the women folk because they

seldom have ownership of land or other physical assets in most of the developing world. As

such, MFIs provide credit and allow women to engage in productive activities leading to their

empowerment (Mohindra & Haddad, 2005).

Bouman (2004) observed that offering of microfinance services has a long history that depends

on community groups’ credit functions that are largely channeled through trust-bonded

mechanisms. Nevertheless, literature has it that the level of popularity of the current

microfinance industry evolved from the success of of Yunus Mohammed with the Grameen

Bank, and the then innovation in village banking. One way in which microfinance services

gained popularity was by just challenging the failure of the traditional formal banking approach

to respond to the multiplicity of unmatched financial demands by the poor both in urban and

rural set-ups. These events were a success at setting up a turning point in the global microfinance

landscape. These successsfully set up a foundation which was ideal for multiple microfinance

services which for example included micro-credit, micro-saving, micro-insurance, and micro-

leasing supported by non-financial services (Brett, 2006).


2

These successes are said to have emerged from two interlinked factors explained below. Firstly,

the formal financial sector was segregative and ineffective in targeting the poor. But the

commercial banks in the developing world that were established during the period after World

War II suffered from the colonial legacy of financial service provision to urban areas and export-

led large-scale projects that excluded the poor (Brett, 2006). The poor that were mostly excluded

were the women.

Secondly, concessionary loans which were borne as donor attempts under development financial

institutions even affected the poor people more. The reason behind this was that such loans had

only targeted specific agricultural sectors in society such as cotton and coffee in Uganda where

only the rich had advantages. But with the schemes attached to government officials in most

countries by then, thus selection of beneficiaries only benefited the rich and their political

supporters more.

The end results were that MFI provided an avenue for a diversified financial landscape with a

multitude of financial service functions (Brett, 2006). Their popularity among both practitioners

and poor clients then grew from its poor and vulnerble people, women in particular. Since the

1990s, the expansion of microfinance as both a replacement of and a complementary service to

commercial banking grew more in most countries. With a typical feature of proximity to clients,

speed and flexibility of services, diversity of services and products, and mutual reciprocity,

microfinance continues to grow into a popular industry. In Zambia, the number of major MFI has

grown excessively from a single digit to double. Perhaps even triple digits considering from

micro to macro level. For example, According to the Microfinance Gateway (2007) there were

98 MFI in Zambia. This number was good enough to help in empowering the women in the

Hospitality industry who are vulnerable. To date however these MFI have continued to increase

such that it becomes important to determine their role and performance.

Simanowitz et al, (2007) as cited in Asiamah et al (2007), microfinance is a key strategy in

reaching the Millennium Development Goals (MDGs). The objectives of microfinance among

others are that the poor, mostly women (because of their engagement in unpaid work) need

access to productive resources with financial services being a key resource. Microfinance can

have significant impact on cross cutting issues such as women empowerment thereby promoting


3

gender equality. Microfinance schemes usually lend small short term loans to very poor micro-

entrepreneurs (very poor micro-entrepreneurs are women). Loan repayment is always guaranteed

by group members collectively and access to future credit or loans is contingent on successful

repayment. Hence peer monitoring and the prospect of subsequent larger loans act as strong

incentive for repayment (Ray, 1998). According to the population and housing censuses

conducted so far in Zambia about 83.9% of the working population is found in the private

informal sector (Labor Force Survey, 2014). The sector is characterized by women dominance

and lack of access to credit from the traditional banking institution due to the question of

collateral security. Therefore, the effectiveness of any microfinance scheme or program should

be assessed based on how it has been able to empower women economically, politically and

socially.

Increasing evidence shows that not only is women overrepresented among the poorest people but

is also more likely than men to spend their incomes on the welfare of children and dependents.

Therefore, poverty reduction program which target women are likely to be more effective.

Empowering women is the second stated goals of microcredit summit campaign. There is also

the evidence of significant potential for microfinance to enable women to challenge and change

gender inequalities at all levels. There is now the growing need to rethink the current best

practices to ensure that women have equal and possibly preferential access to all types of

financial services (Mayoux, 2006). Many microcredit program have targeted one of the most

vulnerable group in society-women who are in households which own little or no asset. By

providing opportunity for self-employment, many studies have concluded that these program

have significantly increased women’s security, autonomy, self-confidence and status within their

households (Mayoux, 2006). Is this the case in Zambia?

1.2 Problem Statement

According to Baden (1997), women’s empowerment refers to ‘the processes and outcomes of

women’s struggle in changing their well-being and entitlement status, individually and

collectively,against hitherto gendered livelihood practices of that disadvantaged them. The

empowerement and improvement of the women’s involvement in business is expected to be one

of the major mandates of the MFIs in Zambia. This is expected to be the case as many Non


4

Governmental Organizations (NGO)s, MFIs inclusive, have been born so as to help push for

gender equality balance.

However, despite the emergence and increase in the number of MFIs in Zambia, there has been

little knowledge in their role towards empowering of women in Small and Medium

Entrepreneurship although many policies and programmes in Zambia are usually designed with

due concern for practical Gender needs. It therefore becomes critical to close this gap through the

examination of the role of micro finance institutions towards empowerment of women by using

FINCA microfinance institution in Lusaka district Zambia.

1.3 Research Purpose

The purpose of this study is to determine the role of MFIs towards the empowerement of women

participating in Small and Medium Entrepreneurship in Zambia. The study will contribute in

examining the role of microfinance institutions on how women can be empowered in Zambia so

as to contribute to the economic growth of the nation at large.

1.4 Objectives of the Study

1.4.0 General Objective

This study generally attempts to examine the role of microfinance institutions towards

empowerment of women in Zambia.

1.4.1 Specific Objectives

The specific objectives included are:

a) to understand the role of MFIs towards empowering of women in Zambia

b) to access the performance of MFIs in the empowerement of women in Zambia.

c) to identify issues that women face in accessing services from MFIs in Zambia

1.5 Research Questions

Based on the identified gaps emanating from literature, this study seeks to answer the following

questions:

a) What is the role of MFI in empowering women in Zambia?

b) How have MFIs performed towards the empowering of women in Zambia?

c) What issues do women have in accessing of services by MFIs in Zambia?


5

1.6 Significance of the Study

Microfinance and gender issues inform geo-politics of today. Therefore, any government or

institution which ignores them does so at its own peril. As such the findings of the study may be

tapped by policy makers and institutions especially those in the microfinance services to develop

policy framework which will take care of gender issues in micro financing in Zambia. This study

intends to be a pace setter for similar studies to be embarked on in other parts of Zambia.

This study is significant in several ways. Firstly, it will attempt to unearth the evidence that

exists partaining to the relationship between existence of MFI and women empowerment in

Zambia. Secondly, the study will explore the evidence that is there on the performance that MFI

have had on women empowerment. This will bridge the gap between the existing evidence and

past conflicting research results about MFI and women empowerment. Furthermore, the research

results will contribute to the body of knowledge that is there about MFI concept and

recommendations will be useful for Government policies and other interested parties.

1.7 Delimitation of the Study

This study will be undertaken within Lusaka District in Zambia. This is mainly due to ease

accessibility, lack of research funding and other factors beyond the control of the researcher.

Lusaka was also selected on the basis that there exists more MFIs than any city in Zambia. Thus,

the results are expected to be more precisely generalized to other cities with less descrepancy.

1.8 Limitations of the Study

This study will be undertaken within Lusaka District in Zambia. This is mainly due to ease

accessibility, lack of research funding and other factors beyond the control of the researcher.

Lusaka was also selected on the basis that there exists more MFIs than any city in Zambia. Thus

the results are expected to be more precisely generalized to other cities with less

descrepancy.Empowerment implies expansion of assets and capabilities of people to influence

control and hold accountable institution that affects their lives (World Bank Resource Book).

Empowerment is the process of enabling or authorizing an individual to think, behave, take

action and control work in an autonomous way. It is the state of feelings of self-empowered to

take control of one’s own destiny. It includes both controls over resources (Physical, Human,

Intellectual and Financial) and over ideology (Belief, values and attitudes) (Batliwala, 1994).


6

1.9 Operational Definitions

The following are the key concepts and how they are defined particularly in this study, however

further and detailed definitions of key concepts in this study are given in chapter two which

constitutes the literature review:

Small business as “any business that is independently owened and operated but is not

dominant in its field and does not engage in any new machinery or innovative parties”

(Carland et al, 1984).

Empowerment: generally empowerment is defined in many ways depending on who it is

being applied to. The general definition states that empowerment is the process of

enabling or authoring an individual to think, behave, take action and control work in

autonomous way (World Bank Resource Book). However, in this study as per the

research topic empowerment is defined in two ways and these include; firstly

empowerment is the process of increasing the capicity of women to make choices and to

transform these choices into desired ations and outcomes (Krishna, 2003). Secondly,

empowerment shall be classied as by the United Ntaions (UN) where women’s

empowerment is classified into five components and these include; women’s “right to

make choices”, “right to have access to resources” “right to control their own lives”,

“sense of self-worth” and “the ability to create a social and economic order” (The UN,

2001).

1.10 Organization of the Study

The study spins across five (5) chapters. Chapter one covers the background and introduction of

the study. Chapter two reviews previous literature and chapter three addresses the research

methodology of the study. Chapter five looks at the empirical results or research findings as well

as discussions of the data analysis. Finally, chapter six presents the summary of the findings,

conclusion and recommendations of the study.


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CHAPTER TWO

LITERATURE REVIEW

2.1 Overview of the Literature

Micro-finance has emerged as a fundamental part of the new development paradigm, described

by the phrase “participation and development.” Many aid donors and Non-Governmental

Organizations (NGOs) are attracted by the tremendous success of the micro-finance programs.

This chapter presents the literature review that is, what others have written on the topic under the

study. It focuses on the key concepts, definitions, theoretical and empirical analysis, variables

and the relationship between the variables as well as the research gap. The theory and empirical

analysis are detailed to give a reader a wider perspective on the contribution of micro credit

institutions to the lives of women in their daily socio-economic activities and entrepreneurship in

Lusaka.

2.2 Theoretical Framework

2.2.1 Conceptual Definitions

Micro-finance Institution (MFI): The term refers to an institution which provides financial

services to low-income clients, including the self-employed. Financial services generally include

savings and credit, and some micro-finance organizations also provide insurance and payment

services (Kibas, 2001).

Micro-credit, Micro-finance, small loans and credit: Micro-credit is the provision of small loans.

According to the Micro-Credit Summit in 1997, the definition of micro-credit is: small loans to

very poor people for self-employment projects that generate income, allowing them to care for

themselves and their families. Micro-finance is the provision of a range of financial services in

addition to credit, such as options for insurance schemes or opportunities to save. It is, however,

a term that is used interchangeably. For the purpose of this study, micro-credit, micro-finance,

small loans and credit will be used interchangeably with respect to micro financial services.

Empowerment: slightly expanded definition, the term refers to increasing the spiritual, political,

social, educational, gender, or economic strength of individuals and communities. According to


8

United Nations women economic empowerment has five components namely sense of self-

worth, right to have and determine choices, right to have access to opportunities and resources,

right to have power to control their own lives within and outside and their ability to influence the

direction of social change to create a more just social and economic order, nationally and

internationally.

An entrepreneur: is an individual who organizes and operates a business or businesses, taking on

financial risk to do so. The entrepreneur is commonly seen as a business leader and innovator of

new ideas and business processes. Management skill and strong team building abilities are often

perceived as essential leadership attributes for successful entrepreneurs. According to Robert B.

Reich considers leadership, management ability, and team-building as essential qualities of an

entrepreneur. Although certain entrepreneurial traits are required, entrepreneurial behaviors are

also dynamic and influenced by environmental factors. In their cornerstone for contemporary

entrepreneurship research paper, Shane and Venkataraman (2000) argue that the entrepreneur is

solely concerned with opportunity recognition and exploitation, although the opportunity that is

recognized depends on the type of entrepreneur; while Ucbasaran et al. (2001) argue there are

many different types contingent upon environmental and personal circumstances.

The ability of entrepreneurs to innovate is thought to relate to innate traits such as extroversion

and a proclivity for risk-taking. According to Schumpeter, the capabilities of innovating,

introducing new technologies, increasing efficiency and productivity, or generating new products

or services, are characteristic qualities of entrepreneurs.

Entrepreneurs are catalysts for economic change, and researchers argue that entrepreneurs are

highly creative individuals with a tendency to imagine new solutions by finding opportunities for

profit or reward. Micro-entrepreneur: Micro-entrepreneur is a person who is engaged in micro-

enterprise activities. The greatest concentration of the informal sector is on non-farm activities

like commerce, trade, services, manufacturing, and mining.

A loan is a type of debt; like all debt instruments, a loan entails the redistribution of financial

assets over time, between the lender and the borrower. In a loan, the borrower initially receives

or borrows an amount of money, called the Principal, from the lender, and is obligated to pay

back or repay an equal amount of money to the lender at a later time. Typically, the money is


9

paid back in regular installments or partial repayments; in annuity, each installment is the same

amount.

2.2.2 Theoretical Analysis

Micro-credit programs have designed several features and mechanisms that have favorably

contributed to their success. As noted earlier, the majority of micro-credit programs have women

as main borrowers; in the 1998 survey of 925 member institutions, the Micro-credit Summit

Council of Practitioners reported that about 76 percent of clients were women (Adams et al,

2000). Analysts have pointed out that repayments rates by women; have led many programs to

target women (Mayoux, 1999).

Characteristically “self-help” oriented micro-credit programs have targeted women because

women are more likely to invest in caring for the family and women can contribute greatly to

improvements in family welfare, and wider social and political empowerment (Mayoux, 1995;

Ledgerwood, 1999; Pitt and Khandker, 1998). An important feature of micro-finance

development includes the opportunity for borrowers to form joint liability groups, as an

alternative of tangible collateral.

In Africa, Micro-credit institutions International have programs in Uganda, Malawi, Tanzania,

South Africa, and Zambia and in the Democratic Republic of Congo. In general, women’s status

and empowerment in Sub Saharan Africa, including Tanzania, is mediated and influenced by the

structural and cultural constraints they face. Studies have shown that, women in Zambia are

poorer than their male counterparts (Rwebangira, 1996).

2.4 Empirical Review

2.4.1 Impact of MFI on Women Empowerment in Zambia

Examination of the role of MFIs existence on the contribution that they have made towards

empowering of women in Zambia. However, up to today, it is clear that a gender concern is

appreciated within the development industry. Many policies and programmes are usually

designed with due concern for practical gender needs. This would in one way help put the

women in front in terms of gender equality. However, responses from NGOs and other policies

and programmes do not see gender equality as the utmost goal, but rather as what can be

circumvented from other outcomes.


10

For example, MFI institutions in many countries have been argued to contribute to women

empowerment. However, despite the number of years women clients have been engaged in

microfinance, there is no difference in their well-being status as compared to the women non-

clients who were just enrolled for taking loans (Nakawesi, 2003; Lakwo, 2006). Noreen (2011)

concluded that microfinance services from MFI has some positive role in women empowerment

but not as much as was expected. However, Suramathi and Mohan (2011) contended that MFI

lead to definite improvement in psychological well being and social empowerment among rural

women as a result of participating in micro finance programs.

As women are generally the poorest of the poor in social, cultural, political and economic circles,

discrimination against women is a prerequisite of eradicating poverty in the context of

sustainable development (ICPD, 1994). Among the Millennium Development Goals (MDG), the

third MDG focuses on promoting gender equality and the empowerment of women, has given

prominence to recent efforts to target gendered poverty. Gendered poverty is the recognition that

women and men face poverty for different reasons and both experience and respond to it

differently. Most sstudies have revealed that the indicators of education and literacy, the metrics

used to measure progress towards MDG 3, do not sufficiently capture gendered poverty or

gender disparities.

There are many other factors that are known to influence the status of women, such as income,

reproductive health and environmental and socio - cultural constraints. Bradshaw and Lingerer

(2003) list three factors that contribute to the relative poverty of women: (1) women generally

have fewer opportunities to transform work into income, (2) women still have limited decision-

making authority, and (3) when women actually do make decisions, they tend to act for the

benefit of others first. Despite this knowledge little has been done in Zambia to determine the

performance of MFI in relation to women empowerment in practical terms.

Outside of Zambia, most studies have assessed the impact of microfinance programs on women

empowerment; for Bolivia (Mosley (2001)), Ecuador (Woller and Parson (2002)), Guatemala

(Kevane and Wydick (2001); Wydick (1999a), (1999b), (2002)), Indonesia (Bolnick and Nelson

(1990)), Peru (Dunn (2001)), Thailand (Coleman (1999)), Uganda (Barnes et al. (1999)), Zambia

(Copestake et al., (2001)), and in multiple countries (Mosely and Hulme (1998) and Anderson et


11

al., (2002)). The findings vary considerably from study to study, suggesting that impacts are

highly and theoretically specific.

Analyzing the four programs in Bolivia, Mosley (2001) shows that assets and income increased

commensurate with initial poverty levels, but also that MFI services may increase vulnerability if

borrowers over-leverage, women in particular. Bolnick and Nelson (1990) found that MFI

participation had a positive impact on enterprises that were typically small, labor intensive and

growing, although the impact was far from uniform across sectors and target variables.

Copestake et al. (2001) found that women borrowers in Zambia who were able to obtain two

loans experienced high growth in profits and household income compared to a control sample,

but borrowers who never qualified for the second loan were actually worse off due to MFI

collection mechanisms.

Dunn (2001) finds that program clients’ enterprises performed better than non-client enterprises

in terms of profits, fixed assets, and employment. Finally, Anderson et al. (2002) analyze 147

MFIs and finds that microfinance participation increased environmental awareness and common

pool resource stewardship for the women folk. Other impact studies address trade-offs that need

to be considered when performing microfinance impact assessments.

Kevane and Wydick (2001) found that targeting microenterprise credit to poor women appears to

imply a trade-off between economic growth in favor of poverty reduction and child welfare. In

particular, female entrepreneurs of child bearing age create significantly fewer jobs than male

entrepreneurs. Each of the impact assessment studies noted above, with one exception, provide

evidence of positive impacts of microfinance. Other impact assessment studies, however, fail to

find significant impacts. In his assessment of Thai MFIs, Coleman (1999) finds that "naive"

estimates of impact failing to control for self-selection and endogenous (non-random) program

placement significantly overestimate program impacts. He generalized this finding to other

impact assessments, arguing that most impact studies neglect the issues of self-selection and

endogenous program placement thus leading to systematic overstatement of impact.

Making comparisons across impact studies is greatly complicated by the contextual differences

of programs assessed and the diversity of empirical tools or methods used. The diversity of

empirical methodologies in turn reflects the diversity in methodological options available.


12

Hyman (1998) also considered the issue of optimal impact assessment methods by reviewing and

comparing four MFI evaluation systems. Through his analysis, he suggested for improved

methods for existing assessment approaches.

Woller et al. (1999b) surveyed 73 MFIs in the US and developing countries on their impact

evaluation practices. They found that the sampled institutions regularly evaluated their programs,

albeit using inexpensive and un-scientific methods, regularly monitored project performance,

saw evaluations as vital, used findings to implement project changes, and sought formal

feedback from clients. The survey findings also sheded more light on impediments to performing

impact assessments on the role played by various stakeholders in the evaluation process.

These studies cited above prove that less has been done in Zambia to determine the significant

contibution that MFI have had on women empowerment. This stimulates the need to investigate

more on this subject and this study will examine on that in more detail. A lot of literature has

been written between micro-finance and women’s empowerment. Women have been considered

to be the poorest among the poor and they dominate the formal in Zambia. Women’s

empowerment through micro-finance has been one of the priorities of stakeholders in

Zambia, it is regarded women hardly have access to loans in Micro finance institutions

because of the insinuation that these women do not have access to collateral such as land

to obtain loans from micro finance institutions.

In relating micro-finance to women’s empowerment in Zambia, some experts have formulated

indicators to measure the role of micro finance institutions towards empowerment of women.

Hashemi et al. (1996) examines the role of women’s empowerment by developing an

empowerment indicator to measure economic security, household decision and political

awareness of women. Ackerly (1995) built an accounting knowledge indicator, while Goetz and

Gupa (1996) manufactured an index of marginal control to see how women utilize their loans for

financial activities. What. Hashemi et al. (1996) examines if women access to micro-credit has

an effect on their well-being, the outcome of the results shows that women access to micro-credit

contributes enormously to their economic power.

However, Mayoux (1997) argument is that micro-credit to women does not always bring about

positive development. This could be as a result of women who took loans from the banks did not


13

use their loans for the intended purposes. There. Holvoet (2005) analyses women’s decision-

making patterns as regard to loan borrowing, women who borrow directly from the banks always

have fewer decision patterns, but when the loans are secure through women’s groups and are

combined with investment then a positive shift in decision-making patterns is noted. The idea

of women to form groups in their Hotel and catering Associations in Zambia had been beneficial

to women; most of the micro-finance institutions, always align with women's group associations

in order to empower women and they find this medium easy for loan repayment. Some scholars

have argued against the perception that micro-finance empowers women, according to Dobra

(2011) micro-finance enable women to be empowered, however the most reservations of

micro-finance on woman empowerment is that there is no really effective correlation between

micro-finance and women’s empowerment.

McWhirter (1991) defines empowerment as a state where people who lack power become

aware of their power. Dobra (2011) argues, if empowerment is all about one being aware

of his or her power, then empowerment has not occurred. Some feminist theorists have classified

power of women into “power with”, “power within”, “power to” and “power over”. The

acquiring of ‘power over’ with the intention of empowering women through redistribution of

resources has not happened Dahl (1999). For this according to Woolcock (2004) empowering

poor women generate complex situation. Many studies have advocated the theoretical argument

correlating micro-finance with poverty reduction. However, Dobra (2011) postulates that there is

no empirical fact to this effect. It is on this assumption that this study will examine the The role

of micro finance institutions towards empowerment of women in Zambia

2.4.2 Developing countries: Microfinance and Women Empowerment

Micro-finance programs not only give women and men access to savings and credit but reach

millions of people worldwide bringing them together regularly in organized groups. Although

they are potentially a very significant contribution to gender equality and women's

empowerment, as well as pro-poor development and civil society strengthening. Through their

contribution to women’s ability to earn an income these programs have potential to initiate a

series of ‘virtuous spirals’ of economic empowerment, increased well-being for women and their

families and wider social and political empowerment. Micro finance services and groups


14

involving men also have potential to question and significantly change men's attitudes and

behaviors as an essential component of achieving gender equality.

Majority of microfinance programs focus women with a view to empower them. There are

varying underlying motivations for pursuing women economic empowerment. Some argue that

women are amongst the poorest and the most vulnerable of the underprivileged and thus helping

them should be a priority. A more feminist point of view stresses that an increased access to

financial services represent an opening/opportunity for greater empowerment. Such

organizations explicitly perceive microfinance as a tool in the fight for the women’s rights and

independence. Finally, keeping up with the objective of financial viability, an increasing number

of microfinance institutions prefer women members as they believe that they are better and more

reliable borrowers.

Self-help groups intermediated by microcredit have been shown to have positive effects on

women, with some of these impacts being ripple effects. They have played valuable roles in

reducing the vulnerability of the poor, through asset creation, income and consumption

smoothing, provision of emergency assistance, and empowering and emboldening women by

giving them control over assets and increased self-esteem and knowledge (Zaman 2001). Several

recent assessment studies have also generally reported positive impacts (Simanowitz and Walker

2002).

Malhotra (2002) constructed a list of the most commonly used dimensions of women’s

empowerment, drawing from the frameworks developed by various authors in different fields of

social sciences. Allowing for overlap, these frameworks suggest that women’s empowerment

needs to occur along multiple dimensions including: economic, socio-cultural,

familial/interpersonal, legal, political, and psychological. It has been well-documented that an

increase in women’s resources results in the well-being of the family, especially children

(Mayoux, 1997; Kabeer, 2001; Hulme and Mosley, 1997). A more feminist point of view

stresses that an increased access to financial services represent an opening/opportunity for

greater empowerment. Such organizations explicitly perceive microfinance as a tool in the fight

for the women’s rights and independence.


15

Ranjula Bali Swain (2007) Can Microfinance Empower Women? Self-Help Groups in India”

concluded many strides have been made in the right direction and women are in the process of

empowering themselves and NGOs that provide support in financial services and specialized

training, have a greater ability to make a positive impact on women empowerment. Susy

Cheston, Lisa Kuhn in their article titled ‘Empowering Women through Microfinance’ concluded

Microfinance has the potential to have a powerful impact on women’s empowerment. Ranjula

Bali Swaina and Fan Yang Wallentin (September 2009) in their article ‘Does microfinance

empower women? Evidence from self-help groups (SHG) in India’ concluded that their study

strongly indicate that SHG members are empowered by participating in microfinance program in

the sense that they have a greater propensity to resist existing gender norms and culture that

restrict their ability to develop and make choices.

Batliwala (1994) identified three approaches to women’s empowerment: the integrated

development approach which focused on women’s survival and livelihood needs; the economic

development approach which aimed to strengthen women’s economic position and the

consciousness approach which organized women into collectives that address the source of

oppression. Mayoux (1997) argues that the role of microfinance institutions on women is not

always positive. Women that have set up enterprises benefit not only from small increases in

income at the cost of heavier workloads and repayment pressures. Sometimes their loans are

used by men in the family to set up enterprises, or sometimes women end up being employed as

unpaid family workers with little benefit. She further points that in some cases women’s

increased autonomy has been temporary and has led to the withdrawal of male support.

In studies conducted in Africa, reveals that in polygamous marriages women have added

advantages of control over their own income. The explanation could possibly be in polygamous

marriages women tend to have their separate entities and are most likely to have control over

their own income. This shows that social-cultural background plays an important role in the level

of income control. Mayoux sees that, even in areas where polygamy is not very common, still

women had the desire to control income due to traditions of polygamy, divorce and infidelity.

However, Goetz & Gupta (1996) for example, found that women lose control over their loans as

time passes.


16

It is possible that women who successfully build up a small enterprise by investing their loan

funds reach a point after a few years at which they can no longer profitably expand, and

subsequently make their loan funds more and more available for their husband. When viewing

the idea of turning in loans to husbands from a traditional perspective one would argue even if

women turn their entire loan over to their husband or to some other male relative, they will not

lose strength in their decision-making roles within the household (Hashemi et al, 1996; Goetz &

Gupta, 1996). Goetz & Gupta (1996) add that when a woman hands over the loan to the husband

or a relative in the family, it may be a compromise which has resulted from empowerment, or by

turning the loan to the husband, the process will ultimately result into a positive impact on the

woman’s empowering aspect. Goetz & Gupta point out, “an apparent loss of control may

disguise a negotiated transfer, where the nature of the negotiation and transfer, and the rights and

privileges gained in return, may indicate a power achievement for the woman borrower”.

In addition, even if the credit program participants never used a loan to finance their own

economic activities, they were considerably more likely to be empowered than women who were

not participating in credit programs. As Mayoux (1998) points out, there has been no systematic

comparative study to assess different factors in micro-finance programs and their relationship to

empowerment. A number of researchers for some years have debated the subject of loan control

(Goetz & Gupta, 1996; Kabeer, 2001; Mayoux, 1998). They have argued on actually what does it

mean; male control, female control, and joint male and female control for women’s

empowerment in different socio-cultural perspectives.

2.4.3 Summary of Studies Reviewed

It is quite evident that micro-finance has positive impacts on women; however, this may depend

among other things such as social cultural backgrounds, individual background and the lending

methodology of the organization. It can be pointed out that loans have empowered the women,

and credit has become a resource to generate additional income, to accumulate assets, and for

consumption purposes.

2.5 Research Gap Identified

In developing country like Zambia, it’s a tradition that women play a major role in household

production which somehow makes her away unavailable in participating in various micro-


17

finance programs. For a number of years, women in Zambia have been marginalized by being

denied opportunities such as credit due to a lack of collateral and other reasons including deep

rooted traditional cultural barriers and existing social norms.

The mobilization of women’s groups, who guarantee each other, in order to access loans, have

raised interest in whether there is a close correlation between credit and women economic

empowerment. There is a special need therefore, to study the economic and social changes

attained by women specifically. Such empirical findings will also be used by other researchers to

make comparisons with other districts in Zambia. The study aims in examining the overall role

played by micro-finance institutions in promoting individual women entrepreneurship business

within Lusaka which was used as a case study.

2.6 Conceptual Framework

Figure 2. 1: Conceptual Framework

(Source: field survey 2019)

TheRole ofMFI’s

SelfesteemE

ducationGo

od health

Loanaccessibility

Growth of Business


18

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.1 Overview

This chapter presents detailed research methodology employed in the study. The chapter is

divided into six sections, namely, research design, research area and population, sampling and

procedures, method of data collection, data processing and analysis and expected results of the

study.

3.2 Research Design

A research design is simply the framework or plan for a study used as a guide in collecting and

analyzing data (Churchill, 2007). This study used the case study design to obtain necessary

information. The case study has been chosen due to its ability to provide the depth insight of the

issue to be studied and / or investigated. However, the design has number of problem. One of

them being, it does not provide basis for comparison, as no two businesses are the same. Despite

of the said weakness, case study is said to be complete, reality based, empirically grounded and

exploratory (Zikmund, 2006). A case study of FINCA microfinance institution in Lusaka district

Zambia. This study will employ both the qualitative and quantitative designs. Therefore, the

graphical presentations of observed phenomena will be used so as to produce precise and

accurate information on women empowerment through MFI in Zambia.

3.3 Research Area and Population

The study was conducted in Lusaka district of Lusaka province, Zambia. Lusaka district was

chosen because of its urban, rural and mixed urban/rural nature. Though this study will cover the

central part of Lusaka district from the urban set up perspective. This urban nature would provide

an ideal situation for studying contribution of microfinance on urban small and medium micro-

entrepreneurs.

The target population shall be 300 of the management staff and the general staff of FINCA.

FINCA is one of the oldest if not the oldest microfinance institution which is known to give

loans to small medium enterprises as well as entrepreneurs in Zambia. The institution has


19

different offices across Zambia and the offices located within Lusaka district were used as a case

study together with its subsequent women borrowers.

3.4 Sampling Techniques

This includes the sample size and sampling procedures which were conducted prior to data

collection step.

3.4.1 Sample Size

About fifty questionnaires were administered to different women registered and access loans

from FINCA Lusaka offices. The rationale behind this sample size was enough to be studied and

be representative of total population. A convenience sample is merely an available sample that

appears able to offer answers of interest to the research study (Backer, 2002).

3.4.2 Sampling Procedures

The research design strategy that was used in this study is purposeful sampling. This strategy

was chosen in order to get an in-depth knowledge of the case using a small population sample

from each of the selected communities in Lusaka District. This approach is sometimes called

purposive or judgment sampling (Patton, 2002). Patton indicates that purposeful sampling is used

to select information-rich cases for study in depth; that is participants who possess rich

information on the case. The purposeful sampling type that will be used in the study is the

maximum variation (heterogeneity) sampling (Patton, 2002). A heterogeneous sample includes

individuals with diverse characteristics from multiple dimensions and is considered a maximum

variation sample. The idea is that any patterns that emerge across the diverse set of individuals

would be valuable in describing experiences central or core to most individuals.

3.5 Research Variables

The study considered the microfinance institutions in enhancing capacity building to women

entrepreneurs within Lusaka district. The parameters used to measure capacity building include,

loan accessibility, education, self-esteem and business growth. That is, in the assumption of this

study was that micro-finance institutions contributes in facilitating the growth of women

entrepreneurs by providing them with the loans as capital and education as skills to ensure the

cash flow is maintained to repay the loan.


20

3.6 Methods of Data Collection

In the study the only primary data was collected from both women entrepreneurs running SMEs

businesses as well as FINCA administration staffs at Lusaka offices. For women respondents the

data was collected by questionnaire as well as observation while for micro-finance

administrations the data was collected by interview. The questionnaires showed the weakness of

low rate of return of the filled-in questionnaires bias due to no response is often in determinate.

The control over questionnaire may be lost once it is sent. At some point it was difficult to know

whether willing respondents were truly representative. There is in built inflexibility because of

the difficulty of amending the approach once questionnaires have been detached. There was also

the possibility of ambiguous replies or omission of replies altogether to certain questions

interpretation and omission was difficult (Kothari, 2005; Baker, 2003).

Observation: In order to cross check some of the information which was provided in the

interview, the researcher also followed up with observation. The observation was used only on

the business entrepreneur’s participants. The observation was done after the interview. The

people to be observed were based on availability of time and their willingness to allow the

researcher into their homes and businesses. Here the role was to observe, listen, and

communicate as well as a range of other forms of being, doing and thinking. The researcher also

observed the nature of their businesses and living condition in their homes.

3.7 Data Collection Instrument

The researcher in addition observed the socio-economic status of the entrepreneurs under study

by looking at the nature and state of their houses, whether permanent or not. This approach

assisted in collecting data in a “naturally” or “situational” or at least in a contextual setting

(Mason, 2002). Interview was structured by the written questions as well as unstructured by

allowing the interviewee to flow. The researcher used a notebook in recording the interviews

coupled with a self-structured questionnaire.

3.8 Data Analysis Procedures

At the end of data collection all completed questionnaires from the women borrowers were

thoroughly examined by the researcher, coded and analyzed for computer analysis. Data analysis

was performed in order to achieve the research objectives. Cleaned data were entered in the


21

computer using the Statistical Package for Social Science (SPSS) software as well as Microsoft’s

Excel. This was followed by actual analysis of data in order to answer the research questions.

The data was first analyzed for descriptive statistics as shown in chapter four. Simple frequency

and percentage tables output were obtained. Also, the Pearson’s correlation between credits

provided by FINCA and empowerment level for borrowed women was determined.

3.9 Ethical Considerations

The information which shall be obtained from all research centres shall be for academic use only

and nothing else. The study shall consider issues of confidentiality, consent, respect, access, gate

keeper’s approval before accessing information. Authority shall be sought from FINCA in order

to carry out the research.

3.10 Validity and Reliability

A conclusion of any study can be affected by either a researcher’s bias or subjective judgment in

the data collection process (Yin 1994). According to Nachmias (1996), the researcher must

provide supporting evidence that a measuring instrument does, in fact, measure what it appears

to measure.

On the other hand, reliability is the central concern to social scientists because the measuring

instruments they employ are rarely completely valid. Nachmias and Nachmias (1996) reliability

that is, the extent to which a measuring instrument contains variable errors, that is, errors that

appear inconsistently from observation to observation during any one measurement attempt or

vary each time a given unit is measured by the same instrument. The sample selected was

conducted in order to boost the reliability in the existing local communities who are living in the

area where this study was carried.


22


23

CHAPTER FOUR

PRESENTATION OF FINDINGS

4.0 Chapter Overview

This chapter highlights the results of the interviews that have been conducted with the

microfinance institution that agreed to participate in this survey. This chapter generally focuses

on the findings, data analysis and discussions which all together answer objectives of the study in

examining the contribution of small loans on enhancing the capacity building to women micro-

entrepreneurs in Lusaka district.

4.1 Respondent Characteristics

This part describes the demographic characteristic of respondents involved in the study. It

explains characteristics like gender, age, educational level and marital status when the study was

conducted.

4.1.0 Age

In the study, the factor of age among respondents were also taken into account, the group of

youth especially with the age below 20 years and elderly group of above 40 years were also

involved in being questioned so as to gain insight among women respondents with various ages.

Also, the adult’s individuals who dominate the study were also included. In the study a total of

32% of respondents were between 30 to 34 years old (including 20% of 25- 26 years and 20% of

30-34 years as well as the remaining age groups).

The results are shown in table 4.1, and it indicates that the study was dominated by the women

who were adult who particularly in this age group are usually at the maximum of their productive

capacity.

Table 4. 1: Age of Respondents

Frequency Percent (%)

19 – 24 years 4 8

25 – 26 years 10 20

30 – 34years 16 32

35 – 39 years 14 28

40 – aboveyears 6 12

Total 50 100

Source:field work survey 2019


24

4.1.2 Marital Status of Respondents

In this study about 40% of respondents were married while only 20% were single. This showed

that women with household responsibilities were most likely to secure loans. The remaining total

of 42% of respondents (including 24% widow/er and 18% divorced) were used to be in

relationships but not anymore. The higher percentage of women married indicates that women

have family obligations which they are adhered to on daily basis as they engage with their daily

entrepreneur activities.

Table 4. 2: Marital Status of Respondents


Married 20 40

Single 10 20 Divorced 9 18

Widow/er 12 24

Total 50 100


4.1.3 Education Level

For the case of highest academic qualification which may also have contribution especially on

the perception meaning among women entrepreneurs the results were such that only 10% were

having University degree as their highest qualification. This may indicate a moral understanding

in ethics of loan application and repayment among minority of women entrepreneur’s members.

Other members were having primary and secondary education as their highest academic

qualifications and these were 42% and 36% respectively as shown in a table 4.3.

The level of education tends to determine where one will work. Women’s participation in micro-

entrepreneurial activities was partly influenced by low levels of education, which stimulated the

development of women’s competency including entrepreneurship. This was supported by

Lugalla (1995), who commented that due to the fact that most women have a primary school

level education, they tend to be engaged in the activities which need minimal skills. This finding

also is confirmed by Kibas (2001), who indicated that the majority of micro-enterprises are

conducted by people who have primary level education.


25

With this results to which most individuals were having primary and secondary education as

their highest academic level which indicates poor understanding and awareness of how

importance women economic empowerment is in improving their life’s and society welfare at

large.

Table 4. 3: Highest Academic Level of Respondents

Frequency Percent

Secondary 20 40

Tertiary 18 36

College 6 12

University 6 12

Total 50 100


4.1.4 Nature of Business That the Women Entrepreneurs Engage

Women entrepreneurs engage in various activities in an attempt to increase income. Nevertheless

these activities are the ones that loans are taken so as to start a new business platform or

investing in the existing business aiming to generate the more promising results. In the study it

was revealed that about 18% of respondents were engage in Hair Saloon business as the activity

they use in running their lives. This high percentage in Hair saloon among women entrepreneurs

is explained by the tendency of growing beauty market among women especially in urban areas

which seems to attract women in doing such business.

The restaurant business was recorded the highest with 40%. A possible explanation for why

women micro-entrepreneurs are concentrated in food business could be because the needed

startup capital for food businesses is relatively low. That means women micro-entrepreneurs can

easily secure initial capital from personal savings, husbands, friends and relatives.

Additionally, women want to involve themselves in business ventures such as home based

enterprises, which will allow them enough time to attend to other household activities. Other

entrepreneurship that the women respondents involve includes the catering, tailoring and

‘salaula’ (second hand clothes) business which was represented by 4% of respondents. The

results are shown in a table 4.4 below:


26

Table 4. 4: Women Entrepreneurial Activities


Restaurant 20 40

Hair Saloon 9 18

Shop 15 30

Other 6 12

Total 50 100


4.4 Microfinance Institutions and Women Economic Empowerment

The microfinance institutions are known to support informal sector development through

provision of loan to individuals who most of them are small entrepreneurs engage in small

business. In the study the parameters for measuring women economic empowerment includes the

education, health, self-esteem and loan accessibility which are discussed below.

4.4.1 Loan Accessibility

Loan accessibility is the one important factor that contributes to women economic empowerment

by giving loan to enhance women in their entrepreneurs’ activities so that they can either

increase their current capital by expanding their business or establish business in the way of

employ themselves. In the study it was revealed that a total of 98% (including 78% strongly

agree and 20% agree) of respondents agree that small loan they obtain from FINCA have impact

in their life. The higher percent of individual agree is explained by the importance of the small

loan to women entrepreneurs in assisting developing them to grow as business women and

workers. On the other hand, only 2% of women respondents were undecided which indicate they

were unclear on whether the loan have potential benefits or not. The results are shown in table

4.5 below.

Table 4. 5: Respondents Results on the Impact of Small Loan from FINCA in Their Life


Strongly agree 39 78

Agree 10 20


27

Undecided 1 2

Total 50 100.0


4.4.2 Pearson Correlation between the Credits Offered by FINCA and Empowerment by

Women Entrepreneurs

The correlation between credits offered by FINCA and empowerment were analyzed to check on

how the two relates and how influencing the credits offered is to empowerment. To obtain the

variable for level of empowerment including self-esteem, health, loan accessibility and education

were added in SPSS to obtain one variable which later with the service quality as another

parameter the relationship was determined. Preliminary analyses were performed to ensure no

violation of the assumptions of normality, linearity and homoscedasticity and the Pearson

correlation is shown in a table 4.8

Table 4. 6: Pearson correlation between credits offered by FINCA and women economic

empowerment

Credits offered by

FINCA

Women economic

empowerment

Credits offered by

FINCA

Pearson Correlation 1 0.648**

Sig. (1-tailed) 0.000

N 32 32

Women economic

empowerment

Pearson Correlation 0.648** 1

Sig. (1-tailed) 0.000

N 32 32

**. Correlation is significant at the 0.01 level (1-tailed).

The correlation value which defines the strength of relationship between two variables is 0.648

and indicates a large strength existing between the credits offered and empowerment. The

relationship is also positive a one and which means the two variables understudy are directly

related. The coefficient of determination between the two variables which was obtained by

squaring the correlation value to which the result was 0.42 (in percent is 42%) and it means that

credits offered by FINCA help to explain nearly 42% of variances in respondents results from

women economic empowerment especially through the various factors like accessibility, self-


28

esteem, health and education. Furthermore, the correlation is statistically significant as it was

below 0.05 which is the standard required for significance (Pallant, 2004).

29

CHAPTER FIVE

DISCUSSION AND INTERPRETATION

5.0 Chapter Overview

This chapter discusses the overall findings of the study.

5.1 Discussion of Major Findings

In the study it was revealed that a total of 98% (including 78% strongly agree and 20% agree) of

respondents agree that small loan they obtain from FINCA have an impact in their lives. The

higher percent of individuals who agree is explained by the importance of the small loan to

women entrepreneurs in assisting developing them to grow as business women and workers. On

the other hand, only 2% of women respondents were undecided which implied they were unclear

on whether the loan have potential benefits or not. The higher percent was due to the importance

of the small loan to women entrepreneurs in assisting developing them to grow as business

women and workers. Women who took a loan from FINCA were involved in a small business.

In the study, the Pearson correlation was determined to explain the relationship existing credits

offered by FINCA and women economic empowerment and was 0.648. The relationship was

positive and indicates a large strength the two variables with the coefficient of determination of

0.42 (in percent is 42%). The values mean that credits offered by FINCA help to explain nearly

42% of variances in respondents results from women economic empowerment especially through

the various factors like accessibility, self-esteem, health and education.

5.3. Summary of the Findings

The study reveals that the small loans offered by FINCA contribute to women economic

empowerment in relation to their current socio-economic activities they engage in. This was

evidenced by a total of 98% of women micro-entrepreneurs agreeing that FINCA loans have

impacted their lives positively. Also, the study revealed that there was a high and positive

Pearson correlation of 0.648 between the credits offered and by FINCA and the level of

empowerment which indicates that loan given by microfinance institutions have a profound

impact on the women welfare by aiding empowerment socially and economically. Furthermore,

the coefficient of determination between the two variables (credit obtained from FINCA and

women economic empowerment) which was obtained by squaring the correlation value to which

the result was 0.42 (in percent is 42%) meant that credits offered by FINCA help to explain

30

nearly 42% of variances in respondents results from women economic empowerment especially

through the various factors like accessibility, self-esteem, health and education.

31

CHAPTER SIX

CONCLUSION, RECOMMENDATIONS AND LIMITATIONS

6.0 Conclusion

In the study it was revealed that a total of 98% (including 78% strongly agree and 20% agree) of

respondents agree that small loans they obtain from FINCA have impact in their life. The higher

percent of 98% was due to the importance of the small loan to women entrepreneurs in assisting

developing them to grow as business women and workers. Evidence showed that women who

took a loan from FINCA were involved in a small business.

In the study, the Pearson correlation was determined to explain the relationship existing credits

offered by FINCA and women economic empowerment and was 0.648. The relationship was

positive and indicates a large strength the two variables with the coefficient of determination of

0.42 (in percent is 42%). The values mean that credits offered by FINCA help to explain nearly

42% of variances in respondent’s results from women economic empowerment especially

through the various factors like accessibility, self-esteem, health and education. The study

concludes that, loan given by microfinance institutions have a profound impact on the women

welfare by aiding women empowerment both socially and economically.

6.2 Recommendations

Seminar and trainings should be given to women entrepreneurs on how to effectively manage

their loans in such a way that they expand their business territories. This will establish a good

relationship between women respondents and micro finance institutions as well as equip them

with loans using skills which is essential in entrepreneurship world.

The micro finance institutions should review its policy and regulations in order to give high loan

packages to facilitate women entrepreneurs to execute big projects which can have substantial

impact to their life and community such as providing employment, increase revenue and create

other social entrepreneurs to emerge in other potential sectors/industry in the society.

It’s recommended that the micro finance institutions set the minimum loan amount to carter for

all classes of women doing different kinds of business so as to enhance business opportunities

for all types of women entrepreneurs.

32

6.3 Policy Implications

The study findings clearly indicate that the small loans to small women micro entrepreneurs is

vital in promoting women social upbringing as it enables their empowerment which in turn, it’s

advantageous to family and society at large. With regards to loans provided by MFIs such as

FINCA and their influences in some small entrepreneurs such as women, it’s important to point

out the improvement in both social and economic empowerment enhances the country’s Gross

Domestic Product (GDP) which in turn booms the economy of the country at large. However,

this study also encourages that policy makers pay attention to ensuring that loans are easily

accessible by women too. And with this, the study indicates that it’s the lack of opportunity to

access the finances that causes women sometimes to fail to be empowered in comparison when

there is access to finances.

6.4 Areas for Further Studies

Further studies should be conducted based on examining the women economic empowerment

caused by women entrepreneurs receiving loan group wise from microfinance institutions taking

the liability together.


33

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36

QUESTIONNAIRE

I’m a student from Cavendish University Zambia carrying out a research titled “The Role of

Micro Finance Institutions Towards Empowerment of Women: A Case Study of FINCA

Microfinance Institution in Lusaka District”. I am kindly requesting you to fill this questionnaire

accordingly. The information you provide will be used for academic purposes only and not

otherwise.

Please circle the appropriate response(s) OR Fill the space provided

1. What is your age

a) Below 20 years

b) 20-30 years

c) 30-40 years

d) 40-50 years

e) above 50

2. What are your highest academic qualifications?

a) Primary education

b) Secondary education

c) University college

d) Don’t know

3. What is your marital status?

a) Single

b) Married

c) Separated

d) Widowed

e) Don’t know

4. What type of business are you doing?

a) Restaurant

b) Hair Salon

c) Shop

d) Secretarial bureau

e) Others

HOW Small Loans Contribute to Women’s Socio-Economic Empowerment

Do the Loans Are Used for the Purpose for Which They Were Contracted

Strongly

Agree

Agree Undecided Disagree Strongly

disagree


37

I feel that small loans

have a positive impact on

my life.

My incomes have now

increased.

I now have an

opportunity to save

money

I can now contribute to

my children education

I am now better able to

purchase household assets

I am able to make

improvements in

household diet.

I am now able to receive

appreciation from family

members

I feel empowered because

my self-confidence is

promoted

I am able to exchange and

learn new ideas from

fellow group members.

I pay my loans on time

without missing a single

repayment.

I put some money aside

after receiving the loan

THANK YOU!

the role of microfinance institutions towards empowerment

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