Sustainable Microfinance for Women's Empowerment
By Linda Mayoux | Dr Linda Mayoux has worked on gender and microfinance since 1997 for donor agencies and microfinance NGOs in South Asia, Latin America and Africa. Her current focus is on developing an effective cost-efficient participatory action learning methodology on gender and livelihoods which can be integrated into NGO and MFI group methodologies for empowerment.

Report on International Mutual Learning Workshop hosted by CMF, Chennai, funded by Levi Strauss Foundation, September 2006 Background to the Workshop: Microfinance programs not only give women and men access to savings and credit, but reach millions of people worldwide by bringing them together regularly in organised groups. These programs can contribute significantly to gender equality and women's empowerment. Microfinance programs contribute to women's ability to earn an income, initiating a series of 'virtuous spirals' of economic empowerment, increased well-being for women and their families, and wider social and political empowerment. Microfinance services and groups involving men also have potential to question and significantly change men's attitudes and behaviours as an essential component of achieving gender equality. Gender equality and women's empowerment in turn are integral components of pro-poor development and civil society strengthening. However, donor funding for microfinance has generally been conditional on compliance with some variant of CGAP's Guidelines for Best Practice aiming at short term financial sustainability. Although financial sustainability is desirable in order to enable access to financial services on a sufficient scale to meet demand, these programs can only be part of a solution to poverty reduction and empowerment. Despite some successes, evidence indicates that even in financially sustainable programs, benefits for women cannot be assumed. To the contrary, many programs report decreases in their ability to ensure that women benefit following introduction of policies to increase financial sustainability. Women's empowerment is not addressed even in the new poverty agenda for inclusive microfinance. Moreover funding for programs which place prime emphasis on women's empowerment continues to decrease. The evidence to date shows that if microfinance programs are to make significant contributions to pro-poor development and civil society strengthening, they need to develop explicit gender strategies to address the needs of women. These gender strategies need to look beyond just increasing women's access to savings and credit, and to organising self-help groups to look strategically at how gender equality and women's empowerment can be promoted. Moreover the focus should be on developing a diversified microfinance sector where different types of organisations—NGOs, MFIs, and formal sector banks—all have gender policies adapted to (1) the needs of their particular target groups, and (2) their institutional role and capacities. These types of organizations must all work collaboratively as part of an inclusive financial sector in order to make significant contributions to gender equality and pro-poor development.

Current Innovations: The workshop brought together participants from India, Nepal, Uganda, Sudan, Mexico, and Peru involved in innovative programs and research. Participants identified many innovations which could be implemented by different types of microfinance providers to increase contribution to empowerment. First, programs have been introducing a range of savings, loan, insurance, pension, and remittance products. A common feature was prior participatory market research with clients and a commitment to prioritize their interests as an essential contribution to long term financial sustainability as well as empowerment: 'unsustainable clients mean unsustainable institutions'. Second, programs have been developing non-financial services to increase the benefits of the microfinance. Cost-effective delivery mechanisms included: participatory learning processes among clients; integration with microfinance delivery; separately-funded initiatives; and collaboration with specialist service providers and people's movements. Third, programs were innovative in building on women's groups for wider change at the household, community, and national levels. This went beyond federations of SHGs for savings and credit to supporting women's collective organization and action on a range of issues. Some programs were developing participatory methods like Participatory Action Learning Systems (PALS) and Internal Learning Systems (ILS) to facilitate networking, planning and tracking. Others were developing self-sustaining and self-managed information centers as a resource for collective learning and action. Finally, discussion focused on the organizational implications: effective program information systems are needed to track and understand contribution to empowerment, staff gender policies, and participatory management structures. These can range from participatory market research in banks to full control over decision-making in federations and cooperatives. Underlying all these was the need for 'gender equality and empowerment to become part of the DNA of the organization, promoted in its advertising and promotional activities and throughout interactions with clients and members.

Next Steps: It was also clear that there is a need for an ongoing process to promote women's empowerment as a central issue in microfinance involving:

1. A forum for ongoing exchange of experience and innovation between practitioners.
2. Gender training integrated into the Microcredit Summit campaigns at international and regional levels to raise awareness.
3. Engagement with 'malestream' microfinance debates to promote questioning of 'bad practice'.
4. Lobbying donors for sufficient funding for development and implementation of effective empowerment strategies.
5. Bringing together different players in the sector to develop coherent policies and for gender advocacy.

The current point in time is favourable for bringing together elements of "Best Gender" and "Empowerment Practice" strategies for different types of institutions. On the one hand, as the workshop demonstrated, there is now more experience and awareness of the issues and possible strategies. On the other hand, the earlier somewhat dogmatic promotion of "one-size-fits-all" financial sustainability is now being convincingly challenged in relation to poverty targeting—a major theme at the Microcredit Summit in Halifax in November. This will provide a key opening for now paying more attention to gender issues—the second official goal of the campaign being not only 'reaching' but also 'empowering' women.

Innovations for Empowerment
Product innovations

1. Customized loans: Fencu, Peru
2. Product-specific loans (e.g. for solar lighting in salt drying, different milk products): KMVS, India
3. Consumption loans available for both men and women to prevent burden on women, with women’s access to asset and leisure-related loans: ANANDI, India
4. Microinsurance for assets, health, crisis and disasters: Basix, ICICI Bank, India
5. Linkage of groups to state health insurance: LEAP, Sudan
6. Health emergency loans linked to state provision: ANANDI, India
7. Pension fund: SEWA, India
8. Children’s savings card: Siembra, Mexico
9. Group savings for social development (e.g. scholarships for poor children who excel in school): Dhan Foundation, India
10. Loan policies tied to promotion of children’s rights: India
11. Remittances: NGO-to-NGO-facilitated remittances for migrant workers, Fund transfers for overseas migrants, Biometric cards: Basix, CASHE and ICICI Bank, India

Innovations in Non-financial services

1. Training through participatory mutual learning: LEAP Sudan and KRC, Uganda
2. Literacy training linked to credit: WEP, Nepal
3. Women’s rights learning/training through the microfinance groups or clusters: WEP, Nepal, WIDA, Lokadrusti and others in India
4. Network enterprises: ICICI Bank, India and livelihood cooperatives: PRADAN, India
5. Volunteer entrepreneur networks in specific activities: Siembra, Mexico, Finca, Peru
6. Assistance in setting up environmental enterprises (e.g. waste management): Hand in Hand, India

Building on groups for wider change

1. Women’s groups/cluster organizations as managers of Rural Information and Citizen Centers: ANANDI, Hand in Hand, Swayam Shikshan Prayog, ACORD India
2. Participatory Action Learning System (PALS) for livelihood development, gender learning and input into local economic planning: LEAP, Sudan, KRC, Uganda and ANANDI, India
3. Women’s groups as researchers for policy change (e.g. food security issues): ANANDI
4. Mobile phone networks used by women’s groups earning income as researchers for multinational companies and empowerment networking
5. Internal Learning System based on women’s and group diaries: PRADAN, and ASA India
6. Federations and Women’s Centers, either for microfinance or as separate women’s federations to engage in collective action and gender advocacy on behalf of members: ANANDI, WIDA, Lokadrusti, NESA, ACORD and others in India, LEAP Sudan.
7. Networking through events, fairs, exchange visits for political education and campaigning on a range of issues: ANANDI, India

Organizational Structure

1. Social indicators integrated into program Management Information Systems and financial management accessible to group members (e.g. PRADAN’s Munshi system, India)
2. Staff gender policy to ensure women have equal access to promotion prospects as well as able to work effectively and safely in the field
3. Participatory management (e.g. Internal Learning System and member postbox system in PRADAN to ensure that client/member needs and views are central to program design and implementation at all levels)

For more information, please:

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contact the author, Dr. Linda Mayoux: l.mayoux@ntlworld.com