Microfinance Impact on Women’s Empowerment

An increased amount of studies has been devoted to discussions on the importance of women’s empowerment for poverty reduction (Kulkarni, 2011). Also, there is evidence that many programmes targeted at women have benefited male-headed households rather than female-headed families (Khandker, 1998; Mayoux and Hartl, 2009). Although, there are several studies that support the efficacy of microfinance in empowering women Corsi et al., (2013); Bhatt and Bhatt, (2016); Nisser and Ayedh, (2017); Angko, (2013), its potential in helping poor women escape poverty remains contentious (Guneratne, 2015). Also, for centuries, there have been widespread concerns about how women are marginalised in male controlled households (Kato and Kratzer, 2013). Moreover, surveys such as that conducted by Khan and Noreen (2012) show that women represent about seventy percent of the world’s poor and are mostly affected by poverty. Thus, to ensure there is a coordinated approach towards empowering women, in 2000, the Millennium Development Goals aimed at halving global poverty was promulgated by the United Nations. This was followed by the declaration of 2005 as a year of microfinance to promote gender equality and women’s empowerment (Owusu et al., 2013). Thus, the recent interests in microfinance have renewed an interest in women’s contribution towards poverty reduction. According to OECD (2009) women in many developing countries including

71

Ghana are the main source of livelihood for their families. However, development programmes targeted at women often face challenges. Dzisi and Obeng (2013) have attributed this outcome to the participation of women in low-wages work and informal sectors of the economy.

Furthermore, positive outcomes from the Grameen Bank experiment have shown the importance of empowering women (Moreno, 2010). Essentially, the Grameen Bank model recognises the pivotal role of women’s participation in socio-economic development and women’s contribution to family health, nutrition and education (Khandker and Shahidur, 1994). Thus, one major goal of the microfinance programme is to economically empower women due to their contribution to family wellbeing (Rahman and Nie, 2011). According to Elliot (2008) empowerment is characterised by three core dimensions. First, a person’s capabilities such as, self- confidence, health, education and knowledge. Second, cultural institutions and other pertinent resources that provide the individual the opportunities and challenges. Third, the means by which choices are made and implemented. Pitt and Khandker, (1998); Leach and Sitaran, (2002) analysed these three empowerment dimensions and concluded that women’s access to microcredit is more likely to produce more development outcomes than that of the men borrowers. This view is consistent with Dzisi and Obeng (2013) who found that women borrowers spend the proceeds from their economic ventures on household basic needs. According to United Nation (2006) entrepreneurial development is constrained in less-developed countries due to a lack of access to credit and availability of assets and this is more pronounced for women (Guneratne et al., 2015).

The evaluations and outcomes of existing studies indicate that the effect of microfinance provision on women borrowers is inconclusive (Wrigley-Asante, 2011). There are significant results that suggest credit to women in male-headed households has the potential of improving household wellbeing. For example, Kato and Kratzer (2013) assessed the impact of microfinance on women’s empowerment in men-headed households in Tanzania and found that women borrowers are more empowered compared to non-borrowers. They reported that the women have experienced greater improvements in their self-confidence, self-efficacy, decision- making in the household, freedom of mobility and control over income and saving.

72

Consistent with the Wrigley-Asante (2011) findings, Herath et al., (2015) investigated the effect of microfinance on women’s empowerment in Sri Lanka and concluded that access to credit and the availability of the market for products and services for women have improved their decision-making ability in the family especially if they act as mediators for the loan. Similarly, Mayoux and Hartl (2009) found that microfinance does not only contribute to poverty reduction but it also promotes economic empowerment, livelihood and the political and social empowerment of women borrowers. Thus, microfinance helps in promoting gender equality in line with the United Nation Millennium Development Goals (MDGs). Der and Bebelleh (2014) assessed the impact of microfinance on rural women’s empowerment in the Kpandai District in Ghana and found that access to credit improved the wellbeing of women including; nutrition, child education and access to health services. They concluded that, the training programme organised by the microfinance institution together with the tailored nature of the loan, have largely impacted on the economic empowerment of women. Similarly, Seddoh (2014) investigated the impact of Plan Ghana Microfinance on poverty reduction among 180 women borrowers in Lower Manya Krobo and found that the credit scheme has improved the wellbeing of the women in the following areas; health, child education, personal development and business sustainability. Alatinga and Williams, (2016) later assessed the effect of microfinance on women’s empowerment regarding household welfare and found that access to credit has improved women’s participation in intra-household decision-making, education, health and participation in social networks within their communities. The reasoning in the above narratives suggests the positive impact of microfinance on women’s empowerment. Meanwhile, studies such as; Schuler et al., (1998) and Wrigley-Asante (2011) found that the empowerment of women in a male-headed family may lead to violence in the household when “empowered women” challenge established family authority structures that favour men. In some instances, an increase women’s self-sufficiency has resulted in the withdrawal of the usual traditional assistance from men (Silbertschmidt, 1999; Wrigley-Asante, 2011). Moreover, Hargreaves et al., (2010) found that women have experienced barriers to collective action. Rahman et al., (2009) investigated factors influencing women’s empowerment in Bangladesh employing a control group method and found that women without access to microcredit are equally empowered. Schindler (2010)

73

argued on the basis of a qualitative analysis that microcredit loans provided to women in the Northern Region of Ghana entailed high processing costs. The excessive cost of borrowing has the potential to increase poverty gaps.

Furthermore, women are seen to be better clients compared to men (Dzisi and Obeng, 2013). Women’s access to loans is more likely to yield better developmental results because they are inclined to use the gains from their enterprises to fulfil their household’s basic needs (Leach and Shashikhala, 2002; Pitt and Khandker, 1998). Besides, Espallier et al., (2009) assessed the repayment characteristics of 350 microfinance institutions in 70 different countries and reported that women borrowers are associated with a lower portfolio-at-risk and lower credit loss provisions. These findings support the view that, women are better clients of microfinance institutions compared to men (World Bank, 2007). Armendariz and Morduch (2005) argued that because women are unable to access credit from traditional financial institutions, they ensure that there is a continual good relationship with microfinance institutions. Thus, women tend to repay their loans on time to guarantee regular access to credit. However, there some cases of evidence that contradict suggestions that women repay their loans on time. For example, Afrane and Adusei (2014) studied female loan repayments among some 754 female borrowers in Ghana and found that women are more likely to default on loan repayments than men. Thus, they suggested that lending to creditworthy men clients could improve the repayments of the microfinance institutions. The evaluation and outcomes of the existing literature however, suggest that much uncertainty still exists about the relationship between women’s empowerment, microfinance and repayment rates. Thus, the need to further investigate the relationship between microfinance and women’s empowerment will contribute to the ongoing discourse on the impact of microfinance.

3.8.1 Disaggregating the Dimensions and Conceptual Framework for