Microcredit: More Than Access to Money

General Assembly Special Session, Women Action 2000: Equality, Peace and Development for the 21st Century

5 June 2000, New York, USA

Five years ago, at the Fourth World Conference on Women (WCW) in Beijing, Mrs. Clinton a strong international advocate for women and First Lady of the United States of America, Professor Yunus the Founder of the Grameen Bank and banking for the poor, Ela Bhatt the Founder of SEWA and the movement to organize home based workers, and I as Executive Director of the United Nations Development Fund for Women organized a panel on women and credit and the empowerment of women. We also announced the idea of reaching 100 million of the World’s poorest families, especially women with microcredit. This challenge was taken up and turned into a campaign by civil society through the organization of the Microcredit Summit, under the leadership of Sam Daley-Harris. The Administrator of UNDP and I were made the Co-chairs of the UN council to follow up on the goals of this summit. Today, as we review the progress of women and the problems still to be addressed, all of us are before you to be accountable for what we said five years ago, for what we have committed ourselves to do since the Beijing conference. We will also share lessons we have learned over the last several years on converting access to credit into progress for women.

Before the Fourth WCW, women received an extremely small proportion of the cumulative loans given by financial institutions to rural areas. In 1992, the World Bank puts the figure at about 5 per cent. The International Coalition of Women and Credit that UNIFEM organized (consisting of thirty-two of the largest micro-credit organizations) made sure that the issue of Women’s access to credit was addressed at the Fourth WCW. The Platform for Action that came out of the Beijing meeting carried 35 references to women’s access to credit. And today, the picture has changed. Let me first share with you at least one impressive result since the Microcredit Summit Campaign was launched in 1997:

  • Today, 14 million of the world’s poorest families are being reached by 1065 microcredit institutions compared to 8 million three years ago. Seventy-five per cent are women. You will hear more about this later from Sam.

Women have gained an international reputation for their excellent credit performance. The fact that they are a “good credit risk”, with high repayment rates made them a priority for poverty-oriented credit programs. Whatever the reasons, we celebrate the tremendous increase of credit for women as a positive contribution that challenges the unequal access to resources and opportunities along lines of class, caste, ethnicity and gender.

For the majority of women borrowers, credit is much more than access to money. It is about women changing their world. It is about women lifting themselves out of poverty and vulnerability. It is about women achieving economic and political empowerment within their homes, their villages, and their countries.

UNIFEM recognized early on the importance of giving credit to women as an essential ingredient of building local institutions, for greater participation and engagement in the public sphere, including being advocates for economic policies, institutions and markets which support poor women.

Many microcredit groups have become the sites for the emergence of a new sense of empowerment. They build communities of women and create the collective will, the solidarity, the trust and respect, the network of alliances, which are the elements of social capital. Where women trust each other and share a concern for the well-being of all, there one finds successful credit programmes, community banks, labour exchange, shared child-minding, and the flow of advice and knowledge which draw women into the world of political and economic participation.

However, at B+5, we need to pay more attention to issues of women’s empowerment: i.e., women’s control over loan use, the nature of their investment activity, access to markets and to technology including ICTs, participation in non-traditional higher profit investments, improvement in skills development, and in social and business support services so that credit in the hands of women is not a debt but an opportunity. Studies from four microcredit programmes in Bangladesh showed that on average 39 per cent of women clients had little or no control over the use of their loan. This still means that 61 per cent of women clients do have partial or full control over their loans, and our goal must be to increase this rate to 100 per cent. The challenge at Beijing + 5 is to look at how programmes are designed and figure out what processes and mechanisms are encouraging or discouraging a positive impact on women’s lives.

There is much that we can do to ensure that women have greater control over their loans and are ultimately empowered by microcredit:

  • We need to build a culture of economic enterprise among poor women and ensure their participation in women friendly markets. Otherwise the pipelining of loans to males will continue and women end up paying the debt;
  • We need microfinance policies and institutions that are women friendly, that incorporate women’s empowerment as a priority in their operations and staff that is sensitized to women’s needs and gender issues;
  • We need structures and rules that women can understand and operate, such as the group and center structure promoted by the Grameen Bank, SEWA Coop Bank and Country Women Association of Nigeria;
  • We need to reduce the risk for women through social insurance, and through social and business services;
  • We need more men to get involved with the elimination of gender inequalities and violence against women within the household to ensure that women benefit from increases in household economic assets.

In conclusion, let me review UNIFEM’s commitment. As policy advisors, we will continue to mainstream gender equality and women’s empowerment approaches into credit and financial policies and institutions; as advocates, we will continue to ensure that women play a greater role in shaping microcredit policies and institutions; as a fund, we will support the building of strategic partnerships among MFIs, bankers and policy-makers to improve women’s participation in markets as well as their bargaining power; as the co-chair of the UN council to the follow up on the campaign, I commit myself to address the challenges of breaking the cycle of poverty and of ending poverty in women’s lives.