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Rural Women’s Access to Microcredit: Necessary but not Sufficient for Socio-economic Empowerment

21.09.2015John Kuumuori Ganle, Researcher, Kwame Nkrumah University, Kumasi, Ghana

In many parts of rural Africa today, microcredit schemes for women are increasingly being promoted as both a solution to women's limited access to credit and a strategy for poverty reduction and women's empowerment. Microcredit is simply the extension of a small amount of collateral-free institutional loans to jointly liable poor group members for their self-employment and income-generation. In a recent paper that we published in World Development (Vol. 66, pp.335-345, 2015), we studied the empowerment benefits of rural women's access to microcredit using data from a longitudinal multi-method research that we conducted with rural women who were involved in an NGO-run micro-lending programme in Ghana. We developed a simple, yet multifaceted model of empowerment in which the empowerment benefits of women's access to microcredit were evaluated based on three main pathway matrixes: material, relational, and perceptual pathways to women empowerment.

We found that some women are empowered along several dimensions as a result of their access to credit; several other women have little control over the use of loan funds and are therefore no better off due to receiving credit; while some women are subjected to harassment and abuse due to their indebtedness and inability to repay loans, and are therefore worse off. Those women who became more empowered as a result of their access to credit were women who either were already engaged in some business venture before receiving the loan or they exercised full or significant control over proceeds from their loans. Women borrowers who became vulnerable and even disempowered were however those who either received loans to start-up new businesses but who actually failed to do so due to loss of loans to other unapproved loan uses such as direct consumption, or those who had no control over investments and earnings from their loans.

Our findings suggest that having an understanding of the nature of potential loan recipients and the socio-cultural context within which they live could be vital for the survival, effectiveness and long-term success of any microcredit programme. In some cases, access to credit is the only input needed on the road to women empowerment. At the same time, our findings also suggest that in a culture in which women have little control over their loans and income from their investments, it is a singularly poor environment to give out credit to women to start-up new businesses.

This suggests the need to focus the lending approach of microcredit schemes for rural women on a number of things. First, it might be better to focus on women who already have an income-generating activity that generates sufficient income to repay the loan. This would not only help loan recipients to grow their existing businesses and generate more income, but it would also ensure the sustainability of the schemes themselves. Second, it might be useful to first screen and determine which clients have adequate control to be able to use a loan productively. This might require moving beyond individual women to focusing on families and communities to redress powerlessness and gender-based discrimination against women. Finally, borrower groups should be encouraged to build-up their own emergency savings through small regular contributions. Such funds could be loaned out (and to be replaced later) to group members who might have legitimate reasons for being unable to repay at the time of collection. This could reduce the harassment, abuse, and seizure of assets that insolvent borrowers often experience due to other group members having to cover for them out of their own pocket.

Overall, our study suggests that empowerment cannot always be assumed to be an automatic outcome of women's access to microcredit particularly in contexts such as Ghana where women still face considerable socio-economic disadvantage relative to men. However, with adequate loan size, appropriate timing, effective monitoring, and better screening methods that avoid giving loans to potentially insolvent borrowers, women's access to microcredit does have the potential to impact positively and powerfully on their empowerment.

 

This blog post is based on the study Microcredit: Empowerment and Disempowerment of Rural Women in Ghana, World Development, Vol. 66, pp.335-345, 2015. Corresponding Author: Dr. John Kuumuori Ganle, Department of Geography and Rural Development, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana, Tel: 0249957505, E: johnganle[at]yahoo.com 

About the Authors

John Kuumuori Ganle, is a population, rural and international development researcher at the Kwame Nkrumah University of Science and Technology, Kumasi, Ghana. He holds a Doctor of Philosophy in Public Health from the University of Oxford, UK. 

Kwadwo Afriyie is a Lecturer at the Department of Geography and Rural Development at the Kwame Nkrumah University of Science and Technology, Kumasi, Ghana. He holds a Master of Philosophy in Geography and Resource Development from the University of Ghana, Legon. 

Alexander Yao Segbefia is a Lecturer and Head at the Department of Geography and Rural Development at the Kwame Nkrumah University of Science and Technology, Kumasi, Ghana. He holds a doctorate degree in Geography and Resource Development from the University of Ghana, Legon.

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