Microfinance and Bangladeshi Women’s Empowerment

The practices of microfinance as development policy in several countries have shown the positive effects in two vital areas of national development; namely, the alleviation of poverty and the empowerment of women. Despite this positive evidence, some critics question the impact of microcredit for women’s empowerment. While microcredit has contributed positively to the well-being of women in general, it has not necessarily led to the comprehensive improvement of women. Also, the inclusion of gender mainstreaming in development policy, including microfinance, has invoked questions on its impact on a progressive gender and development policy. By using the findings of several microfinance practices in Bangladesh, I will examine critically their impacts for women’s empowerment, particularly at the individual level. Therefore, it will lead to a big question on the ways microfinance can be considered a “progressive” gender and development in policy-making.

The experiences of microfinance in Bangladesh have been unique. Traditionally, women in Bangladesh have very little contact with the labor market and generally do not have significant cash incomes of their own. This reflects on customary and religious restrictions on women’s mobility outside the home. This condition is also supported by the marriage traditions of patrilocal residence and village exogamy in Bangladeshi society. When a woman marries, she leaves her home, family, and village, and moves into the household of her new husband, in a new village. As a result, wives may not have many relationships outside the household and their empowerment has less attention. Therefore, the country has been the “laboratory” for some of the most challenging gender and developmental experiments in the contemporary world, including microfinance policy.

Microfinance, also known as microcredit, has rapidly grown in Bangladesh during the 1990s and it has enjoyed correspondingly growing prominence. The program was actually born in the aftermath of the country’s war of independence in the 1970s. The extreme poverty and hunger in that period led an Economics professor at the University of Chittagong, Muhammad Yunus, to begin an experimental project providing credit to the rural poor of Bangladesh. He established the Grameen Bank in 1983, as a microfinance institution that gives collateral-free income-generating loans to poor families. The success of the Bank to alleviate poverty and to empower women has spread and has inspired other villages in Bangladesh and around the world.

Therefore, analyzing the experience of microfinance practices on women empowerment at the individual level is useful to capture its complexities. The cognitive change that occurs within the individual may lead to further action in their relationships with others. Further, Riger argues that the individual approach of empowerment understates the political dimension and the power relationship that exists in human relations. It also helps build a base for social change. Since empowerment is a multi-dimensional concept, the analysis will be based on the definition of empowerment by Kabeer, which emphasized the notion of power as determining choice and the ability to choose.

It is acknowledged that studies which used the individual and the household approaches to examine the implications of microfinance on women’s empowerment most often resulted in conflicting findings. In one hand, microfinance has impacted on progress of women’s empowerment in several aspects of development. Their progress in the economic domain is obvious when the credits can reduce poverty, provide continuous funds to their home, and strengthen economic conditions of the household. Also, the profits from their enterprise can increase their assets and purchasing power. Through income-generating activities in the program, women can enhance entrepreneurial skills for a sustaining empowerment.

In the social and political domain, progress can be seen in their capability to negotiate gender-relations with their husband. The enhanced role of the women may even generate a much-needed expanded area of communication between wife and husband, including shared decision-making in domestic matters and control of the use of loans. This ability also can help to empower husbands and children. Ultimately, progress may lead to gender-equality between women and men, at least within the household. Social and political progress can be seen practically at the level of the collective dimension of empowerment such as in groups and in society. In terms of identity, women have freedom in self-actualization and self-determination. The activities in the group also bring benefits to building confidence, knowledge and self-esteem. The domain of identity cannot be separated from culture and religion. In the case of Bangladesh, it suggests that in some instances cultural tradition undermines the progress of women’s empowerment. However, it cannot be ignored that many women in Bangladesh still believe and hold their culture sincerely, such as the respect of their husband.

In the case of Bangladesh, on the other hand, I argue that microfinance cannot fully be considered as a progressive gender and development policy. There are two main reasons for that.

First, microfinance has not been a policy that shows comprehensive and intact progress for women. The progress in women’s empowerment always contains risks on the other side. For example, a woman may, herself, eat better and feel better able to provide more income for her family, but at the same time may have extended the length of her work day or increased the intensity of her work. Also, it is true that microfinance cannot eliminate the likelihood of domestic violence, however, their participation in microfinance and economic contribution generally may reduce violence. A finding by Hashemi, Schuler, Riley, and Akhter, for example, noticed that access to credit appeared to be associated with an overall reduction of the incidence of violence against women. The loans and social dimensions of credit programs may help to inhibit violence against women. Bringing home a resource that benefits men can protect women from violence. It is also supported by another study by Reza which compares the likelihood before and after involvement in the credit program. Women reported an overall decrease in normative violent behavior by their husbands.

Secondly, microfinance practices have not adapted to a systematic approach to enabling both women and men to contribute together in the program. Microfinance practices have not reflected gender mainstreaming in the gender and development policy which emphasizes men’s role. Men or husbands have not contributed positively in advancing gender equality and gender relations. Women’s economic progress from microfinance policy does not necessarily lead to their welfare. For instance, husbands still pay less attention to women’s health and vulnerability, including nutrition issues. Also, women who participated in microfinance did not have any problems in terms of their access to credit because they directly accepted the money. The problems appeared to be in the control and the use of the credits. Study by Goetz and Gupta found that married women exercised little or no control over their loans and their husband controlled those loans.

The discussion shows that the impact of microfinance on women’s empowerment at the individual level shows mixed results. While access to microfinance can and does make vital contributions to the economic productivity and social well-being of poor women and their households, it does not automatically empower women who seek to bring about a radical structural transformation. On one hand, microfinance is still promising as one of the strategies of development. Women’s empowerment through microfinance might lead to gender equality through enhanced self-confidence, resources, coping abilities, freedom of choice and power-relations. It also contributes substantially to the well-being of women, reduces women’s vulnerability and poverty, and provides stable and continuous income for family. In this context, microfinance can be considered as a progressive gender and development policy. However, the achievements of microfinance on women’s empowerment contain risks for women’s and the family’s security. There are also several quantitative and qualitative factors which could contribute to women’s empowerment, particularly qualitative ones, for instance, religious beliefs, household type, and husbands’ attitudes.