Mi­cro­fi­nance loses ef­fec­tive­ness

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Em­pow­er­ing poor by lend­ing small amounts par­tic­u­larly to women is con­sid­ered to have an ef­fec­tive poverty-re­duc­ing im­pact but re­search has shown that the ef­fec­tive­ness of mi­cro­fi­nance is lesser in man-dom­i­nated so­ci­eties.

It has been es­tab­lished that ideal gen­der par­ity is ab­sent even in the most de­vel­oped economies. Women are still dis­crim­i­nated in pro­mo­tion, elec­tions and cor­po­rate boards even in coun­tries like the United States or Canada. In ev­ery coun­try around the world, women out­num­ber men in poverty.

Dom­i­nance of men varies in dif­fer­ent so­ci­eties. Pa­tri­archy could be in the fam­ily, pro­fes­sion and re­li­gion. It sup­presses the women and mi­cro­fi­nance lenders find it hard to lend them due to var­i­ous rea­sons, which in­clude dif­fi­culty in at­tract­ing re­sources and fe­male cus­tomers and re­cov­er­ing credit. One can­not, how­ever, ne­glect the im­pact of loans pro­vided by small mi­cro­fi­nance in­sti­tu­tions to the poor women in de­vel­op­ing economies.

The suc­cess of mi­cro­fi­nance in Bangladesh rekin­dled hopes of a sim­i­lar turn­around in other poor coun­tries. While lend­ing to poor women the small lenders have to take into ac­count not only the im­pact of men-dom­i­nance in the so­ci­ety but other sources of in­equal­ity as well.

Men-dom­i­nance in some coun­tries is stronger in some sec­tors and com­par­a­tively weaker in oth­ers. For in­stance, in Pak­istan and Bangladesh there is a men-dom­i­nance in re­li­gious and fam­ily mat­ters, but the in­flu­ence of women is com­par­a­tively equal in pro­fes­sions and gov­ern­ment in Bangladesh. The post of prime min­is­ter in Bangladesh has been ro­tat­ing be­tween the two women for the past 15 years. This has in­creased the out­reach of women in Bangladesh com­pared with Pak­istan.

More than 80 per­cent of the work­ers in gar­ment in­dus­try in Bangladesh are women, while only 10 per­cent gar­ment work­ers in Pak­istan are from fair gen­der. Gar­ment in­dus­try in Bangladesh is the largest provider of de­cent salary and in­dus­trial jobs and women dom­i­nance in the in­dus­try has em­pow­ered them na­tion­ally. This em­pow­er­ment of women in Bangladesh has made mi­cro­fi­nance a global suc­cess story.

In Pak­istan, most of the low wage work is per­formed by women as is the case in In­dia as well. The low im­pact of mi­cro­fi­nance in these two coun­tries is be­cause of al­most to­tal male dom­i­nance in the so­ci­ety.

It is es­sen­tial for mi­cro­fi­nance lender to take into ac­count fac­tors, like pa­tri­archy and other sources of in­equal­ity in­stead of pay­ing at­ten­tion to just eco­nomic fac­tors. The suc­cess rate of mi­croloans will be higher if mi­cro­fi­nance prod­ucts are de­signed af­ter con­sid­er­ing all the fac­tors im­pact­ing poverty. Since the aim of mi­cro­fi­nance is to pull peo­ple out of poverty, it is nec­es­sary to un­der­stand fac­tors from where this poverty arises. While ad­dress­ing the is­sues faced by poor women, the mi­cro lender should an­a­lyse the root of those is­sues in the so­ci­ety. It should then find a way to make the mi­croloan ben­e­fi­cial for the down­trod­den.

It is gen­er­ally per­ceived that gen­der equal­ity is higher among the weaker seg­ments of so­ci­ety. How­ever, a deep anal­y­sis will re­veal that this is not true. We see male dom­i­nance in all the so­ci­eties when it comes to re­li­gion, eth­nic, and lin­guis­tic frac­tion­al­i­sa­tion. The re­li­gious lead­ers are pre­dom­i­nantly men. Most po­lit­i­cal lead­ers around the world are men. There is a strong el­e­ment of pa­tri­archy as far as cor­po­rate heads or board mem­bers in cor­po­rate en­ti­ties are con­cerned. The mi­cro­fi­nance lead­ers should look into the rea­sons why de­spite this uni­ver­sal dom­i­nance of pa­tri­archy, some so­ci­eties are less dis­crim­i­na­tive against fair sex than the oth­ers.

Grameen Bank has shown the way to the mi­cro lenders to suc­cess­fully op­er­ate in a male dom­i­nated so­ci­ety. There is a lot of ground to be cov­ered by the mi­cro­fi­nance in­sti­tu­tions of Pak­istan. They have to find out a way to op­er­ate poverty-rid­den so­ci­ety, ad­dress­ing the is­sues of gen­der or other forms of sys­tem­atic dis­crim­i­na­tion.

They must re­alise that when poverty is based on gen­der or other forms of cat­e­gor­i­cal in­equal­ity it in­creases the trans­ac­tion costs as they try to reach their tar­geted clients. They should de­sign their pro­gram pru­dently as in such cases it would be much more ex­pen­sive to try and ad­dress poverty. In­stead of aban­don­ing their pro­grammes half­way, they should make sure that these pro­grammes are sus­tain­able.

The size of mi­cro­fi­nance in­sti­tu­tion mat­ters. Grameen has at­tained a size where it could carry out a mix­ture of high and low cost mi­cro­fi­nance and sur­vive on av­er­age. The mi­cro­fi­nance in­sti­tu­tions in Pak­istan are too small to take up chal­leng­ing mi­cro­fi­nance ini­tia­tives.

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