Women's Empowerment Pt. II: On Microfinance

In a previous post on women's empowerment, we briefly discussed the role of framing economic development in the context of an ever-advancing civilization in which spiritual and moral empowerment go hand-in-hand. This concept may be difficult to conceptualize, so we think it might be beneficial to analyze a current trend with regards to microfinance institutions that have, in recent years, placed particular emphasis on women's empowerment. Though we do not claim to have experience dealing with this topic, recent reports and analyses of the declining effectiveness of these institutions have inspired this post.

In what is considered the birthplace of microfinance, the story of this institution has taken a turn for the worse in India. This turn has been documented through decreasing repayment rates (the rate of delinquency has almost doubled in recent years) as well as a seemingly rising trend that emphasizes the use of traditional moneylenders to pay back loans acquired through microfinance. The WSJ article quoted a borrower as saying:

"Group pressure makes us go to moneylenders... We get small loans for 15 days to fill the gaps when we can't pay. If you lag behind, the rest of the group members can't get new loans."

There is increasing interest by donors to fund microfinance efforts because of the expectation that providing access to finance will lead to empowerment; however, it is not clear whether these initiatives are  ultimately beneficial. Part of the reason may be a result of the divergent interests of lenders from promoting social goals:

"On the one hand, private capital helps finance the growth of the sector and expand its reach. 'At the same time, if the mission of microfinance institutions is only to maximize profit, then the social goal of helping people out of poverty is not reached,' …'The problem is that a lot of the new private investors in the sector see it mainly as a way of making a lot of money.'"

Our point in sharing these trends is not so much to criticize the efforts of the microfinance programs described in these articles. Indeed, principles such as the equality between women and men that  have been infused into such programs address truly profound social ills and have tremendously boosted the status of women in the regions in which they  have been implemented. After all, in many instances the concept of income generation was foreign to women, and since earning an income, these women have placed more financial emphasis on the education of future generations than was the case before.

Rather, our point is to share that without other moral and spiritual principles that cement processes of development in an ever-evolving framework, noble efforts can be undermined by other, less constructive forces. Having a strong moral and spiritual base can keep such initiatives focused and purposeful. Consider the case of ECTA (which means "unity" in Nepali) in which participants are encouraged to build-capacity to analyze the needs of society and apply spiritual principles towards the advancement of their communities. Certainly, the experience here is also a fledgling effort at its early stages. However, the communities’  objective seems to go beyond income generation and skill-building,  and their approach attempts to address  the  causes of social ills at a much deeper level.

This same process may be taking place among other microfinance programs that seek to elevate the station of women, though are not given much attention. Perhaps the financial component of these activities is magnified in Western media, partly to demonstrate results that are more easily measured and more rapidly achieved. Perhaps the other components of community-building, which are more difficult to measure and tend to bear fruits more gradually, are left hidden to our eyes. If this is the case, then we should perhaps learn how to shift the way we measure and discuss micro-finance programs so that they fit into the context of an ever-advancing civilization. If this is not the case, then perhaps it would be helpful to step back and analyze our experiences in this field in a more holistic manner that would address principles that need to be included in order to truly propel our communities forward.