Levy, Michael - Spring '10 (P) - The Effects of...

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The Effects of Microfinance on Women’s Empowerment in Zimbabwe Michael Levy Advisor: Caren Grown Honors in Economics Capstone Spring 2010
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Levy 2 Introduction The feminization of development has shifted the indicators of success from concepts of welfare and efficiency to social justice and balance of power (Kabeer 2003, 2). The development community has praised microfinance institutions (MFIs) for providing comprehensive avenues toward these valued measures. They claim that targeting women with microcredit programs promotes their empowerment, which in turn has beneficial spillover effects on a developing nation’s macroeconomy, including economic growth, the reduction of poverty, and improved governance (Malhotra et al. 2002, 3). The main objective of microcredit is to create self- employment opportunities for the underemployed and unemployed poor by supporting their microenterprises, which serves as an alternative to wage labor (Afrin 2008, 171). Before more resources are devoted to microcredit programs, however, we must develop a complete understanding of the ramifications these programs have on clients and their communities by measuring their effects. The leading MFI, the Grameen Bank in Bangladesh, asserts, “Women invest their loans properly and utilize income for the welfare of the members of the family,” explaining microcredit’s success (Chowdhury 2008). While some studies support these claims, others have found that in some countries, men control the loans taken out by their female relatives, although the women bear the liability for repayment (Goetz and Sen Gupta 1996). Fuwa et al. (2006) warns that women may even be at a loss if intrahousehold allocation adjusts against their favor following the provision of microcredit. They, as do others, call for further empirical investigation at the individual level—even if household indicators improve, women may not be empowered during the process.
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Levy 3 The term ‘empowerment,’ the lynchpin of MFIs’ acclaim, is not sufficiently defined. Malhotra et al. (2002, 3) argues, “The term has been used more often to advocate for certain types of policies and intervention strategies than to analyze them.” MFIs tend to argue that microcredit empowers women, which validates their decision to target women; however, this argument may veil their true motivation—that women tend to be more compliant with their rules and procedures than men, which has nothing to do with the program’s impact (Chowdhury 2008, 5). Some researchers claim that the Grameen bank has given preference to women, not because it empowers them, but because the bank experienced far greater loan recovery rates with women than men in the 1980s (Chowdhury 2008 6). Kabeer (1999, 3) has developed the most commonly used definition for empowerment as: “the expansion in people’s ability to make strategic life choices in a context where this ability was previously denied to them.” Other scholars also value concepts of holding institutions accountable, personal autonomy, self- reliance, and the control over resources in their definitions. Empowerment is a process that does
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