Women and Microfinance in Mediterranean Countries

Transcription

1 Development, 2006, 49(2), (67 74) r 2006 Society for International Development /06 Women and Microfinance in Mediterranean Countries Dialogue MARCELLA CORSI, FABRIZIO BOTTI, TOMMASO RONDINELLA AND GIULIA ZACCHIA ABSTRACT Marcella Corsi and her co-workers analyze the social and economic impact that microfinance programmes have on participant s lives, particularly on women in the Mediterranean countries. They identify the changes of the women who took part in the microcredit programme. They examine the consumption levels, savings, housing conditions and investigate using an index of the changes whether the microcredit programme did indeed bring about women empowerment. KEYWORDS microcredit; women s empowerment; poverty alleviation; sustainable development Introduction Since the beginning of the 1990s microfinance programmes specifically targeted to women have been one of the principal strategies for poverty alleviation by international community of donors, mainly because of the assumed financial self-sustainability of Microfinance Institutions (MFIs). MFIs aim to provide financial services to low income households, even the extremely poor, in a participatory and non-paternalistic development approach to the great interest of the donor community, policy makers, development researcher and practitioners. According to the so-called win-win proposition MFIs should combine the social goals, such as poverty alleviation and women s empowerment, with operational and financial self-sufficiency based on access to international financial markets independently from international development agencies. Both the financial self-sustainability of microfinance programmes and the growing empirical evidence of the high return on loans of women clients have convinced international development agencies to support the access of women to microfinance. The stated goal of MFIs in development is to generate a virtuous circle of increased family income and improved social and economic conditions for the whole community. Nevertheless, the impact analysis of microfinance intervention on women has shown controversial results, even within the same MFI. Some studies have confirmed the women s economic and social empowerment whereas others have argued that women s participation in MFI programmes has only served to strengthen patriarchal behaviours (Kabeer, 2001). Similarly, concerns have been raised on the impact of microfinance programmes on economic and social inequalities for women because of the donor to turn Development (2006) 49(2), doi: /palgrave.development

2 Development 49(2): Dialogue 68 the microcredit programmes in self-sustaining projects (Morduch, 2002). This pressure can lead to a minimalist approach and the exclusion of the non-financial components such as healthcare, sanitary and educational literacy, which are necessary for the participation of poorest people, particularly for women. This trend also confirms the existence of a possible trade-off between social and financial goals (Morduch,1999). In the following we analyze these recent criticisms of MFI programmes by looking at microfinance women engaged in the Mediterranean countries. A gender perspective on microfinance Approximately 500 million economically active poor people worldwide are operating microenterprises and small business (Women s World Banking Global Policy Forum, 1995). The vast majority of them have no access to the formal banking system because of lack of collateral, high transaction costs per loan for small-scale projects, and the high risk of operating in the informal sector. Microfinance is a unique tool in development interventions, pursuing the goal of poverty alleviation in low income countries in a sustainable way, even if most MFIs still rely on subsidies (ArmendaŁ riz de Aghion and Morduch, 2005). Microfinance covers a wide range of financial services, including loans and savings facilities, insurance, transfers payments and even micropensions to people excluded from the formal financial sector. Microfinance reach a wide range of beneficiaries, typically self-employed, low-income entrepreneurs in both urban and rural areas. Many MFIs provide also social intermediation services such as group formation or development of self-confidence, enterprise development services such as business management and bookkeeping training, and social services such as education, nutrition training and health care. 1 MFIs clients therefore use financial services not only for business investments but also to finance health and education, for household consumption, household emergencies and to meet other cash needs. MFIs assume a different legal status according to local regulatory frameworks: they can be nongovernmental organizations (NGOs), savings and loan cooperatives, credit unions, government banks, commercial banks, or non-bank financial institutions. The most common scheme used is the solidarity group scheme. Group lending contracts make borrowers jointly liable of each group partners loan, mitigating informational asymmetries problems through peer selection and peer monitoring, and social enforcement. Microfinance programmes also introduce other innovations: dynamic incentives such as increasing loan size amounts upon satisfactory repayment with a focus on more creditworthy and reliable women clients (assuming women s culturally programmed behaviour to be reliable); 2 regular repayment schedules starting almost immediately after loan disbursement, as a means to screen out undisciplined borrowers; and collateral substitutes such as compulsory savings, emergency and group fund, providing insurance in case of default or additional funding to group members (Morduch, 1999). Microfinance is assumed to be a gender-sensitive development tool. Early and successful programmes such as Grameen Bank in Bangladesh and BancoSol in Bolivia serve mostly women beneficiaries. Recent studies support the assumption showing overwhelming shares of women clients among major microlenders (Mody, 2000; Microcredit Summit Campaign, 2005). 3 The focus on women is reinforced by empirical studies reporting higher repayment rates (Khandker et al., 1995; Hulme and Mosley, 1997)and greater social and economic impact of lending to women rather than to men (Khandker, 2003).Women are deemed to be more conservative about their investment decisions because of limited labour mobility. This implies the possibility of effective monitoring by peer borrowers in-group lending schemes and more effective social sanctions. Serving women clients is also associated with a more positive impact on households, as women are more concerned about children s health and education (Blumberg, 1989). In general, household improvements on nutritional status, housing conditions, savings behaviour and agricultural productivity are associated with women s control of funds and income

3 Corsi et al: Women and Microfinance generating activity (Thomas, 1994; Udry, 1996; Khandker, 2003). Microfinance capacity to facilitate gender empowerment is strongly debated. Some advocates argue that women enjoy a greater bargaining power within the household when participating in microcredit programmes. They point to a reduction of domestic violence due to a third party scrutiny provided by peer pressure of other group members. Empirical evidence indicates a mixed picture however of the impact of microfinance on domestic violence. Hashemi et al. (1996)reports a decrease in domestic violence in Bangladesh, and Kabeer (2001)argues that women more likely share loans and benefits of programmes access with other household members, reducing intrahousehold gender inequalities. On the other hand, Rahman (1999)reports an increasing degree of violence in households because women participating in the Grameen Bank are perceived as a threat to men traditional supremacy. Most studies indicate that just giving women financial services alone can just reinforce existing social norms; it is the integrated approach which is empowering for women (Adams and Mayoux, 2001; Rankin, 2002). Opening up restricted working opportunities to poor women and encouraging skills accumulation through non-financial services provision along with microcredit schemes does the most to empower women (ArmendaŁ riz de Aghion and Morduch, 2005). Microcredit in the Mediterranean On the occasion of the InternationalYear of Microcredit and with the financial support of Fondazione Risorsa Donna as a member of the Italian National Committee for the Year, we carried out a project on the social and economic impact that microfinance programmes have on women in the Mediterranean countries. With the help of elected local MFIs, we prepared a questionnaire in order to interview women in Morocco, Tunisia, Egypt, Jordan, Lebanon, Bosnia, Croatia, Kosovo, Albania, France, Spain and Italy. The choice of women to interview was random and largely dependent on the needs of local MFIs (Figure 1). Lebanon Al Majmoua CHF-AM Kosovo P4 Meshtekna Grameen Trust Jordan MFW Spain CODESPA WWB Spain Morocco AlAmana Fondep Italy FRD 10 Talenti Fond S.M.Soccorso Fond S.G.Moscati Tunisia FTSS France CSDL Albania PSHM USCA Bosnia Bossel EKI MI-Bospo Croatia DEMOS Egypt PAP DBACD Al Tadamun Figure 1: MFIs involved in delivering microcredit to women in the Mediterranean. The MFIs involved had different kinds of programmes classified according to the range of services offered. These services ranged from minimalist to integrated, they were delivered in both urban and rural areas and to individuals or through groups. The study is based on the MFIs personnel interviewing 4,323 women, between April and September The large majority of interviewees were married, between 35 and 45 years old, with low literacy rate (especially in Egypt and Morocco). Most women declared themselves as self-employed in the trade sector; however, in some relevant cases they were employed as salaried workers (e.g., in Albania and Lebanon). In Jordan, there was a strikingly high percentage of housewives involved in the microcredit programme (64 per cent). It is interesting to note that the interviewees were on the average receiving lower loans than the overall MFI average for women clients, with the exceptions of Egypt, Kosovo, Lebanon and Spain. As commonly assumed in the microfinance industry, average loan balance can be used as a proxy of MFIs depth of outreach. This implies that most of the MFIs selected poor beneficiaries to interview. About 20 per cent of interviewees have been facing difficulties in repaying loans, mainly in Croatia, Italy and Spain, but in few cases difficulties are due to the failure of the financed activity; in most cases they are related to the contract terms (i.e., expiry date of payment). 69

4 Development 49(2): Dialogue 70 Loan amounts have been mainly used to improve an existing activity. The participation of other household members varies among countries. There is a high participation of other family members in Balkan countries and in Morocco, while lower in Egypt and Italy, and very low intunisia and Spain. As an overall effect, credit seems to have stabilized household consumption in 85.5 per cent of the cases, with the exception of Italy and Spain. 4 Women s participation in microfinance programmes seems to affect deeply their savings behaviour. The amount of savings increases in all countries when women enter the programme. Coherently with assumptions about women s deeper concern about household needs, savings have been used by a major share of clients for family-related expenses (56.5 per cent), and also in a very significant amount of cases to invest in an already existing activity (29.3 per cent). Furthermore, a considerable share of interviewees who were facing difficulties in providing daily meals before having access to microfinance, succeeded in overcoming food problems, particularly in Croatia, Jordan, Kosovo, Morocco and Spain where 20 per cent of pre-existent food problems were solved. House improvements were reported mainly in Kosovo, Jordan and Tunisia where more than 70 per cent of clients managed to improve dwelling conditions since they entered the programme (Albania and Bosnia it was about 60 per cent), improving their standard of living. Much less house improvements were undertaken elsewhere. Women empowerment In the project, the impact of microfinance on women empowerment has been assessed by taking into consideration seven dimensions of women social and civic life: mobility outside the family home; role within the reference community; participation in social and civil life; ability to undertake purchases; participation to decisions concerning investment; bargaining power; capacity to reconcile work with family life. In order to be able to give a total evaluation of the empowerment provided by the microcredit programme, we built indexes which consider the results of the seven indicators. We have assigned a score of 1 when the answer was decreased, 0 when it stayed the same and 1 in case of increased. Thus, we have obtained a measure of the changes in each dimension using the mean of the scores obtained (that is the percentage balances not taking into account zeros), providing an index that varies between 100 and 100. The average of the scores obtained in the seven aspects analyzed represents, for each unit, an index of empowerment. As Table 1 indicates, mobility, that is the possibility of going out of the family home, is considered as an advantage especially in Morocco, Italy, France and Kosovo. This indicator aims to measure the freedom that women have in going out of the house, but in some cases the result has been negative due to the fact that the interviewee has much less spare time after having received the loan, even if she gained more freedom: this could be the reason of the negative impact in Spain. Finally, microfinance programmes seem to have an important impact on women s chances to go out, but in almost all cases for reasons concerning their job. The ability in doing purchases (without asking permission of the husband)is considered the main advantage for interviewees in Egypt and Albania, while the regional outcome of this dimension appears the highest in the Arab countries and in the Balkans. Women in Tunisia, Bosnia and Croatia attribute great importance to the possibility of increasing the participation in the decision taken inside the family regarding big purchases, repairing of the house or rents. In Jordan, Spain and Bosnia women perceive the most relevant change to be the increase in their bargaining power inside the family. For the capacity of reconciling work and family life, the access to microcredit is considered advantageous in Tunisia, Jordan and Egypt, while nega-

5 Corsi et al: Women and Microfinance tive outputs were reported in Italy and France. It is possible to state, from a regional perspective, that Arab countries have higher improvements in job and family life reconciliation due to participation in microcredit. A high level impact can be seen in the two empowerment dimensions referring to the power inside the household, both in participation to decision-making concerning important investments and bargaining power inside the family. We found a very high percentage of positive answers in Tunisia and Jordan, Egypt and Morocco. Data show that microcredit programmes have a higher positive impact on women correlated to their educational background. In Albania and Bosnia there is a significant and positive correlation between the empowerment index and women education (Albania Pearson correlation ¼ 0.383; Bosnia Pearson correlation ¼ 0.181). Taking into consideration single aspects of the empowerment index, in Albania the ability to purchase and participate in investment decisions are the most positively affected, while in Bosnia the bargaining power inside the household are more consistently noted. A regional aggregation confirms these results (see Table 1)and shows the strong changes in women s purchasing ability in the Arab countries 71

6 Development 49(2): Dialogue Tunisia Morocco Egypt and in the Balkans. Also on a regional basis, the capacity to reconcile a job with family life seems to be the main problem for women interviewed. This negative effect is noticeable in Western Europe (seetable 2). In countries where it is possible to compare different approaches to microfinance, MFIs providing both non-financial services and credit and savings products (integrated approach)have better results in terms of the empowerment index. Integrated programmes lead to 74 per cent of interviewees reporting positive changes towards empowerment, while minimalist institutions have only 59 per cent reports of positive results. 5 This suggests that providing non-financial services help to attain empowerment (Figure 2). Looking at MFIs disbursement procedures, it seems that group lending arrangements are the most positive for women. In some countries, there is a positive correlation between the empowerment index and the length of participation in the programme and the number of loans received. In those cases, we can assume a causal relationship that confirms the positive impact of microfinance for women s empowerment. An in-depth analysis of the correlation of each empowerment dimension with the length of participation shows significant results for Albania, Bosnia, Morocco and Jordan. Mobility outside the family home has not changed overtime in any country; possibly due to the fact that changes at the very beginning of the activity may not continue to evolve. The other dimensions may, instead, increase slowly over time relative to household and social relationships. Ability to undertake purchases and participation in decisions concerning investment register the most important changes. Conclusion Minimalist Italy Spain Kosovo France Jordan Lebanon Mean Croatia Bosnia Albania Integrated Figure 2: Positive impact on empowerment by type of programme (per cent). The results do not provide an absolute measure, but help to identify the changes that have occurred both through qualitative indicators and the project s empowerment index. The evidence shows that access to credit can change women s life conditions, giving women the chance to find their way out of poverty. In relation to women s empowerment the results are similar. Through the empowerment index, the project has measured how women s conditions change in relation

7 Corsi et al: Women and Microfinance to seven central aspects of empowerment. The results also indicate that microfinance activities, granting loans only to women in order to have guaranteed high return rates, can stimulate women s empowerment: in the first place, microfinance provides economic emancipation, and this can lead to broader levels of empowerment. It could be argued that financial empowerment is more effective than programmes designed to fight gender discrimination directly. However, the results also indicate that the achievement of women s empowerment is best served through specific gender-sensitive contract features within the microfinance scheme, such as the early Grameen Bank early experience suggested. 6 In particular, non-financial inputs provision (such as adult literacy, health care services, management training and so on)is extremely relevant not only as a tool to enhance women s participation but particularly to increase women s empowerment. An inclusive and gender-sensitive approach to microfinance needs to address women s specific needs and constraints (limited mobility, lack of land title as collateral, etc.)and consistently translate them into credit terms, financial products and delivery mechanisms. In order to attain the ambitious goal to reach 100 million of the world s poorest families by the end of 2006, donors must review best practices and guidelines, including those that address empowerment, taking into account the trade-off between social objectives and financial self-sufficiency by MFIs. Acknowledgements We thank Fondazione Risorsa Donna ( the financial support, SANABEL ( ETIMOS ( the networking activity and Angela Spagnuolo for the technical assistance. A preliminary version of this paper was presented at the conference on Women and Microfinance: A New Path for Development in Mediterranean Countries? (Rome ^ 21 September 2005), organized by Fondazione Risorsa Donna on the occasion of the International Year of Microcredit. The usual disclaimer applies. Notes 1 MFIs decision to offer non-financial services determines whether they are minimalist or integrated. 2 Rahman (2001)study on Grameen Bank women clients in Bangladesh point to these complementary cultural forces. 3 Mody (2000)found 80 per cent of women clients in a sample of 34 largest MFIs beneficiaries, while according to the Microcredit Summit Campaign Report 2005, over a 3100 programmes sample 83.5 per cent of clients are women per cent of them answered their consumption has stabilized a lot. 5 Integrated approach: financial and non-financial services (such as social intermediation ^ group formation, leadership training, enterprise development services, marketing, business training, and social services ^ education, health and nutrition)are provided. Minimalist approach: only financial services are provided by the MFI, notably credit and savings. 6 Grameen Bank re-designed its approach and range of products offered in order to enhance the share of women served. While farming is a man-dominated sector, a greater focus was devoted to non-farm rural activities. References Adams, Dale and Linda Mayoux (2001) Crossfire, Small Enterprise Development12(1): 4^6. ArmendaŁ riz de Aghion, Beatriz and Jonathan Morduch (2005) The Economics of Microfinance, Cambridge, MA: MIT Press. Blumberg, Rae (1989) Entrepreneurship, Credit, and Gender in the Informal Sector of the Dominican Republic, WomeninDevelopment:AID sexperience,1973^852,washington, DC: USAID. European Commission (1997) The Joint Harmonised EU Programme of Business and Consumer Surveys, European Economy-Reports and Studies 6: 21^2. 73

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