Microfinance as a tool to initiate women’s empowerment

International aid and development work related to addressing poverty often focuses on the issue of empowerment. Empowerment is most commonly thought of in economic and political terms. The world Bank (2002), for example, defines empowerment as “the expansion of assets and abilities of poor people to participate in, negotiate with, influence, control and hold accountable institution that affect their lives” (p. 14). Although not explicitly listed, it is easy to see that empowerment, as defined here, would necessarily have positive psychological consequences related to self-efficacy, dignity, and other aspects of mental health. Interestingly, empowerment is an issue that is already talked about within the framework of individual and collective welfare. The World Bank (2002) reports “the is a reciprocal relationship between individuals assets and capabilities and the capacity to act collectively.. poor people who are healthy, educated and secure can contribute more effectively to collective action; at the same time, collective action can improve poor people’s access to quality schools or health clinics” (p. 15). Despite the fact that empowerment programs undoubtedly have psychological benefits, they are most often framed in economic terms and presented as economic interventions. This is, perhaps, the reason that there has not been more attention to such programs within positive psychology itself.

Since the 1980s, the economic tool of microfinance has been used to combat poverty in some of the poorest countries in the world. Micro frame programs provide poor women, and occasionally men, across the world with small loans to use towards life betterment including business startup or improvement, home improvements, or other family matters. When implemented appropriately, micro financial programs have seen success in financial as well as social and psychological aspects of women’s lives. In fact, some microfinance programs have helped women become more empowered in their household and community. Theoretically, empowerment has the potential to impact individuals in three ways:

1. Power to
2. Power over and
3. Power within.

Microfinance programs have been found to impact all three of these categories for women in economically developing countries[1].

Power to is a personal sense of efficacy or influence and can be used to understand the psychological benefits of the empowerment process including autonomy, self-confidence, and self-esteem. Microfinance programs in Bangladesh, India, Nepal, and South Africa have been found to increase these characteristics components of psychological empowerment for women living in poverty. For example, a study found that Nepalese women participating in a microfinance program in South Africa reported higher levels of self-confidence, financial confidence, and more progressive attitudes toward gender norms and relations compared to South African women that did not participate.

Microfinance programs have also been associated with increases in the power over components of empowerment. Power over is an individual’s ability to make personally or socially impactful actions. Studies have associated women’s participation in microfinance programs with women’s increased reports of decision-making, bargaining power, and communication with their husbands as well as improvements in spousal relationship and appreciation for women’s work in the household.

Finally, it has been suggested that microfinance programs positively impact women’s sense of power within or an individual’s ability to participate in organization and agencies in her own community. Women who participate in microfinance program across the world have reported to be more active in social organizations as well as seek out more community activities and collective action. Research shows that participation in microfinance programs serves to help women gain access to resources and increase mobility which provide a stepping stone for women to enter social and political arenas[2].

Microfinance programs have been criticized for a number of failures negatively impacting women’s financial, social, and psychological well-being, and many critiques recognize that micro frame opportunities for not immediately alleviate poverty or empower women simply by program implementation or participation. However, it is important to recognize that, when implemented appropriately, micro frame programs can be successfully and positively impacts many aspects of women’s lives. Taking into account women’s needs, community needs and resources and societal norms and values (e.g., gender relations), Microfinance programs can be tailored to fit a specific group of women. By doing so, organizations and communities increase the chances of the program’s success and enhance the potential to help women overcome poverty and find ways to empower themselves.

References

1. Jones S R (2004), Legal guide to microenterprise development, American Bar Association, USA
2. Gelb J (2009), Women and politics around the world, ABC-CLIO Inc., USA