Microcredit and Women's Empowerment

My particular approach to politics and life often leans towards a focus on smaller, more local solutions to problems.  It may have something to do with being raised in a small town and in a small state, but the local approach of microcredit and “village banks” seems like a near-perfect model for lifting people out of poverty. What makes this model so impressive is its ability to pool capital, create bonds of interdependence between women, empower women to make major decisions in and out of their households, and to accomplish this without becoming indebted to their husbands or major banking corporations. 

The heart of these “self-help groups” or SHGs is regular village women; they are historically proven to be more productive with funds from loans and they repay the loans at a rate of 98% (Thomas and Sinha, 2009) and make the women safer from an investment standpoint.  This may be for a variety of reasons, either they are more committed to providing for their families than their male counterparts, or are under greater social pressure to fulfill their roles as caretakers.  It is thought that when the financial agreements are between village women, there is a conscious or unconscious feeling of peer pressure which keeps the women honest and prompt in their repayment.

The main goal of microcredit is for a community to provide a small loan to a woman looking to make an investment that will offer a return and lift her family out of poverty and all that goes with it (Kothari and Gupta).  For example, if a young mother were to accept a loan and invest that money into a small from-home business, she may be able to support herself and her family.  With this financial independence she has options: if her husband is unjust in his treatment, she can leave him without worrying her children will starve; she can send her kids to school and offer them a better opportunity than she had herself; she can make choices, which is probably a power she has never had before.  This seemingly simple power has some unexpected consequences (Thomas and Sinha, 2009).

SHGs have a very positive effect on the mental health of women.  When the women meet in a group and discuss their issues (not just financial) they create a support group for each other.  By seeing that their opinions and input have merit, there is a noticeable growth in self-esteem.  This can go a long way in treating mental imbalances like depression.  Just knowing that she is not alone in her struggles, a woman can overcome a variety of other pressures coming from her family and community.  This self-esteem can be an observed and learned behavior for this woman’s children.  If they learn from their primary caregiver that she is a strong woman worth respect, it will breed an entirely new generation, one with a few less prejudices.

If these self-help groups are so glorious and perfect and wonderful, you would wonder why not everyone would be crawling over themselves to be a part of them.  While the village banks are a center of support, they can also be a source of exclusivity.  When the women agree on who is to receive a loan, unmarried or older women are often marginalized.  The SHG creates its own rules and prejudices; a hierarchy of who is more deserving means that some women are still outcasts to a degree.  Then, there are the women who do not get to participate in these SHGs at all.  Women who either work so many hours they cannot make the time to attend, or are from such a lowly caste that they would not be accepted. It is unfortunate because these are the women most likely in need of financial help and companionship (Thomas and Sinha, 2009).  It is also the sake, that many of these village banks are investing their money in projects which do not reap long term reward.  Women are asking for money to repay previous loans or to purchase dowries.  There is still a positive social effect, but it does nothing to financially lift these families out of poverty (Thomas and Sinha, 2009).

Microcredit is a novel idea which has far reaching consequences in establishing social and financial opportunities for women. Since its inception in the 1980s, it has served to lift some people right out of poverty, and the magic of this is that they are doing it almost entirely themselves.  What other people are being held back based on their sex or social position?  If we can further facilitate the growth of these self-help groups, then we can give women an opportunity to remake poverty in India. 

Sources:

Kothari, V., & Gupta, N. (n.d.). Micro Credit in India: Overview of regulatory scenario. Micro Credit in India: Overview of regulatory scenario. Retrieved September 15, 2011, from www.vinodkothari.com/Micro%20Credit%20in%20India%20-%20Overview%20of%20the%20Regulatory%20Scenario.pdf

Thomas, R., & Sinha, J. W. (2009). A Critical Look at Microfinance and NGOs in Regard to Poverty REduction for Women.. Social Development Issues, 31(2). Retrieved September 13, 2011, from http://courses.furman.edu/mod/resource/view.php?id=103026