Gender

7.1 Introduction

To many, microfinance is all about banking for women. Pioneers such as BancoSol and the Grameen Bank were built around serving women, and microfinance networks such as Women's World Banking and NGOs such as Pro Mujer cement the association. Not all microfinance institutions focus specifically on women, but a recent study found that women make up 80 percent of the clients of the thirty-four largest microlenders (Mody 2000). The Microcredit Summit Campaign Report for the year 2000, "Empowering Women with Microcredit," reports on a 1999 tally of over 1,000 programs in which 75 percent of clients were women (Microcredit Summit Campaign 2000).

So far we have only touched briefly on gender in microfinance, but in this chapter we address issues directly. We begin by asking why most microfinance borrowers are women, especially the most impoverished. We then ask whether targeting women is efficient in the strict economic sense. Does it help microfinance enterprises to attain their self-sustainability goals? Does it favor more equality within the household? How might microfinance help to promote social capital and women's empowerment?

The Grameen Bank's history is instructive. From the start, Muhammad Yunus recognized the importance of women when confronting poverty. But cultural norms, especially the Muslim practice of purdah (which guards a woman's modesty and limits her mobility and social interactions), made it difficult to approach potential female clients. At first, Yunus struggled to serve at least 50 percent women; but now, with barriers fallen, 95 percent of Grameen's clients are women (Yunus 2001).1 When the bank started, most borrowers were men; just 44 percent of clients were women in October 1983 (Yunus 1983, 11). But figure 7.1 shows that the situation rapidly changed. In 1986, women made up about three-quarters of Grameen's members, rising steadily through the 1990s along with overall membership growth. The bias in favor of women was reinforced by experience showing that, relative to male borrowers, women had better repayment records. But the comparative advantage of women as microfinance customers did not stop there; it extended to other dimensions of performance as well. For example, Khandker (2003) finds that a 100 percent increase in the volume of borrowing by a woman would lead to a 5 percent increase in per capita household nonfood expenditure and a 1 percent increase in per capita household food expenditure, while a 100 percent increase in borrowing by men would lead to just a 2 percent increase in nonfood expenditure and a negligible change in food expenditure. Thus, evidence shows that serving women turns out to have stronger impacts on households.2 Serving women thus seems to accord well with the dual objectives of maintaining high repayment rates and meeting social goals as proxied by the higher household expenditures.

The importance of women in microfinance in places such as Bolivia and Bangladesh has been helped by other social transformations that started far earlier. Data on fertility rates and illiteracy show how dramatic those changes have been. Table 7.1 shows that fertility rates have

Figure 7.1

Female membership of Grameen Bank, 1985-1997.

Figure 7.1

Female membership of Grameen Bank, 1985-1997.

Table 7.1

Falling fertility and female illiteracy rates, selected countries 1970-2000

Bolivia Bangladesh Indonesia All low-income

Table 7.1

Falling fertility and female illiteracy rates, selected countries 1970-2000

Bolivia Bangladesh Indonesia All low-income

Fertility rate

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