Weekly Editorial: Micro-finance and Gender-Based Violence

Since the 1970s, microfinance programs have multiplied and they are now a staple in the so-called international development toolkit.  One of the largest perpetuators of the intergenerational cycle of poverty is  lack of access to credit markets, as there is often no collateral to give in exchange for a loan, no matter how small. This is where microfinance institutions come in by providing the poorest members of society with small credit loans that have varying repayment periods and options at relatively low interest rates.

Microfinance programs are ubiquitous in the developing world and don’t seem like they are going away any time soon. There are many and perhaps the most well known is the Grameen Bank, which was founded in 1983 in Bangladesh by Muhammad Yunus.

The numbers tell the story best: in 2006, over 3300 microfinance organization served 133 million clients with a microloan. 85% of their poorest clients were women (ILO, 2006). Many organizations prefer to give loans to women as they believe it will yield more growth and societal well being. This belief is certainly not unfounded; women tend to spend more money on their children’s education and as they are mainly responsible for feeding their families increased income can help raise nutrition levels. Increasing women’s incomes can help increase their decision-making power and their economic autonomy. These are all wonderful outcomes of microfinance programs.

However, there exists a dark side to some of the programs that claim to empower women. Some studies have begun to demonstrate a link between a woman’s participation in microfinance loans and the incidence of gender-based violence against her. The introduction of a new source of income in a family home can create tensions that did not exist before and may challenge traditional conceptions of masculinity.

For example, research done in Bangladesh suggests that participation in microcredit schemes increased exposure to intimate partner violence (IPV). Of course, any such results must be contextualized, however it is important to consider all possible effects of international aid programs before implementing them. Other studies, such as one from South Africa, say that while violence may increase in the short run, it decreases in the long run.

While microfinance programs may generally deliver empowerment and increased incomes, the existence of any violence against women at all is a call to evaluate how such  programs can best serve their most vulnerable beneficiaries while doing no harm in the process.

By: Genevieve Hill

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