The Role of Microfinance in Mitigating Gender Inquality
March 11, 2018
One of the main pillars of microfinance is its focus on women. In terms of financial institutions, microfinance stands alone in its prioritization of the economic health of women. In fact, over 80% of all microloans are afforded to women. In a world where few options exist for women to lift themselves out of poverty, microfinance helps to level the playing field. Much is said about poverty and gender dynamics all over the world, so instead of playing to opinions, here are some facts about women and poverty.
Half of all developing countries have been found to have discriminatory customary practices against women.
One-third of all married women in developing countries have no control over major household spending.
In sub-Saharan Africa, only 46% of married women earned any cash labor income.
Although female participation in tertiary education has surpassed male participation in all developed countries and half of developing countries, two-thirds of the world’s 781 million illiterate people are women.
In most countries, women in full-time jobs earn between 70-90% of what men earn, despite the fact that women work longer hours per day than men all around the world (30 minutes more in developing countries, 50 minutes more in developed countries).
Microfinance was created in the 1970s by Muhammad Yunus when he began experimenting with lending to the impoverished women of Jobra, India. Since then, a focus on eliminating the gender disparity of poverty has remained a key focus for microfinance. In fact, the Grameen Bank, Yunus’ microfinance institution, made 97% of its loans to women. According to him, women have a better track record of repayment, make better use of their loans, and represent a giant untapped labor pool with immense potential. As he found time and time again, increased access to capital leads to increased education, better health and hygiene, and an overall improved quality of life.
As of 2011, microfinance had reached 114 million clients living in extreme poverty (less than $1.25 per day), 94 million of whom were women. What is such a differentiator of the industry is its focus on enabling people to gain financial independence. The end goal of microfinance is to have a world where it is not needed. In a 64-country study done by the UK publication, The Conversation, an increase in microfinance operations by 15% was followed by a decline in gender equality by about half. The core of the findings of this study was the simple fact that when women are afforded access to credit, they in turn have greater access to education, healthcare, and income-generating opportunities. In the end, microfinance is not charity. It’s empowerment.