Woman, training and work

Gender! A Partnership of Equals
Geneve: International Labour Office, 2000. 115 p.

Control over Finances
Who controls the purse strings?

Women have increasingly become a key target group for microfinance programs. Providing women entrepreneurs with access to microfinance contributes not only to poverty alleviation but also to women's empowerment. Moreover, because poor women are increasingly recognized to be better borrowers, regular financial institutions are starting to show interest in them.

It is widely assumed that microfinance will have a positive impact on women's livelihood by leading to higher income, which will help women to perform their role as agents of the health, nutritional and educational status of other household members, by increasing women's employment in microenterprises and improving their income-generating productivity, and by enhancing their self-confidence and status within the family as independent producers and providers of valuable cash resources to the household economy.

On average, however, women's access to formal institutional credit is much more restricted than men's. Women's microenterprises have lower sales revenues, fewer assets and smaller profit margins which, under conventional financial criteria, make them high-risk ventures. Because of tradition, customary law and state law on property and land rights, women rarely have property under their names which they can offer to secure loans. Transaction costs are also likely to be higher for women than men because women tend to have a greater workload, face social restrictions to travel and often lack cash to cover pre-loan expenses, etc. Analysis of the limited number of assessments which exist on the impact of microfinancing demonstrates both positive and negative effects:

• Improvements in women's economic security, bargaining power within the household, self-confidence and health and education of other family members
• Positive effects on the schooling of girls, increase in women's asset holdings (except land) and total household expenditure
• Negative effects of microfinance have been detected with regard to women's workload, repayment burden and the unpaid employment of daughters

Women'scontrol over financial resources is increasingly seen as a key factor in explaining these mixed results. The limited evidence available highlights that a significant proportion of women who may have access to financing, may not have control over the loans obtained. However, the loss of control over financial resources does not necessarily mean that women are worse off in terms of increased social and economic opportunities:

• Even when women lose control over the use of their loans, their overall status in the household may improve due to their role as a financial mediator
• Handing over loans to men may help to secure family stability by easing cashflow bottlenecks in the household
• Women may also use credit as a bargaining chip to gain access to other opportunities offered by financial institutions, such as training, education and information

However, the impact of microfinance services is stronger when women actually control the financial resources acquired in their names. Increased control is likely to contribute to women's empowerment, facilitate women's entrepreneurship, assist them in their household roles and ease their repayment burden.

Lessons learned: The way forward

To effectively address the constraints faced by women in their access to and control over finances, support measures are required at many levels.

Support measures Policy level: Surveys and other data collection methods to determine the needs, demands and debt capacity of women, land reform and other legal measures to abolish gender differences in commercial and civil law, the provision of interest rate subsidies, directed credit and portfolio quotas, etc., and, most importantly, the gender-sensitization of policymakers. Institutional level: Creation of dedicated lending schemes, of gender-specific windows in financial institutions or gender-sensitization of existing financial institutions. Direct support: Literacy campaigns, primary education of girls and the dissemination of sensitization information about financial sector institutions and available targeted schemes, encouragement and support to group-based savings and credit functions and organizations which promote women's associations.

Other strategic options

• Loans in kind, small amounts of credit and savings, regular occasions for deposits
• Supporting activities which are controlled by women, which can be marketed from the home and/or result in income during the season when the woman is acting as the head of the household
• Numeracy and literacy training for women, skills-training, especially bookkeeping and accounting
• Legal literacy and awareness-raising for both men and women, more women staff at all levels of financial institutions
• Group formation for economy of scale (access to markets, land and other productive resources) and federation for leadership training
• Registering and insuring assets acquired through loans on borrower's name, insist on proof of managerial control over enterprise, close monitoring of loan use by financial institution, and mandatory savings on women's individual accounts

Self-Support: A case study TheWorking Women's Forum (WWF) in India was set up in 1978 to organize poor working women in the slum areas of Madras. Its membership has since expanded and now also covers three other states. Members are engaged in a variety of trades. WWF field workers encourage women to form groups of 20 to 30 members usually along occupational and neighbourhood lines. Each group elects a leader; the group leaders elect an area leader to sit on the WWF Governing Board. Loans were obtained initially from commercial banks, but due to constraints met in dealing with them, the WWF set up its own credit cooperative in 1981, the Working Women's Credit Society (WWCS). Loans are granted at an effective rate of interest of about 8%. Groups begin with small short-term loans. Less formal procedures are applied than at commercial banks, such as accepting photographs in place of signatures for identification. Each group leader assumes liability for the members' loans and supervises loan applications and repayment, while the group exerts peer pressure to ensure repayment. The repayment rate stands at over 96%.


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