According to Sujata (19), the concept of micro credit has dominated a global forum in recent times because of its ability to alleviate poverty in rural areas. This concept was epitomized by the Nobel laureate Muhammad Yunus with his Grameen Bank model that has so far empowered women in Bangladesh. Mayoux (17) notes that all over the world women have been marginalized and there was need to empower them so that they could contribute to development alongside their male counterparts. Yunus discovered that women in Bangladesh, like in any other country in the world, were disadvantaged in terms of access to education, property and economic rights, as well as limited opportunities to come out of poverty and have self determination.
Aminur (10) notes that Muhammad Yunus discovered that women could be empowered through a micro credit model as opposed to macro credit that disadvantaged them in terms of guarantors and other requirements. Most women could not meet these requirements, as they depended on their husbands. It was discovered that many women were ready for a finance facility that they could rely upon to help them to come out of poverty. Women empowerment, therefore, was hinged on several objectives. These include: to enable women to have their own income, separated from those of their spouses, and to unable women to have freedom. This write up discusses the concept of micro credit loans and argues that micro credit system has played a vital role in empowering women in alleviating of poverty.
The Concept of Micro Credit System
According to Polmar, White, and Yunus (15),it is only through creation of the proper environment to support the poor and the marginalized in the society that they can be empowered to assist themselves. They add that Muhammad Yunus realized this in 1976 and started Grameen Bank to give small credits to poor women in rural areas to start businesses that could increase their income. Polmar, White, and Yunus (18) note that the philosophy of micro credit in empowering women is to help women so that they can help themselves. Through micro credit, small credit to a poor woman is seen as an empowering opportunity and a provision of fundamental right. This is because it enables the women to participate in socio-economic development, which could have not been possible in the mainstream banking system.
Sobhan (4) notes that micro credit system of finance acts like a social safety model that assists the poor to go through short term problems of poverty. He argues that this is the most effective and successful way of enabling poor women in rural areas to empower themselves by attaining self sufficiency. Additionally, Sobhan (5) notes that since micro credit system has well defined modes of operation, women are able to be relied on to repay the loans advanced to them without delay. Sreeramulu (9)argues that the realization that many women were committed to repay the loans advanced to them within the agreed time was the impetus that has seen the lives of many women in rural areas being transformed.
Polmar, White, and Yunus (18) observe that the concept of micro credit as conceived by Yunus, was founded on several fundamental truths that are important in ensuring that the women are empowered to alleviate poverty in their communities. He notes that micro credit allows women to adopt a progressive attitude by enabling them to eliminate the problem of financial dependency. In this system, micro credit targeted poor women in rural areas by giving them loans to start business ventures. The system ensures that the borrowers are able to repay their loans. This is done through provision of information on how to establish and run small businesses. Similarly, Yunus and Weber (10) note that the system encourages saving so that at the end of a particular time, these women are able to run their businesses using their own savings, and allow other women to access the loans. According to Yunus and Weber (10), this is done through close monitoring by micro credit institutions and ensuring of equitable distribution of loans to poor women in rural and urban communities.
Models in Micro Credit
According to Polmar, White, and Yunus (15),micro-credit system is composed of several models under which women can get advanced loans. He cites the Self Help Group model, where the group acts as an intermediary between the borrower and the institution providing the financial support to women who were to start their businesses. The other model is the Grameen Group that was started by Muhammad Yunus in Bangladesh, where individuals are provided financial assistance by a financial institution depending on the strength of the group. This is the model that is used by many countries across the world.
Micro Credit and Women Empowerment
According to Mayoux (7), micro credit has been lauded as a powerful tool in empowering poor women to attain equality in the developing communities. However, critiques argue that the model has failed to address the real challenges the women are facing, with some unscrupulous institutions reaping away the benefits that women could have got from the model started by Yunus. Mayoux (7) argues that micro credit can alleviate poverty to poor women, since most of the Micro Finance Institutions (MFIs) charge higher interest rates on the loans advanced to women.
Consequently, Bateman (21) observes that this model has, therefore, been seen as feminist empowerment where the underlying concern is women equality and women rights. Bateman (22) argues that women empowerment in itself cannot be achieved simply by taking care of the financial needs of women. He notes that women empowerment is an integral and inseparable part of social transformation, and micro credit to poor women is the basis to achieve social transformation. Bateman (21) states that through micro finance, empowered women can not only agitate for their rights, but also act as role models to fellow women and the community at large.
Additionally, Meenai (8) notes that through micro credit, women are provided with an entry point in the sense of an expanded strategy which aimed at enabling them to attain socio-economic and political empowerment. In this way, issues of gender rights can be addressed as a part of a strategy to allow the creation of opportunities aimed at changing the lives of many poor women. Similarly, micro credit enables the identification of constraints and bottlenecks within the path of attaining empowerment by providing information to women on their rights and potential to overcome those constraints. Meenai (8) notes that through micro credit strategies, more women have been linked to the existing services and infrastructure, while the developed new technologies have been availed to poor women in rural communities.
As a result, women have access to jobs, such as food processing and weaving, which helps them to build information networks which are, in turn, vital in identifying new unexploited markets. Nath-Dhar (12) notes that opening of new markets for women enterprises is a panacea for changes in policies not only in traditional views about women, but also in terms of the legislative actions of the government.
According to Naz (1), micro credit system also empowers women through participatory principle, which helps women to build incremental knowledge about social, economic, and political development. Naz (1) argues that such knowledge if availed to women is useful for the development of strategies for change. For instance, providing knowledge on the economic matters to women will help to address issues like property rights to women, intra-house relations and transformative macro economy, which is largely seen as a reserve of men in many communities. Similarly, knowledge to women will enhance the address of gender specific strategies for political and social empowerment. Mayoux (31) notes that by embracing micro credit system to women, it is possible to form effective means to integrate gender awareness among women and men. This could help to challenge the tenets of male chauvinism in communities where poor women operate.
Women Empowerment and Poverty Alleviation
According to Mayoux (7), women are poor because they are not empowered. They, thus, face the burden of economic insecurity and socio-political inequality as a result of lack of power. Poverty alleviation through micro credit takes a panoramic approach that goes beyond the normal market incomes and incorporates increasing capacities and choices to poor women. Nath-Dhar (12) observes that Yunus’ model of microfinance focuses on developing sustainable livelihoods and community advancement, while addressing issues of education access, healthcare, and infrastructure development. In this regard, micro credit addresses the poorest, while also sustaining the achievement attained by the poor.
Moreover, Nath-Dhar (12) notes that poverty alleviation through micro credit system focuses on small savings and provision of loans, production, forming of groups, and provision of subsidies to poor women in some special context. Equally, micro credit develops effective methodologies targeting poor women in rural areas. Meenai (18) observes that Yunus’ system of micro credit finance explicitly targeted poor women in rural areas because of the pronounced higher levels of poverty and need for women to participate in the well being of their households. Micro credit system as developed by Yunus, did not consider gender inequality as the problem of poverty per se. This is because gender issues were viewed largely as cultural problem, which did not require outside invention.
But Nath-Dhar (12) notes that the issue of gender inequality was almost inescapable when it comes to addressing the problem of poverty to poor women in rural areas. As women become empowered through micro credit, they get access to information and start demanding for equal treatments in communities which have marginalized them. It is, therefore, noticeable, that poverty alleviation and women empowerment go hand in hand. However, Harper (3) notes that poverty alleviation has been overshadowed by women empowerment, as the latter denotes political intonations. Harper (4) argues that this is, in fact, the very essence of empowering women, so that they can have self determination when it comes to political matters.
Hogue-Werhane (10) further indicates that micro credit assumes that increasing women’s access to financial facilities will enable them to have greater contribution to the household income, hence, provide inventions to increase household well being. This will translate into better conditions for women, who will be empowered to bring about changes to the gender inequality problems that exist in many rural communities
Micro Credit Creates Enabling Environment
According to Jerinabi (21), empowerment of women can be an elusive endeavor. It can also be a pipe dream more if the ones to be empowered are ignorant and lack financial support. Jerinabi (22) notes that micro credit is concerned with creating and enabling environment to ensure that both women and men are part and parcel in the process of empowering women to address their own problems
Fisher and Sriram (3) note that for a long time, the environment to empower women was not conducive and, therefore, there was a need to address the issue of poverty in communities where women lived. It is evident that poverty in communities exacerbated the inability of women to address problems of a patriarchal society conclusively. Fisher and Sriram (5) further note that micro credit system sought to address the root cause of inequality in communities where poor women lived.
Aminur (12) observes that in addressing the problem of poverty, it is vital to concentrate on the environment in which women operate. For instance, Aminur (12) has noted that the environment did not allow women to own property. Equally, there was lack of access to education in relation to men in the communities while investments were also lacking and could not provide a surplus for women. The other aspect of the environment was the lack of human rights and specifically, women rights and their subsequent reinforcement.
Additionally, Fisher and Sriram (5) note that the environment did not permit women to have a minimum income or employment to enable them to have a stable income. Women could also not access nutritious foods and safety nets to help them to deal with the frequent malnutrition related diseases in their households. This caused them to spend most of their working time attending to their malnutrition and suckling children. Similarly, they lacked power to address the injustices and inequality and above all, the problem of gender inequality, which is being accepted by many people as a cultural norm.
Challenges facing Micro Credit System in Addressing Poverty Alleviation and Women Empowerment
Harper (3) observes that micro credit system in countries like Bangladesh have received international accolades for comprehensively addressing the problem of poverty among women. However, he notes that many challenges still abound, and there is an urgent need to address them so as to fully realize the benefits of a women empowered society. He identifies a lack of knowledge about the market and its profitability as the factors which create obstacles for women decision making. Similarly, some of the groups benefiting from micro credit loans have been associated with poor keeping of records and poor management of funds, which have hampered the progress of many women in achieving poverty alleviation in their communities.
Additionally, Hogue-Werhane (10) points out cases of employing too many people from the same family to mange MFIs, which besides increasing pressure to share benefits, has also led to emergence of inequality among women themselves. Consequently, Hogue-Werhane (10) notes that inventory and inflation accounting in many of the MFIs and self help groups is never taken into consideration, making cases of corruption go undetected. Similarly, many women still lack capital and the loans’ interest rates have been increasing, making many women to become lukewarm in accepting loans from MFIs.
On the other hand, Jerinabi (11)points to stringent credit policies coupled with harsh business environment which threaten to ruin small businesses started by women. This again reduces their aggressiveness in accessing loan facilities to start programs that could empower them. Additionally, Jerinabi (11) identifies the burden of meeting, because women are required to attend long meetings, while, at the same time, are expected to take care of family chores. This has the danger of alleviating women from their traditional responsibilities of mothers, a concept that many rural women have not yet accepted. Similarly, Fisher and Sriram (5) argue that some women are worry that by using group lending model additional stresses and pressures are introduced, and they see this as an avenue of plunging back into poverty in case some of their members fail to repay their loans.
On a more critical note, Aminur (4) observes that micro credit system is a way of keeping women more in traditional gender roles, as there is no macro empowerment to them. Aminur (4) argues that this has the effect of reinforcing the idea that women can only do better in low production sectors, and that they cannot move from micro enterprise to macro businesses. Again, Aminur (4) notes that micro credit seems to have made matters worse in individual households, as men withdraw from their provisional duty and leave the responsibility to women with the claim that they are engaged in productive activities.
Lesson Learnt from Micro Credit in Empowering Women and Poverty Alleviation
The system of micro credit has enabled the poor women to participate in alleviating poverty in their communities. It is among the strongest weapons apart from the political empowerment that could be used to bring poor women in rural areas to participate in socio economic development. With overwhelming success in countries like Bangladesh, micro credit schemes have proved to be an exceptionally good tool in alleviating poverty for rural and urban poor women.
Similarly, schemes supported by micro credit, such as mini hatcheries, are useful as investment ways in enabling women to overcome poverty not only in their homes, but also communities. This is because in these mini hatcheries, women get to share ideas and encourage other women to create their small business. Through sharing of information, women are able to empower themselves by establishing successful micro businesses and create wage employment not only to themselves, but also to other women who are employed to work in these businesses.
Additionally, micro credit has lead to forming of micro credit institutions which provide other vital services beyond the usual loans. Such services include: the provision of information on how to do business, mutual support networks, counseling, and community formation and fostering. Women in the micro credit system get benefits from these non financial services. Evidently, micro credit has also brought the government on board to address the question of women empowerment, hence, women benefit from the services of coordination and control to avoid unscrupulous people in their quest for poverty alleviation.
Apart from alleviating poverty, micro credit helps women to be empowered in terms of information on health and education. They enjoy more opportunities to access employment and other avenues, like politics, which were previously a preserve of men. Through political and social awareness women are able to participate in politics and vie for elective positions not only at local level, but also at national level. Similarly, micro credit has the potential of reducing dependency of women on their spouses and gives them more power to participate in decision making in their families.
From the above discussion, it is evident that the micro credit model formed by Muhammad Yunus in Bangladesh has helped to achieve greater milestones in empowering women so as to participate in poverty alleviation in their communities. Through micro credits, women have been empowered to participate both in socio economic and political arenas. This has made them realize other rights, like education, health, and equality, in communities that were largely patriarchal. Even though the challenges still abound, it is notable that women have become increasingly powerful as equal players in development through micro credit finance. Through this system women have greater control in matters like fertility and birth spacing, education access, and access to other services.