Rajshekar studies microfinance and women's empowerment in a somewhat cryptic study. The first part studies the transormation of MFIs (Micro Finance Institutions). Excepts:
"A brief backgrounder now before I discuss how the business changed for them: MFIs do not operate like traditional banks. That is, they are not classified as depository institutions that take client deposits and use them as lending capital. They focus on lending. The problem with this approach is that it isn’t easy to generate capital for lending purposes. Most of the capital they lend, especially in the early stages, comes in the form of contributions by governments, from philanthropic organizations and individuals, and as loans from governments and institutions that incur interest at below market rates. As an MFI matures, it can start borrowing from banks, and then on-lend it further at its own risk. This is clearly preferable from an operational basis as it demonstrates an ability to exist outside of the unreliable world of voluntary contributions.(26) Now, with the financial constraint lifted, the MFIs were free to expand as rapidly as they like.
It is pertinent to mention here that the rapid growth in MFI lending took place after 2003, with the introduction of ICICI Bank’s ‘partnership’ model. In this model, the MFI becomes an agent of the commercial bank.
.......This pressure to achieve institutional sustainability reflects in policy decisions to expand the scale of the programme, to increase the volume of loans disbursed per borrower, increase interest rates, tighten repayment discipline by enforcing punitive strategies and offer minimalist credit programmes. Minimalist, incidentally, refers to an approach which focuses only on providing financial services, as opposed to the more holistic “microfinance plus” approach which seeks to also provide livelihood support, or so-called “business development” services. Minimalist MFIs (the vast majority, says Ghate) recognise the importance of livelihood support services but take the view they are best provided by specialist NGOs and the public sector.(32)"
"To sum up. If they are to scale up, MFIs need funds from the commercial sector. But, this being commercial capital, the MFIs need to invest these funds in a sustainable, risk-averse. Which means that the MFIs will have to either abjure from lending to the very poor or accompany every loan with very strict conditionalities. In Andhra, so far, they have opted for the latter approach. And that, as we have seen, can hurt the women. An empowered woman would be in a position to resist changes that go against her interests. And yet, if the suicides, in India and Bangladesh, are anything to go by, the borrowers are not always in a position to resist the MFIs."
The second part, which I found more difficult, is about the empowerment of women. Excerpts:
"Much of the euphoria over microfinance as a silver bullet to solve the two problems of poverty and gender inequity rests upon two assumptions. One, pushing up the earnings of poor women by making available enough credit to engage in gainful occupations will help them gain greater bargaining power within their households; and, two, bringing together women in groups will not only strengthen their earning capacities, but also create an institutional space from where they can articulate their interests.(42) Mayoux calls this a virtuous spiral — women’s access to micro-credit leads to more well-being for families leading to greater bargaining power for women within the household, which then is seen to lead to greater empowerment in the public as a group.(43)
Whether this claim stands up to scrutiny has been the subject of much debate. According to Mayoux, for many women, (microfinance’s) impact on social and economic empowerment does appear to be marginal, and some women might be disempowered.(44) That is echoed by the findings of Goetz and Sen Gupta in Bangladesh. They found that on average women retained full or significant control over loan use in just 37% of the cases; nearly 22% of respondents were either unable to give details of loan use, or were aware of how their husbands or other male household members had used loans, but were not themselves involved in the productive process; about 43% of the cases, they found, fell into three categories of partial, very limited, or no control: indicating a fairly significant pattern of loss of direct control over credit.(45)
.......
Schemes like Kudumbashree, they aver, define ‘women’s empowerment’ as increasing their capacity to improve the well-being of their families. Empowerment here, they say, does not mean revolutionary change in power structures, but merely the creation of greater space and flexibility for the poor within the existing limits, postponing the more far-reaching changes to a distant future hopefully reached through the ‘virtuous spiral’.
This, they say, is not good enough. It cannot be. That puts the women in a very defenceless position vis:a:vis the development apparatus – be it the MFIs or the state government.
To challenge patriarchy, one needs to transform economic structures. And so, they write, a feminist interventionist micro-finance programme would define empowerment very differently. In such a context, it would be defined as the women acquiring the capability to transform the newly created opportunities and spaces so that the very limits of existing institutions, public and domestic, are challenged.(57)
The question is whether minimalist microfinance is good enough to deliver that."
