1. 1
ECONOMIC EMPOWERMENT OF WOMEN
THROUGH INCLUSIVE FINANCE:
ENSURING FOOD SECURITY AND
SUSTAINABLE DEVELOPMENT
Presented at the ‘Regional Rural and Agricultural Finance Thematic Conference’, under the theme ‘’Regional
experience on Knowledge Sharing and Networking in Rural and Agricultural Financing’’ organized by
AFRACA and IFAD-Africa, June 10-12, 2015, Harare, Zimbabwe, as well as, ‘Research Meets Africa’ (sub-
unit of University Meets Microfinance), under the theme ‘’Accelerating Research on Innovation for Rural
Financial Inclusion in Africa’’ organized by Planet Finance and ADA-Microfinance, June 29-July 2, 2015,
Dakar, Senegal (programme attached at the end).
by
Getaneh Gobezie1
(getanehg2002@yahoo.com)
Abstract: The expansion of microfinance (credit, saving, insurance, etc) in many contexts, by enhancing
inclusive finance, promised to address the issue of poverty alleviation, promoting women’s empowerment and
sustainable development that can benefit all. Unfortunately such interventions, often focussed only on
‘minimalist’ microcredit, and implemented without addressing gender issues in programme design, risk not
attaining their stated objectives, and at times worsen existing undesirable situation. This paper undertakes a
very comprehensive analysis of existing situations in various contexts, and offers some practical
recommendations.
1- BACKGROUND
In developing countries, women are often the main farmers or producers. In many parts of
Sub Saharan Africa, 75 percent of agricultural producers are women (World Bank et., al,
2009), and they produce more than 80% of the food for the continent. Women are also very
active in unpaid care, which contributes to economic growth through a labour force that is fit,
productive and capable of learning and creativity. It has been estimated that if care work were
assigned a monetary value it would constitute between 10% and 39% of GDP (OECD, 2011).
Yet, women continue to have limited access to resources. At least 50% of the population,
women posses only 1% of world resources (ACCION, 2009).
1
The author has over two decades of experience in grass-root development, microenterprise, microfinance,
food security, economic empowerment; and has engaged in a number of research, capacity building, training
and consultancy with international organizations including: Oxfam-Novib, IFAD, FAO, SIDA, DfID, DAI/First
Consult, World Savings Bank Institute etc. He would like to thank the sponsors for funding this research:-
AFRACA and IFAD’s Eastern and Souhthern Africa Rural Finance Knowledge Management, inputs from all the
participants at the conference and suggestions especially from Miriam Cherogony (IFAD-Africa), Maria Hartle
(IFAD) Henry Oketch (consultant), and Pekka Jamsen (AgroBig, Eth). Comments and suggestions are welcome
at mail: getanehg2002@yahoo.com, or ggobezie@firstconsultet.com

2. 2
Gender asymmetries in access to and control over ‘assets’, access to ‘markets’, access to
‘information and organization’ dictate power asymmetries between men and women (Aslop
and Heinsohn, 2005). According to the bargaining model (which recognizes the possibility
of both cooperation and conflict of relationships), this lack of resources would mean that
within the household, women often have lower ‘fall-back position’ (or lower ‘welfare’ in the
event of a breakdown of marriage) and therefore they would be obliged to be subservient to
and accommodate the interest of their male counterparts in order to save the marriage from
breaking down (Osmani, 1998). This vulnerable position of women in the bargaining process
results in the man gaining an upper hand at her expense.
Indeed, without leverage or legal protections, disempowered women are thus very vulnerable
to abuse and exploitation. According to the United Nations Population Fund, around the
world, as many as one in every three women has been beaten, coerced into sex or abused in
some other way – most often by someone she knows, including by her husband or another
male family member (ACCION, 2009). In India, a “bride burning” is committed once every
two hours – an illegal but nonetheless widespread act of murdering the wife in a staged
kitchen fire in order to marry another for a better dowry. Many feminists recognize that poor
men are almost as powerless as poor women in access to material resources in the public
domain, but remain privileged within the patriarchal structure of the family. In some
societies, being seen by neighbours as in control of his family and wife is a key element of
men’s social prestige -- particularly in impoverished communities where men may be able to
boast of few other status symbols (Cheston, et. al 2002). In Tanzania and other parts of
Africa, especially during bad weathers – either drought or flooding – causing crop failures
leading to worsening of poverty, unproductive old women are often killed for ‘’witchcraft’’.
Families, it seems, suddenly discover that unproductive older women living with them
(usually a grandmother) is a witch, after which she gets chased away or killed by others in the
village -- a convenient way to get rid of an unproductive mouth to feed at times where
resources are very tight (Kristof and Wudunn, 2010, p. 192).
The existing unjust structure also determines the fate of the would-be women (i.e the girl
child) who are often viewed as having little prospect of leading a successful life and
supporting parents in future. As a result, it is argued that particularly poor parents, with very
few livelihoods resources and struggling for basic survival, are forced to allocate more of
their scarce household resources for children with a better earning potential (i.e the male
child) often at the expense of the girl child, including in allocation of food, paying for health,
education, etc (Armendariz and Morduch 2005). Sen (Sen, 2001, 1990) estimated that the
number of ‘missing women’ (as a result of girls who died prematurely due to parents’
neglect, or selective abortion of their female infants) in the early 1990s was over 100 million
people2
(Armendariz and Morduch, 2005). In an interview with the YES magazine (2005),
Muhamed Yunus of Grameen Bank reflected on the case of Bangladesh that ‘the moment she
is born, the family looks upon the daughter as a kind of punishment. Thus, throughout her life
the daughter lives in a very apologetic way: "Sorry I was born to be a daughter. I wish I was
not born."
2
The global statistics on the abuse of girls are numbing. It appears that more girls have been killed in the last
fifty years, precisely because they were girls, than men were killed in all the battles of the twentieth century.
More girls are killed in this routine ‘’gendercide’’ in any one decade than people were slaughtered in all the
genocides of the twentieth century. …. In the nineteenth century, the central moral challenge was slavery. In
the twentieth century, it was the battle against totalitarianism. We believe that in this century the paramount
moral challenge will be the struggle for gender equality around the world (Kristof and Wudunn, 2010).

3. 3
Some argue that women themselves often internalize and accept the prevailing norm of
discrimination3
. However, increasing evidence suggest that such cultural norms seriously
constrain not only the individual and economic development of women themselves, but also
of the entire community because women continue to actively counteract in their own way.
Participatory research in rural Uganda, for example, demonstrated a distinct gender division
of tasks, roles and power, with women doing most of the cultivation work – about 70% in
coffee-producing households – and also growing food crops. But women often sold only
fruits, beans and groundnuts, and local custom has it that they have to ‘’kneel down before
their husbands to hand over all their money’’ (Farnworth and Akamandaisa, 2011). Men
typically did only a few heavy tasks, but also came back to harvest and sell the coffee beans,
often spending the proceeds on alcohol or women in town. Indeed, where husbands continue
to sell coffee without the consent of wives, the latter lost interest in taking care of coffee
quality and they also sell un-ripe coffee beans, or beans which had not been fully processed
(without husband’s knowledge!) even if they sold for less, to fulfil some cash needs.
Such inequitable distribution of benefits at household level, particularly in ways that do not
reflect the actual contribution of each household members, results in low motivation and
incentives to work, or failures in collaboration, and hampers the maximization of capacities
of household members (Sebstad and Manfre, 2011). This is because women and men
frequently pursue individual livelihood strategies that demonstrably work against each other.
A more recent IFPRI research on Pakistan, Ethiopia, etc also suggested that if an individual
believes that she has little, if any, ability to impact her own well-being, and has low ‘control’
on her life outcomes, she would have inadequate incentive, motivation, or aspiration4
to
allocate effort or resources towards achieving that goal (Kosec, et al, 2014, and Dunn, et al
1996).
Gender inequalities also inhibit households’ ability to make the best possible use of the
productive resources available to them. Both women and men can fail to take the best
economic decisions possible because gender relations can lock women and men into pre-
determined roles and responsibilities. All this hampers the development of good businesses,
lowers productivity, and can negatively affect nutrition and food security (Farnworth, et al
2013, Fletschner and Kenney, 2011).
Microfinance programmes, through expansion of financial inclusion5
of women, have been
promoted in the last couple of decades as one of the key entry points to achieve the ‘virtuous
3
For example, from a detailed study by the World Bank In Ethiopia, it was found that 85% of women believe
that a husband is justified in beating his wife for at least one of the following reasons: burning food (85%
agree), arguing with him (61%), going out without telling him (56%), neglecting the children (65%), refusing
sexual relations (51%). Even among the highly educated, still 57% support the practice (or domestic violence):
no apparent difference in attitude across the regions, with some exception on Harari, Addis Ababa, Dire Dawa
(World Bank, 2005).
4
‘’Aspirations’’ can be understood as forward-looking goals or targets (or boundary states) and a preference to
exert effort and attain or realize them. (Kosec, et al 2014)
5
There is no single accepted definition or indicator for levels of ‘financial inclusion’. But we can agree that
women‘s financial inclusion occurs when women have effective access to a range of financial products and
services that cater to their multiple business and household needs and that are responsive to the
socioeconomic and cultural factors that cause financial exclusion in women and men to have different
characteristics (DFID, 2013). CGAP (2015) defines financial inclusion as a state where both individuals and
businesses have opportunities to access, and the ability to use a diverse range of appropriate financial services
that are responsibly and sustainably provided by formal financial institutions.

4. 4
spirals’ of economic growth,6
increased well-being and social and political empowerment for
women, thereby addressing goals of gender equality (Mayoux and Hartle, 2009). First,
increasing women’s access to microfinance services can lead to their economic
empowerment. Women’s roles in household financial management may improve, in some
cases enabling them to access significant amounts of money in their own right for the first
time. This might enable women to start their own economic activities, invest more in existing
activities, acquire assets or raise their status in household economic activities through their
visible capital contribution. Increased participation in economic activities may raise women’s
incomes or their control of their own and household income. This, in turn, may enable them
to increase longer-term investment and productivity of their economic activities, as well as
their engagement in the market.
Indeed, as highlighted above, one of the rational for specifically targeting women comes from
growing evidence that gender inequalities in developing societies inhibit economic growth
and development. Societies that discriminate on the basis of gender pay the cost of greater
poverty, slower economic growth, weaker governance, and a lower living standard of their
people. In 2006, a database created by the OECD demonstrated what common sense tells us:
with few exceptions, countries in which women have more economic and political power are
richer7
and more peaceful8
than countries where women are relatively powerless. Patriarchy
is damn expensive (Marche, 2013).
Second, increasing women’s access to microfinance can increase household well-being. This
is partly the result of economic empowerment, but may occur even where women use
microfinance services for the activities of other household members, for example husbands or
children. Even where women are not directly engaged in income-earning activities,
channelling credit or savings options to households through women may enable them to play
a more active role in intra-household decision-making, decrease their own and household
vulnerability, and increase investment in family welfare. This may benefit children through
increasing expenditure on nutrition and education, particularly for girls. It can also lead to
improved well-being for women and enable them to bring about changes in gender
inequalities in the household, as a result of improved fall-back position and bargaining
power.
Third, a combination of women's increased economic activity and increased decision-making
in the household can lead to wider social and political empowerment. Women, themselves,
often value the opportunity to make a greater contribution to household well-being – giving
6
Under the standard neoclassical assumptions about production functions, if women have less access to
capital than men, (marginal) returns to capital for women should be higher than for men. Endowing women
with more capital can thus be growth-enhancing in principle (Armendariz and Morduch , 2005).
7
See Stephen Marche (July/August 2013): Home Economics: The Link Between Work-Life Balance and Income
Equality http://www.theatlantic.com/magazine/archive/2013/07/the-masculine-mystique/309401/y
8
Some security experts noted that the countries that nurture terrorists are disproportionately those where
women are marginalized. The reason there are so many Muslim terrorists, they argued, has little to do with
the Koran but a great deal to do with the lack of robust female participation in Islamic countries. As the
Pentagon gained a deeper understanding of counterterrorism, it became increasingly interested in grassroot
projects such as girls’ education. Empowering girls, some in the military argued, would disempower terrorists
(Kristof and Wudunn, 2010, p. xxi).

5. 5
them greater confidence and sense of self-worth. The positive effects on women’s confidence
and skills, their expanded knowledge and the formation of support networks through group
activity and market access can lead to enhanced status for all women in a community. In
some societies where women’s mobility has been very circumscribed and women previously
had little opportunity to meet women outside their immediate family, there have been very
significant changes. Individual women who gain respect in their households may then act as
role models for others, leading to a wider process of change in community perceptions and
men’s increased willingness to accept change (Mayoux and Hartle, 2009).
Finally, women’s economic empowerment at the individual level can make potentially
significant contributions at the macro-level through increasing women’s visibility as agents
of economic growth and their voice as economic actors in policy decisions. This, together
with their greater ability to meet the needs of household well-being, in turn increases their
effectiveness as agents of poverty reduction. Microfinance groups may take collective action
to address gender inequalities within the community, including such issues as gender violence
and access to resources and local decision-making. Higher-level organization may further
reinforce these local changes, leading to wider movements for social and political change and
promotion of women’s human rights at the macro-level. Savings-and-credit groups have at
times become the basis for mobilizing women’s political participation (See Annex 1).
Moreover, these dimensions of economic empowerment, well-being and social and political
empowerment are potentially mutually reinforcing ‘virtuous spirals’, both for individual
women and at the household, community and macro-level.
2- CURRENT PRACTICE IN RURAL
MICROFINANCE
The MIX market reported that women on average constitute over 80% of global microfinance
(credit) outreach, and about 95% in the case of microfinance institutions like Grameen bank.
Nevertheless, despite the potential contribution of microfinance to women’s empowerment
and well-being, there is a long way to go before women, especially poor women, have equal
access to all financial services particularly in rural areas or are able to fully benefit. The
degree to which women are able to benefit from minimalist financial services that do not
take gender explicitly into account depends largely on context and individual situation, and
may also change over time. But what is clear is that none of the expected linkages between
women’s access to financial services and empowerment can be assumed to occur
automatically.
Among other things, financial products and service approaches, more often than not, are
poorly designed, top-down, in a ‘one-size-fits-all’ modality and little integrated with other
essential microenterprise services. Indeed, one of the great virtues of microfinance is bringing
the service nearer to where the clients, particularly poor clients, reside, as distance is one of
the most important determinants of transaction costs. Women are expected to benefit much
from this shift of approach in the banking service. However, distance is not just physical
space between service provider and potential clients! Geography, psychology, religion,
language, sex, ethnicity, culture, social class, etc also create distance between borrowers and
lenders (Gonzalez-Vega, 2003). And neither women nor men are a homogenous group –
women, for example can be widowed, single, newly married, pregnant, young girls,
unemployed, employed, rural, urban, etc. (FAO, 2002). Effective access transforms mere
(physical) access into actual usage. In other words, a financial product is likely to be used

6. 6
when it is physically accessible, when it has a clear value proposition for the user (i.e. its
utility outweighs the cost) and when the user is eligible for it (DFID (2013).
Women’s mere programme membership, numbers and size of loans and repayment data
cannot be used as indicators of actual access or proxy indicators of empowerment.
Registration of loans in women’s names does not necessarily mean participation even in
decisions about loan applications. Men may take the loans from women or directly negotiate
loans in women’s names with male credit officers, as an easier way of getting access to credit.
Women may choose to give their loans to men (husbands, fathers, sons, brothers) as the most
rational economic or social investment. Loans may be repaid from men’s earnings, through
women forgoing their own consumption, or from income or borrowing from other sources.
High demand for loans by women may be more a sign of social pressure to access outside
resources for in-laws or husbands than of empowerment.
Even where women use loans for their own activities, their choice of activity and ability to
increase their incomes are seriously constrained by: gender inequalities in access to other
complementary resources for investment; responsibility for household subsistence
expenditure; time poverty due of unpaid domestic work, related to responsibility for caring
for the family (‘reproductive tax’ on time from which men are largely exempt) (Kabeer,
2015); low levels of mobility; and vulnerability – all of which limit women’s access to
profitable markets in many cultures. The degree to which credit contributes to increased
incomes for women (as well as for men) also depends largely on how well the delivery of
credit is adapted to the economic activities being financed. Agricultural loans that arrive late
or are not large enough to pay for inputs may simply burden a woman with debt that she
cannot repay from the proceeds of the activity she wished to finance.
Most women tend to invest in existing ‘female’ activities which are low profit and insecure.
There are signs, particularly in some urban markets, that the rapid expansion of micro-finance
programmes may be contributing to market saturation in ‘female’ activities and hence
declining profits (Bateman, 2007). Indeed, not every one is successful at increasing income.
Perhaps, it is only for 5-10 percent of clients -- especially those with successful existing
businesses – that microcredit’s impact can be significant9
. In many instances, given the
objective realities of poor communities, where women are almost fully engaged in household
chores and have little or no extra time or skill in business, micro-credit may not even be a
priority. In particular where such micro-credit services are not accompanied by other
essential services in business, skill development, labour-saving technologies, etc, cases have
been observed where women have been increasingly indebted10
. Studies indicated that in
some instances, inability to make on-time repayment and increased debt has been the greatest
‘source of stress’ for poor women, and there are many real cases of suicide committed by
poor women in India and elsewhere. This has been highly pronounced in 2010, especially
after the Initial Public Offering (IPO) of SKS microfinance in Andrapradesh (CGAP, 2010).
Indeed, as employment and traditional livelihood strategies for men disappear, poor women
in increasing numbers have had to make their ways to take every opportunity in the informal
sector, primarily in low paying and often menial work -- piece work, vending, petty trading,
9
See also on-line discussion at http://nextbillion.net/blogpost.aspx?blogid=5322
10
Indeed the most recent results of an impact assessment on six countries based on a Randomized Control
Trials (RCT) have shown that ‘microcredit’ programmes have ‘no’ or ‘little’ but certainly no ‘transformative’
impact on clients livelihoods (Banerjee, et al, 2014) (American Economic Journal: Applied Economics
https://www.aeaweb.org/articles.php?doi=10.1257/app.20140287).

7. 7
agricultural labour, collecting garbage, cleaning toilets, and factory employment. And this
sometimes includes prostitution (Kabeer, 2015). In almost every country in the World Bank
Group study (2001), both men and women reported women's greater ability to accommodate,
‘bury their pride’ and do whatever job was available to earn the money to feed the family.
Yet, the market value of women’s work may not be particularly important to women
themselves compared with other aspects of their employment which, in a given social and
cultural context, may be strongly valued at a personal level, such as modesty, respect,
acceptability to husbands and kin, job fulfilment and/or the ability to reconcile paid work
with childcare (Chant, 2003). Moreover, if income is increased at all, it may come at the cost
of depletion of other valued resources such as time, health and general well-being.
These all are among the issues that need serious consideration in programme design. Yet,
although most institutions have poverty alleviation, and women’s empowerment as their key
goals, these issues are often less well defined, are not clearly shared-goals with-in and outside
the institution, and are much less well strategized. Particularly at operational areas, branch
staff have lesser understanding of the issues, much less equipped with essential skills and
awareness as well as appropriate personal behaviour and attitude, with the result that such
issues get marginal attention in their day-to-day implementations -- particularly in most cases
where staff incentive schemes are much weighted on the business from loan. Indeed, the
contribution of financial services to women’s social and political empowerment depends very
much on factors such as staff attitudes in interacting, relating with and treating women11
, the
types and effectiveness of core training which, with more commercialization drive, are
receiving lesser weight.
There are many worrisome trends in practice. One loan officer explained that if he fails to
collect a kisti (=instalment?) the branch manager “comes with all the staff and [they] stay in
the client’s house until twelve or one at night”. In the MFI studied (Hulme and Msitrot, 2014)
over 70 percent of credit officers reported finishing repayment collection after 8pm, and just
below 50percent of those reported working up to or after 10pm (although the official office
time ends by 6pm). As another credit officer explained: “When I do not get an instalment [...]
and explain that there is a problem in this house and they cannot repay today [...] my boss
orders me to sit in that house until the clients gives the money: ‘If you have to sit there
throughout the night you will but do not come back without the instalment’ he says. So if I
leave without the kisti I face this kind of mental harassment and physical exhaustion... I feel
like quitting the job.”
Often, some microfinance institutions also rely on or collaborate with local ‘credit
committees’ to establish groups for their loan disbursement and also recollections. Without
working to challenge the traditional norm or culture, such efforts also risk replicating the
patriarchal norm, where women, especially poor women are (further) marginalized from
access12
, thus subjecting the new financial opportunity for elite capture13
.
11
With more commercialization, the cases of client treatment has worsened in many circumstances. This has
been highly pronounced in recent microfinance crisis in Andhra Pradesh, India, where many clients reportedly
committed suicide as a result of over-indebtedness. Arunachalam (2010) has reported many instances of a
typical staff-client relationship during the crisis: Client E’s Husband: “Some collection agents were really rude-
after my wife committed suicide.” They came and said, “If you cannot find means to repay, then you should
send out your two beautiful daughters, and get them to earn money by other means (prostitution…) and then
repay to us.” One of them even said, “If you cannot do that, send them to me and I will use them and pay off
your installments. They are very beautiful and would be able to earn a lot. … I wept as I heard this…”
12
There are evidences demonstrating that the very poor also exclude (or self-select) themselves from
programmes. As reported by Sam Daley Harris (2003): “… The poor people see who goes to the programmes,

8. 8
Many microfinance institutions utilize the Group Guarantee Lending Model (GGLM) as
their operational modality. Groups may extend and strengthen women’s support networks
and decrease vulnerability. Groups may help develop organizational and leadership skills,
especially when they acquire experience on a small scale over time and then form larger
networks and federations. Groups may provide a forum for women to exchange information
and learn from one another. For example, successful women entrepreneurs can share
experiences with others. Sometimes women train other women on a voluntary basis, or
groups organize and pay for training. Members may pool income and assets for group
economic activity and access new markets for activities in which collaboration is
economically beneficial. Groups may provide a basis for collective action on gender and
community development issues.
But, groups may also undermine rather than strengthen networks through putting pressure on
friendships and support networks, particularly if people do not have an equal capacity to save
or repay loans. There are arguments that top-down type of organizing people, driven by bank
or MFI staff, for the purpose of preparing the poor for a group loan as undertaken by
Grameen type group loan can sometime be inconsistent with existing networks that the poor
have maintained for long. Poor people are often rushed into forming groups with people
about whom they have little information. Some authors advise that the methodology might as
well distract and crowd-out existing traditional mutual support networks, particularly in
times of repayment problems. They contend that in majority of poor communities, the rural
poor, especially women, have much less information on the behaviour of even their
immediate neighbours when it comes to ‘financial’ matters. For example, Marr (2002) in her
comprehensive study of microfinance clients in Peru found that only 4% of all participants in
groups have prior relationships based on issues of borrowing and lending. All this means that
the vast majority of participants are unfamiliar with financial issues when they first join the
programme (Collins, et al 2009, Rutherford, 2010 on-line discussion)14
. When these group
members are then confronted with an alien way of relating to one another – in this particular
case, monitoring colleagues’ loans, investments, returns, risks, and so on -- they tend to react
very strongly and may turn out to acts of intimidation, threats and even physical abuse in
order to repress information about their financial affairs.
At household level, men are often very enthusiastic about women’s savings-and-credit
programmes because their wives no longer ‘nag’ them for money. But, evidence indicates
and would just say ‘this programme is not for us; it is for those better off people’….” In an earlier ASA study of
626 respondents (drawn from a mixture of ASA staff and clients), almost all (98.8%) of respondents, and all the
clients, said that lack of minimum clothing (to leave the bari and attend a public meeting) excludes the ‘hard-
core poor’ (Morduch and Haley, 2002).
13
A typical expression of a local community leadership accessing a village level financial services, as reported in
the Microcredit Summit Report (2003?) is: ’’This meeting is for serious people. Here we have to be serious
about business. Somebody, who is only selling few vegetables, is not serious about business.’’
14
Stuart Rutherford (2010, an on-line discussion on ‘Portfolio of the Poor’) does not accept the idea that
'trust' is something that can be imported from pre-existing relationships (such as 'the people in this group trust
each other as they are all from the same village'). But ..... trust is more of a verb than a noun. Trust is
constructed out of the repeated keeping of reciprocal promises. So to construct trust and then keep it going,
both partners (say a bank and its clients) have to repeatedly keep promises - promises to pay, to be on time, to
conduct things fairly, and so on.

9. 9
that, in response to women’s increased incomes, men may withhold more of their
contribution to the household budget for their own luxury expenditure; or react differently
when faced with the fear of loss of power, authority and control over their wives:- some
forcefully stop them from working by threatening to chase them from the home; some allow
them to open own accounts but control the accounts on the ground that since a married
woman belongs to the husband and uses his name, the account she opens belongs to the
husband; some resort to over-controlling their wives’ businesses demanding for
accountability; some borrow the money from them and never pay it back; some allow them to
borrow but divert the loans and leave them to struggle with loan repayment; some, once the
wives start earning, stop providing for the family, resort to drinking or even marry other
wives (Regina, 2010). Some men go to the extent of following up women in groups (Kabeer,
et al 2012, Mayoux and Gobezie, 2011).
There are many evidences with in African context on some coping strategies women use.
One of these is not to disclose their financial dealings to their husbands (Fletschner and
Kenney, 2011). They avoid using SACCOs for fear that their husbands might find out. Even
when they do open accounts, they do so secretly by keeping their pass books with SACCO
staff or friends. Other women prefer to save and borrow in groups as a means of protection
against husbands’ interference. Cheston and Kuhn (2002) from their interview of loan
officers of Sinabi Aba Trust (SAT) in Ghana reported that some women hid their loans and
sometimes even their businesses from their husbands in order to protect their income and
investments from them. Although the extent to which loan hiding is a problem among SAT
clients is difficult to gauge, the follow-up research revealed that half (50%) of SAT’s clients
were hiding savings for fear that their husbands would withdraw their financial support.
Indeed, tensions in gender relationship with-in the household may increase as economically
empowered women find it difficult to co-exist with a man with traditional attitude, and who
feels un-easy and threatened with increasingly economically independent and more
demanding wife. Kabeer (2007) reported cases from some part of Africa. In West Africa,
unable to enforce ‘obedient servility’ through the sanction of withdrawing their contributions
to wives who might be earning more than them, men complained at the ‘waywardness’ of
women and the ease with which women ‘packed out’ when the going got rough15 16
.
Thus, although some studies have suggested that microfinance can reduce the risk of
Intimate Partner Violence (IPV)17
, others have noted that attempting to empower women
15
Earlier evidence suggest that particularly in developed countries there has been a rise in single motherhood
since the 1950s as employment and other wider livelihood opportunities gave women the freedom to leave
unhappy marriages (Kabeer, 2001).
16
Two types of female-headed households are often distinguished: de jure female-headed households in
which the female head is single or widowed; and de facto female-headed households in which the male
partner does not permanently reside in the household, and while he can influence larger decisions, by and
large he is not involved in day-to-day decisions and activities. The financial needs and constraints of women in
de jure female-headed households are likely to differ from those in households that are de facto headed by
women (Fletschner and Kenney, 2011). … Thus, in some cases, given ‘polygamous’ marital practices which
allowed men to take another wife at any time, thereby increasing the competition for his ‘limited resources’,
but given also the costs of going it alone, women were not using their incomes to leave their husbands but to
build positions of ‘virtual autonomy’ (also termed ‘divorce with-in marriage’) from them (Kabeer, 2007).
17
Violence against women is defined as any act of gender-based violence that results in, or is likely to result in,
physical, sexual, or psychological harm or suffering to women, including threats of such acts, coercion, or
arbitrary deprivation of liberty, whether occurring in public or in private life (Hughes, et al 2015). Violence

10. 10
can potentially exacerbate this risk by challenging established gender norms and provoking
conflict within the household. Hughes et al 2015 sighted an earlier study which highlighted
that 70 per cent of women participating in a microfinance initiative reported an increase in
violence in their households because of their involvement in the programme. In light of these
contradictory findings, the question of whether women’s empowerment more broadly, and
participation in microfinance in particular, contributes to reductions in violence has remained
an unresolved research question of central policy importance’ (DFID, 2013). Indeed, there is
increasing evidence that, at best, such services helped women to fulfil their immediate and
pressing practical needs of ensuring food security for themselves and of family members, for
example. However, gender equality advocates argue that confining the analysis of gender
inequality to these achievements alone serves to convey the impression that women’s
disempowerment is largely a matter of poverty and indeed, the impact of these services on
women’s long-term strategic needs – gender equality -- remain uncertain (Mayoux and
Hartl, 2009, Kabeer, 1999).
Some of the constraints that particularly affect women are set out in the Figure below.
Supply side constraints
• Limited physical outreach and typical bank
opening hours affect women more than men
because they are less mobile than men
• Product features: may not meet women´s
requirements (e.g. eligibilty, loan term etc.)
• Collateral requirements exclude women who
often lack land/property rights
• Marketing messages not targeted at poor
women
• Service delivery can be patronising towards
women
• The physical infrastructure can intimidate
women and is not suited to their needs (e.g.
baby changing facilities)
• Documentation requirements: women often
lack proof of identity
• Few women in senior management positions:
women are not prioritised as a business
segment
Demand side constraints
• Women are often less well educated and
literate, affecting their financial capability
• Women have lower incomes, cash flows, than
men, because of the kind of work they do
• Constraints on mobility
• Lack of decision-making power and self-
esteem
• Poor access to information, poor social
networks and risk aversion
• Mental barriers, women’s self selection
• Loyalty to informal products (e.g. ROSCAs,
burial societies) due to their social dimension,
which may stop women from exploring
formal-sector alternatives
• Statutory formal laws, which may explicitly
inhibit women´s access to commercial credit,
owning assets (e.g inheritance law)
• Customary laws that undermine incentives to
invest
DFID (2013)
3 – TOWARDS GENDER MAINSTREAMING
AND EMPOWERMENT OF WOMEN
Reaching a common understanding on the terms like ‘gender mainstreaming’ and ‘women
empowerment’ is essential in order to design programmes for achieving these desirable goals
as well as for monitoring and evaluating them. The UN defines gender mainstreaming as
the ‘process of assessing the implications for women and men (as well as boys and girls) of
any planned action, including legislation, policies or programmes, in any area and at all
levels’ (UN, 2002). The ultimate goal is gender equality, where individual rights,
against women is a serious violation of human rights and a pervasive problem worldwide. Globally, 35 per cent
of women have experienced physical or sexual violence, and rates of intimate-partner violence against women
surpass 50 per cent in some countries.

11. 11
opportunities, responsibilities, as well as resources and benefits no longer depend on whether
a person is born male or female (USAID, 2014)18
. Thus, gender mainstreaming entails
bringing the perceptions, experiences, knowledge, needs and interests of women as well as
men to bear on policy-making, planning and decision making (UN, 2002).
Yet, the mainstreaming strategy does not mean that targeted activities to support women’s
empowerment are no longer necessary. Such activities specifically target women’s priorities
and needs. Targeted initiatives focusing specifically on women are important for reducing
existing disparities, serving as a catalyst for promotion of gender equality. In the current
situation all the statistics on income levels, mortality rates, education and health show that
men have most of the power and resources in the world and enjoy much better conditions of
life. Women are disadvantaged, often suffering sexual violence, which sometimes lead to
suicide and murder (Mayoux and Hartle, 2009).
Based on basic frameworks by UN (2002) and outlined in works of Kabeer (2001) and others,
as well as on its wealth of research and work on the area, the World Bank group has provided
a more simplified and practical and widely used approach to conceptualize and measure
empowerment for analytical purposes (Aslop and Heinsohn, 2005). Accordingly,
empowerment is defined as ‘enhancing an individual’s or group’s capacity to make
(effective) ‘choices’, and transform those choices into desired actions and outcomes’ (or
‘valued ways of being and doing’, Kabeer 2001). Thus, ‘’empowerment of women’’ can be
conceptualized as the process by which women take ‘control’ and ‘ownership’ of their lives
through expansion of choices; or the process of acquiring the ability to make strategic life
choices (See Annex 3).
As the figure below illustrates, this capacity to make an effective choice is primarily
influenced by two sets of factors: agency and opportunity structure. Agency is defined as
an actor’s ability to make meaningful choices; that is, the actor is able to envisage options
and make a choice. Asset endowments act as key indicators of agency. The Sustainable
Livelihoods Framework (SLF), developed by DFID, identified five types of assets: Human:
health, nutrition, education and skills, ability to work, ability to adapt. Natural: environment
services, land, water, resources, forests, climate change adaptation. Financial: income,
savings, remittances, debt/credit, insurance, pensions. Social: status, membership of
organizations, networks, mechanisms for participation and representation, security. Physical:
infrastructure, roads, paths, water and sanitation, tools, technology, housing, livestock.
Programmes and interventions that increase and enhance a household’s different assets will
strengthen the household’s capacity to attain a sustainable livelihood (DFID, no date).
These types of assets are very relevant in determining an individual’s or group’s agency, but
they are not sufficient. The extreme poor, because of the depth and duration of their poverty
and ‘marginalization’, often lack the psychological capacity to envision choices and lack the
information to understand and appreciate their rights, entitlements and options. Therefore, in
order to really capture agency it is necessary to add to financial, human, social, natural and
physical assets, informational (access to information, such as knowledge of rights and
entitlements) and psychological (the capacity to envision, to aspire) assets (DFID, no date).
Indeed, more recent studies by IFPRI and others on aspirations (aspirations for ‘income’,
‘wealth’, ‘educational attainment’, and ‘social status’) in Pakistan and Ethiopia found that
18
According to USAID’s (2014) definition, Gender equality refers to a society in which men and women enjoy
the same rights, opportunities, resources, obligations, and benefits. Gender equality does not suggest that
men and women are the same, but that everyone has equal value and the right to not be discriminated against
based on their gender or biological sex (USAID/LEO Brief, 2014).

12. 12
slower ‘household’ income growth, slower average income growth of ‘neighbors’, higher
‘poverty’ as well as ‘the degree to which individuals feel able to control their life outcomes’,
and absence of ‘role models’ are all associated with lower aspirations19
and individuals
choices (Kosec et al, 2014, Bernard, et al 2014, Apparaduri, 2004)20
.
In turn, opportunity structure is defined as the formal and informal contexts, and is shaped
by the presence and operation of formal and informal institutions, or rules of the game21
such as the laws, regulatory frameworks, and norms governing people’s behavior. The
presence and operation of the formal and informal laws, regulations, norms, and customs
(e.g; familial norms, patron-client relationships, informal wage agreements, formal
contractual transactions, public sector entitlements) determine whether individuals and
groups have access to assets, and whether these people can use the assets to achieve desired
outcomes22
. Agency and opportunity structure give rise to different degree of
empowerment, which can be measured by assessing (1) whether a person has the
opportunity to make a choice (existence of choice), (2) whether a person actually uses the
opportunity to choose (use of choice), and (3) once the choice is made, whether it brings the
desired outcome (achievement of choice).
As such, empowerment is a process (see Annex 4) of change that can only be driven by
women themselves. On the other hand, although empowerment cannot be given to somebody
by someone else, the process of empowerment can be facilitated by others through
19
CHF (2007) reported a much more convincing findings of aspiration failure especially amongst the poorest,
from a detailed qualitative and quantitative survey conducted in five biggest regions of Ethiopia (Tigray,
Amhara, Oromia, South, and Afar) covering nine Woredas (districts), involving 144 households from each of
the nine Woredas. The study strongly argues that due to ‘satisfaction’ (or ‘happiness’) with one’s
circumstances, and absence of ‘role models’ in the localities, there is a widespread occurrence of aspiration
failure – individuals being unwilling to make pro-active investments to better their own lives. For example, a
question was asked to respondents: “… A banker came to you and offered to lend any amount of money you
ask – How much would you ask for it if the loan was payable in one year, 5 years, 10 years? …” The response
clearly come out that the amount that would be borrowed remain relatively small, even for a 10-year
repayment period. Is the theory of ‘Backward-bending Labour Supply Curve’ at work?
20
An individual or group’s command over one asset can affect the endowment of these two assets. For
example, education (human asset) often gives an actor greater access to information (asset) and can enhance
his or her capacity to envision alternative choices and options (psychological asset).
21
An individual or group’s agency, their ability to make meaningful choices, can be measured by their asset
endowments, but they act and interact within a social, economic and political contexts governed by formal
and informal institutions and norms, these are the rules of the game. These are the laws, regulatory
frameworks but also the social norms and conventions and attitudes governing people’s behaviour. The ‘rules
of the game’ can constrain an individual’s ability to choose and to act. Social attitudes and social practices can
result in marginalization, discrimination and exclusion (DFID, no date).
22
In some cases, social norms and customs can be more powerful than formal laws and regulations, subjecting
women (and men) to more vulnerability. This has been well illustrated in case of Ethiopia where women have
equal constitutional right to land, but face divorce. As Teferi (in IFAD, 2001) noted: ‘’After the divorce a woman
will have two alternatives; either to remain in the community of her husband or to go back to her natal
communities (in which case she, according to Peasant Association’s Land Law – which do not provide for ‘non-
residential rights’ -- would lose her land rights). If she decides to take the first option (remain in the community
of her husband fighting for a share of land – not an easy task!!), she will face many problems. Among other
things, she will start to feel an ‘outsider’ amidst relatives of her former husband. People might also start to
treat her in that way. Therefore, the woman cannot mobilize the necessary labour, especially male labour, to
get her land–share ploughed. People, including her ex-friends, will not positively reply to her calls for help for
fear of being thought to take sides against her former husband .’’

13. 13
programmes like education, capacity building, political mobilization, changes in systems of
property rights and the social and legal institutions that marginalize women. Microfinance
programmes have a huge potential to promote women’s empowerment at the grass-root level.
On the other hand, there are often misconceptions, as many men (and some women) see
women’s empowerment as a new situation where men will become small and weak, and
suffer violence from women. All power over is bad. Women’s empowerment means
transforming all power relations through giving both women and men the skills, resources
and confidence to change gender inequality (power to and power within) so that together they
have power with to work together in the interests of themselves, each other and also children,
elderly people and others in their communities and wider society (Mayoux and Hartle, 2009).
In effect, women’s empowerment leading to gender equality is a win-win, not a zero-sum-
game (See Annex 3, Annex 5).

14. 14
Relationship between Outcomes and Correlates of Empowerment
4 -- GENDER MAINSTREAMING AND
EMPOWERMENT OF WOMEN IN RURAL-
FINANCE
Gender mainstreaming in rural finance entails more than increasing women’s access to a few
products designed specifically for women or to small savings and microinsurance
programmes. Gender mainstreaming in ruralfinance requires us to assess the implications for
women and men, as well as for girls and boys, of our planned programmes – of injecting a
new (purchasing) power into the household. Addressing gender issues will require not only
a strategy to mainstream gender equality of access, but also strategies to ensure that this
access then translates into empowerment and improved well-being, rather than merely
feminization of debt or capturing women’s savings for programme financial sustainability
(Mayoux and Hartle, 2009). Even in minimalist microfinance institutions, there are a range of
measures that can be taken to increase the contribution of microfinance services to gender
equality and women’s empowerment.
Degree of
Empowerment
Opportunity
Structure
Development
Outcomes
Agency

15. 15
At the core is a mainstreaming of women’s needs, concerns and language, not as a
marginal concern to those of men, but as a central and equally valued and resourced element
in planning and implementation at all levels. In all types of institutions, the most cost-
effective means of maximizing contributions to gender equality and empowerment is to
develop an institutional structure and culture that is woman-friendly and empowering, and
that manifests these traits in all interactions with clients.
Vision and institutional culture: Institutional culture is expressed in the way an
organization chooses to promote itself. What sorts of messages does it send through the
images in its offices, through its advertising, and through the consistency of its gender aims
in the community with its internal gender policy? The institution’s routinely issued
promotional leaflets, calendars and advertising are a very powerful means of presenting
alternative models and challenging stereotypes. These can be made available for clients to
view while they are waiting to see staff. Organisational gender policy should ensure that the
staff of the organization, women and men, are able to interact with women on the basis of
respect and equality and to promote a vision of women’s empowerment also in interactions
with men.
Recruitment, training and promotion policies: Equal opportunities policies for staff
increases programme effectiveness in reaching and empowering women. They require
family-friendly working practices for women and men, and ensuring that women’s specific
contributions to the job are fully valued (e.g. better understanding of women, multitasking),
and their specific constraints due to contextual factors (e.g. greater vulnerability to violence)
are taken into consideration in job requirements, facilities and pay. Gender awareness and
sensitivity are criteria for recruitment, and training as essential requirements of a professional
service. Performance on gender equity is recognized in criteria for promotion.
Attracting poor women also requires careful design in financial product, approach, as well as
people, with the right attitude and behaviour towards the poor, especially at the forefront of
service delivery. Existing evidence also suggests that while male loan officers treating
women clients with respect and dignity is empowering in and of itself, yet many women
clients confirm that they can relate more easily to female loan officers, and that female loan
officers could provide a 'role model' of achievement. Female loan officers are especially
valued by women clients as role models for their daughters, showing an unplanned
'secondary impact' of the program. Yet, often there are only few female officers (about 20%
in Ethiopia), especially at field level in rural branches. A gender focal point often need to be
specifically appointed and other staff time allocated to work on gender issues.
Using forms of communication accessible to women: All information need to be accessible
in local languages, together with visual information accessible to those many women who
cannot read or write. Mainstreaming women’s language: Literally – in terms of making all
information accessible in local languages and visual forms that women are more likely to
speak and understand. Conceptually – in terms of understanding and valuing women’s
activities, strategies, priorities and challenges and mainstreaming these understandings
throughout the organization’s practice23
. This implies looking beyond the purely economic
23
In one community forum, a woman confessed that she was afraid to venture into a bank as there was
always a ‘mean-looking man’ standing at the door with a big stick in his hands and she thought that was meant
to keep away poor people like her away! There is need for more financial awareness and demystification
of such beliefs including making financial services more user-friendly. - See more at:
http://www.empowerwomen.org/en/circles/make-financial-markets-work-for-women/women-financial-
literacy-and-skills#14A3EE7BB2AB4769BA11DF6833B697C9

16. 16
and market concerns to issues of non-market work and activities, power relations and
underlying forms of social, cultural and political gender discrimination.
Products and Service Designing through Participatory Research
There have been a range of useful innovations in product design that promise to make
products both more adapted to needs and more likely to benefit clients. Recently, in
recognition of some of the risks as well as benefits of the rapid expansion of financial
services, there has been increasing emphasis on participatory market research to develop
appropriate products. It is now generally accepted that such research and ‘knowing your
clients’ is good business practice. To meet the diverse needs of women, there needs to be
adequate diversity and flexibility on products. For women, as for men, loans need to be far
more diverse than the small income generation loans which formed the bulk of loans
targeting women until very recently24
.
Flexible loan: Most loans for Grameen Bank members (over 95% women) previously had a
standard one-year term with a fixed weekly repayment schedule. Under Grameen II, loans
are now available with varying terms and schedules. They can be ‘topped up’ part-way
through the term or paid off early. There is a new flexibility in rescheduling troubled loans.
Although loans are given for business use, in practice members use them for what they wish,
which helps stabilize fragile livelihoods (Mayoux and Hartle, 2009).
Alternative collateral: Indeed, the poor are not necessarily with out any asset. But often the
assets they posses are without title deeds, and cannot serve as collateral for loans from formal
sources. Successful experiments in expanding women’s access to credit accept non-
traditional forms of collateral – assets that women are more likely to have than land or
houses. The most innovative of these is the SEWA Bank’s secured loan programme which
accepts a variety of collateral substitutes such as jewellery, fixed deposits, or mortgages. Its
women clients most commonly use jewellery, which is one of the few assets owned by
women of all classes in India. The bank retains a goldsmith who comes in once a week to
weigh and value applicants’ jewellery. Clients can obtain loan up to 60 percent of the value
of the jewellery offered for security. The bank keeps the jewellery in a safe deposit box until
the loan is repaid (UN-INSTRAW, 1995). Other institutions use household assets such as
refrigerators, sofas, etc using their own stamps as a sign that the asset is pledged for a loan.
Other MFIs in Ethiopia and elsewhere also have experience of providing individual lending
using informal collateral:- house (not formally registered at municipality); household
equipment, tree plantations, college diplomas, certificate of membership in some informal
groups (e.g Equeb), etc.
24
The most important challenge in this respect, of course, is the ability (and commitment) to develop products
based on the needs and circumstances of the target people. Robert Chambers, the undisputed dean of
participatory development, elaborates the most challenging exercise in the power to empower, to listen,
respect, trust, inspire, coach, mentor and give responsibilities -- many behaviours from the PRA (Participatory
Rural Appraisal) tradition: Sit down, listen, learn; Facilitate; Hand over the stick (or marker pen, chalk,
microphone, even megaphone (with large groups); Ask them! – as an upper, ask lowers what they know, their
priorities, their ideas, advice and views, often they come up with ideas new to the upper; Shut up! The
empowering power of silence – surprisingly hard to practice – ‘suffering the silence’ but worth a try:
http://www.oxfamblogs.org/fp2p/?p=12489

17. 17
Warehouse Receipts System, also known as inventory credits, can facilitate credit for
inventory or products held in storage. These receipts, sometimes known as warrants, when
backed by legal provisions that guarantee quality, provide a secure system whereby stored
agricultural commodities can serve as collateral, be sold, traded or used for delivery against
financial instruments including futures contracts. These receipts are documents that state the
ownership of specific quantity of products with specific characteristics and stored in a
specific warehouse. Such a warehouse receipts system has the benefits of: mobilizing credit
to agriculture by creating secure collateral for the farmer, processor, and trader, smoothing
market prices by facilitating sales throughout the year rather than just after harvests, reducing
risk in the agricultural markets, improving food security and credit access in rural areas,
increasing market power of small holders by enabling them to choose at what point in the
price cycle to sell their crops. More important, this system would enable the poor to take
‘individual loans’ without having to form into groups.
Loan Guarantees: USAID’s DCA provides partial credit-risk guarantees to private-sector
lenders to encourage them to provide credit to financially viable businesses and projects that
contribute to development goals. The programme provide a guarantee of up to 50 percent to
one or more lenders’ portfolio of loans to borrowers in a predetermined ‘underserved market
segments or sector, such as agribusiness, or businesses owned and managed by women, and
reduce onerous borrower collateral requirements . By limiting all guarantees to no more than
50 percent, the mechanism ensures that the financial institution retains at least an equal stake
in the risk, which should encourage good investment assessments, decisions, monitoring, and
collections efforts. The hope is that after the initial demonstration that such sectors are not as
risky as the financial institution believed, they will then be willing to continue offering
services to clients without the guarantee. By combining the DCA with technical assistance,
banks in Uganda and Ethiopia moved away from relying solely on collateral-based lending
toward cash flow analysis and other methods to determine creditworthiness (USAID/FS
SHARE, 2010, Kipnis, 2013)
Leasing arrangements: Leasing is a financing tool that provides a very good opportunity for
those who cannot easily form groups, or afford to offer material collateral that many
institution require particularly for larger loans. In leasing, the provider (lessor) owns the
equipment and permits the client (lessee) to use the equipment in exchange for periodic lease
payments. For most rural enterprises, leases are also a means of acquiring equipment (and not
just its use) and ownership is transferred to the lessee at the end of the lease period. Leasing
offers several advantages over loans, both to the lessee and to the lessor25
.
25
‘’Financial lease’’ means a type of leasing by which a lessor provides a lessee against payment of mutually
agreed instalments over a specified period with the use of specified capital goods which is: a) either already
acquired by the lessor; or b) purchased by the lessor from a third party, known as the supplier, chosen and
specified by the lessee; and under which the lessor shall retain full ownership right on the capital goods during
the period of the lease agreement, and subject to agreement between the two parties, the lessee may have an
option to purchase the capital good outright after the termination of the lease period at an agreed price. ‘’Hire
purchase’’ means a type of leasing by which a lessor provides a lessee with the use of a specified capital goods,
against payment of mutually agreed instalments over a specified period under which, with each lease
payment, an equal percentage of the ownership is transferred to the lessee and, upon effecting of the last
payment, the ownership of the capital goods shall automatically be transferred to the lessee; ‘’Operating
lease’’ means a type of leasing for a period of time not exceeding two years, by which a lessor provides a
lessee against payment of mutually agreed rent with the use of specified capital goods that the lessor has at
hand (Federal Democratic Republic of Ethiopia, Negarit Gazeta, 4
th
Year No 27, 5
th
March, 1998, Addis Ababa).

18. 18
Consumption loans to avoid resorting to moneylenders in slack and ‘hungry’ seasons. Other
than being needed in themselves, these loans may free up significant amounts of money spent
on high-interest payments to moneylenders for investment in production at other times of the
year. Providing such loans to men as well as women would reduce the worrying trend of men
taking less responsibility for household well-being when they perceive that women have
access to additional cash. Such loans are needed, and could be paid for, in households that
sell their agricultural labour, as well as farming households. In particular when consumption
levels are already precariously low, such arrangements may rescue the poor from eating less
or cheaper food with lower nutritional value, cancel or postpone profitable investments or sell
valuable assets, at a substantial and permanent lose, to meet irreducible consumption needs.
Loans for assets registered in women’s names: The Grameen Bank offers large, longer-
term loans to buy housing and land. House sites and land must be registered in women’s
names, both as security for the loan and to increase women’s control of assets. This gives
women much more security, improves repayment rates, and also decreases divorce and
abandonment of women (Mayoux and Hartle, 2009). Some organizations, like Women World
Banking (WWB), have explored and developed pro-poor, pro-women micro-insurance
products such as maternity health coverage, coverage for spouse and children as
beneficiaries, and divorce and ‘abandonment’ insurance (Global Asset Project, 2007).
Services for adolescent girls: BRAC started a ‘safe spaces’ programme for girls, providing a
location or building where girls could further develop reading skills and socialise. This
progressed into a space for providing livelihood and life skills, leading BRAC to eventually
incorporate financial services. Despite much resistance from communities, which do not see
girls as able to cope with money, the programme started with savings accounts. Through the
savings programme, and by spending a lot of time in the communities, BRAC was gradually
able to provide credit services to girls. Parents have to be present and sign off credit
agreements. When groups convene for credit and savings services, BRAC staff give talks on
issues relevant to adolescent girls, such as sexual and reproductive health rights, dowries,
etc. It is important to combine both the social and the financial elements, as girls have less
decision-making power and ability (DFID, 2013). Some organizations involved in the Credit
and Savings Household Enterprise (CASHE) project in India also decided to pilot a loan
product for adolescent girls. The loan, available for both parents, enables the girls to purchase
a productive asset to help them earn an income, delay marriage, bring the asset to their in-
laws’ house when they do marry, and reduce the dowry required.
Supporting activities that facilitate women engagement in business
In subsistence economies, water does not flow from a tap, daycare services are largely
nonexistent, and feeding the family is a constant struggle. Access to grain mills, roads, or
energy saving devices is extremely limited. Much of the world still sees domestic work as
"women's work," which can include collecting water, caring for the children, or harvesting a
field. These many hours of hard labor are unpaid, and if a woman should seek income it will
likely be through informal employment with small returns. As a result, the majority of the
world's poor are women, and they have fewer opportunities to become economically self-
sufficient (ACCION, 2009). Some innovative, complementary services demonstrate potential
for replications.
Loans for services benefiting women: Members of the women’s centres developed by
PASED’s Learning for Empowerment Against Poverty (LEAP, Sudan) project identify their

19. 19
needs for services and are encouraged to set up viable businesses that can benefit other
women, such as day-care centres. Loans have also been given for smokeless stoves, which
have health, labour-saving and environmental benefits. The financial services provider is
required to seek out potentially profitable services and assets for which viable repayment
schedules can be devised; once that is done, the loan products are financially sustainable
(Mayoux and Hartle, 2009). Other examples include loans to midwives and health
practitioners to buy equipment to provide better service, or loans to set up waste
management services on a commercial basis (DFID, 2013).
Water point developments: FINIDDA programme in Ethiopia have initiated a programme
that combines microfinance with water point development in rural areas. The idea is that
‘groups’ of people who are already organized for the purpose of loan and saving can
collaborate on development of water points that can supply clean water for drinking as well
as for cattle, and small irrigation schemes. While the main equipment can be subsidized by
the donor, the members can finance maintenance and pay for guards. Such contributions can
be saved at the microfinance institutions. If the group want to replace the water equipment,
they can access loan from the microfinance. The monthly or weekly group and centre
meetings can serve to facilitate discussions on improvement of the water points, and any
other issues.
Credit with Education
The key challenge to delivering development interventions, particularly to rural communities
of developing countries, is the fact that the population lives in a scattered geography, where
the infrastructure, particularly the road network and other communication facility is poor,
making service delivery very costly. Much of the cost of education is in bringing sufficient
numbers of people together with an educator at set times and places, which is already
achieved by the microfinance operations (UNFPA, 2006). Unfortunately, directing credit to
poor women alone may be unable to lead to empowerment, unless several requirements are
met jointly. Women need credit. But women’s improved access to credit will have to be
accompanied by a number of additional measures, such as non-formal education, skill up-
grading, and social and political consciousness-raising to challenge the patriarchal social
structure (USAID/FS SHARE, 2010).
There are now growing efforts to integrate services like reproductive health and microfinance
with a view that the poor, especially the poorest, are unlikely to access reproductive health
education and services without the incentive of immediate benefit, which the offer of
affordable credit can provide. The prospect of getting a loan can draw people to a programme
that offers them additional services. Certain features of group-based microfinance
programmes can make them ideal for integration of reproductive health education (UNFPA,
2006): 1) Group-based microfinance brings poor women together on a regular basis over
periods of months and years to repay loans and deposit savings. These meetings are also
opportunities to provide reproductive health education (and other other topics) over extended
periods. Services can be provided to mothers and also younger women who would not
normally be reached by reproductive health education. 2) Increased income and assets due to
microfinance should enable women clients to put what they learn from reproductive health
education into practice, and to increase their consumption of primary health services and
contraceptive 3) Microfinance services empower women, enhance their roles as decision-
makers within the family, and pave the way for behaviour change. 4) Microfinance
programmes often achieve financial self-sufficiency through interest paid on loans. They can
generate sufficient income to sustain not only the financial services but also additional

20. 20
reproductive health education services offered by the same staff26
. Freedom From hunger
(2012) reports of many positive impacts of such programmes in many developing countries.
Supporting the Vulnerable into Sustainable Livelihoods: BRAC’s Income Generation for
Vulnerable Groups Development (IGVGD) Programme has helped nearly 10 million destitute
rural women make the transition from absolute poverty to economic independence. The
programme begins with an 18-month commitment of free food to those at greatest immediate
risk. Participants learn the skills to pursue such income-generating activities as poultry
production and silkworm-rearing. The very poorest participants also gain access to BRAC’s
Essential Health Care services to break the vicious cycle of poor productivity and poor
health. During this period, BRAC helps participants learn to build an economic ‘nest egg’ for
future investment and protection. Most participants then progress to individual income-
earning activities, using the new livelihood skills they have learned. Within two years of
starting this process, about 80 per cent of participants make the transition – through their
small income-earning activities and accumulated savings – into BRAC’s mainstream
microfinance programme as borrowers. The progression of support services – from grants,
through training, to saving and self-employment – appears sufficient to break down the
barriers of extreme poverty, social isolation, lack of productive skills, and poor self-esteem
that previously kept this population from self-employment. The IGVGD Programme is an
excellent example of what can be done to help destitute rural women raise themselves out of
poverty (DFID, 2013).
Financial Literacy: The microfinance industry is giving more attention to building their
customers’ financial capabilities, designing products that respond to their needs and
preferences, and ensuring their protection as consumers. Consumers with low levels of
financial literacy lack the information and tools necessary to make informed decisions.
Financial education is the process of building knowledge and skills to enable people to make
more effective financial decisions while changing behaviors to build confidence in financial
empowerment. The core of a financial-education agenda includes budgeting, saving, and
managing debt. It also involves managing financial products such as insurance or remittances
and making use of bank services (IFPRI, 2010) (See Annex 7).
The Gender Action Learning System (GALS)
The key premise in GALS is that microfinance can take the lead role, serve as entry point, in
promoting gender issues at grass root level. The microfinance sector has a relatively powerful
leverage to encourage and/or enforce implementation of improved practices27
because it
26
There are three potential scenarios for integration: Unified, Parallel and Linked. Under the Unified modality,
same staff delivers both microfinance and other services. Under the Parallel service delivery, the services are
provided by two or more programs of the same organization operating in the same area. Under the Linked
service delivery by two or more independent organizations operating in the same area, financial services are
offered by a specialist microfinance institution at the same time as non financial services (possibly for health
and other services) are offered by one or more independent specialist or generalist organizations -- to the
same people in need (Freedom From Hunger, 2012).
27
Broadly, financial systems serve the primary function of facilitating the allocation of resources across space
and time in an uncertain environment. This primary function is broken into five basic functions: facilitate the
trading, hedging, diversifying, and pooling of risk; allocate resources; monitor managers and exert corporate
control; mobilizing savings; and facilitate the exchange of goods and services. These financial functions are
expected to affect economic growth through capital accumulation and technological innovations (e.g by
identifying and funding the most innovative entrepreneurs). Defined in this way, these functions help to
justify the view that the financial sector operates like the ‘’brain of the economy’’ (Meyer, 2003, p.2).

21. 21
can establish stronger link with clients, not only because there is still a huge demand for
valuable financial services in many circumstances, but also because financial services (more
so than other sectors, e.g agricultural extension, health, etc) demand that there be close
communication, monitoring and frequent interaction between service provider and clients
(Freedom From Hunger, 2012, Magner, 2007). That is, on the one hand service providers
have their money in the hands of the poor which they have to monitor regularly, and poor
people also need to check on the performance of the other group members which they co-
guarantee, as well as check the safety of their savings with the institution. Contacts are thus
so regular, can be daily, and often weekly and monthly meetings are a must. In particular, the
fact that clients come in groups means that the cost of having to visit individual client (or
‘beneficiaries’, as the case may be) for service delivery, particularly in remote areas with
difficult infrastructure, and lower population density, is reduced hugely28
.
Capacity buildings are thus managed at group forums and mainly utilizes clients’ ‘waiting-
time’ -- the time when clients gather for savings and credit operations and are waiting for
their turns for loan disbursements or savings collection. Discussions are facilitated, by
creating the opportunity for participants, women and men, to openly debate differences and
similarities on perception on gender equality, in terms of individual ‘rights’, ‘responsibilities’
and ‘opportunities’, by invoking such key issues like ‘what and why they like/dislike being of
a particular sex, potentially leading to a consensus or new agreement on many of the gender
issues between the two sexes. The GALS is fundamentally a capacity development
methodology and focuses upon improving the agency of women and men (Mayoux and
Hartle, 2009) (See Annex 2).
The debate would lead participant members to analyze their current situation, relationships,
opportunities and challenges, reflect upon it, envision their individual and household life and
livelihood circumstances, and plan strategies and actions how they can change it, as well as
track and monitor. While normally microfinance clients’ business plan is expected to
incorporate the cost of micro-project, expected benefit, market availability, etc, such
‘business plan’ is expanded to include specific gender issues, for example how, and by
whom, the loan and resulting increased income would be used, how increased responsibility
due to the new business would be shared among household members, etc. Importantly,
communication with participants, majority of whom cannot read and write, is facilitated
through use of pictorials, graphics and simple drawings instead of written forms. Symbols
and colours are also important communications tools in GALS participatory methodology
(Gobezie, 2013). Such plan remains with participants, and thus is accessible to all members
in the household (including children) for viewing and reviewing any time, providing an on-
going participatory space, thus promoting confidence and sense of ownership. Microfinance
programmes like Bukonzo Joint Microfinance Cooperative in Uganda not only does
training on various topics, but also does ‘monitoring’ at least monthly if families have been
doing on their livelihood plans.
Evaluation studies evidence some real positive changes towards gender equality: increased
respect to wives, lesser violence, increased sharing of household responsibility between
28
The few available studies on the additional costs of using such ‘group forums’ as platform for
complementary awareness creation and/or service delivery indicate that this is only about 6-10% of existing
microfinance operating cost in Bolivia, Burkina-Faso, Mali, Togo (Morduch and Haley, 2002), and in the range
of 0.12-3 USD per client per year in India (Freedom From Hunger, 2012).

22. 22
spouses, ‘joint land ownership,’ etc (Farnworth and Akamandisa, 2011). Field assessment
using AIMS/USAID tool demonstrated that 36% of households in the GALS programme has
joint land agreements between husband and wife (compared to only 8% in control group) and
in 43% cases husbands share household responsibility previously considered ‘women’s
activity’ (compared to 24 % in control group) (Gobezie, 2013). The changed men also
reports feeling of greater happiness and sense of fulfilment as fathers and husbands who are
now much more loved, better ‘bedroom’’ and generally a greater sense of self-worth
(Mayoux and Gobezie, 2011). Studies demonstrated conclusively that the GALS is
remarkably powerful in unseating powerful cultural norms that have existed for
generations. It was clear though that given the local context, gender equality, and even such
issues as coming to a status of agreeing on ‘joint land ownership’ does not materialize so
easily, and would essentially take some time, years of negotiation and bargaining. Respect to
women and collaboration develops gradually as women continue to develop the self-esteem.
Kabeer (2007) reported this same issue from various contexts. According to her study, ‘in
some cases, the shift in decision-making was from ‘norm-governed’ to ‘negotiated’ decision-
making, in others from male-dominated to joint or female dominated decision-making’. In the
Bangladesh context, where microfinance has been in operation for some decades (with a
major focus on women), ‘bargaining between spouses is characterized by non-cooperative
behavior within marriage (Dowla and Barua, 2006).
Involving Men?
Gender systems and social roles of women and men are established in different socio-cultural
contexts, which determine what is expected, allowed and valued in a woman/man and
girl/boy in these specific contexts (UN 2002). Indeed, economic empowerment of women can
be a source of concern to men in respect of them maintaining a position of pre-eminence or
final arbiter status within the family power structure. Thus, safeguarding this final arbiter
status can lead to both overt and covert means of resistance. Normally, resistance is sustained
if the outcome of the project intervention initiates a marked deviation or departure from the
equilibrium of family power relations, or the accepted role of women from both the
cultural and religious perspectives (Kassey, 2005). This implies that empowerment of women
and gender equality cannot be achieved in a vacuum; men must be brought along in the
process of change.
Local context matters. Dominant cultural norms and values in developing countries like
South Asia stress male responsibility for providing for household members, and construct
women as their lifelong dependants. Men are therefore expected to shoulder the burden of the
breadwinning role, are given authority within the household and prior claim to its resources.
Women, on the other hand, can expect to be provided for, but are assigned a subordinate
status within their households (and in society at large). Devalued by the prevailing culture,
denied equal access to resources, and their physical mobility often restricted by cultural
norms, women’s dependent status leaves them open to what some sociologists termed
‘patriarchal risk’ (Kabeer, et al, 2012). This is the likelihood of abrupt declines in their
economic welfare and social status should they find themselves bereft of male guardianship.
For poorer men, the failure to fulfil social expectations about their breadwinning roles can
lead to considerable stress and demoralisation. This often results in domestic violence, high
levels of alcoholism, and abandonment of their families and responsibilities.
Indeed, what is called "culture" can sometimes be more accurately understood as the ideas
and practices valued by the dominant group, often men (United Nations Population
Information Network, POPIN, 2010). Under such situations, men are often caught between

23. 23
the patriarchal and rigidly hierarchical notions of masculinity that they are taught from
boyhood, and a changing social and economic fabric that threatens on a daily basis to
undermine that role. When interventions to promote women’s empowerment do not offer
men opportunities to redefine their own identities, they can contribute to a deep crisis of
masculinity. In the absence of opportunities for their own positive engagement and growth,
psychological support for developing alternative self images, men can express that crisis
through withdrawal, depression, suicide, resistance, subversion, or physical or psychological
violence (Martinez, 2006).
Role Models?
Role models, or ‘positive deviants’ from the accepted norm, can play a critical role. In
general, poor people often do not make investments, even when returns are high. One
possible explanation is that they have low aspirations and form mental models which ignore
some options for investment. More recent research experiments, including that of IFRPI
(Bernard et al, 2014) demonstrated that ‘aspirations’ can be influenced with effective
interventions. Individuals who watched documentaries (for two hours) about peer group ‘role
model’ people from similar communities who had succeeded in agriculture or small business,
have, after six months, higher aspirations or forward-looking behaviour on savings and credit
behaviour, children’s school enrolment, and were induced for more work and less leisure.
The role models all took slightly different courses of action to those around them, such as
starting or expanding a small business, diversifying their source of income, improving their
farming practices, or acting outside cultural norms or by adopting non-traditional divisions of
household responsibility between spouses. Also, spouses featured in the documentaries
highlighted the personal qualities of the subjects, such as perseverance, determination and
reliability. The subjects also emphasised the importance of setting goals and working towards
them (Bernard et al, 2014, Kosec, 2014).
Building on Microfinance Groups?
Even when access to financial services have increased to reach the poorest women, goals that
are set in ‘action plans’ of individuals or groups can be heavily influenced by the values of
the society in which poor clients live, and so may sometimes replicate rather than
challenge the structures of injustice. For example, women’s expenditure patterns may
replicate rather than counter existing gender inequalities, and continue to disadvantage girls.
In the extreme, status considerations can lead to cultures where female infanticide and
foeticide, female circumcision, and widow immolation all become ‘rational’ responses to
social norms (Kabeer, 2001). The influence of society and culture over the range and exercise
of choice mean that if we seek to promote empowerment, we must also consider factors
affecting women’s status and rights as a group (Kabeer, 2005). To the extent that group
lending in microfinance entails peer monitoring by other borrowers in the same group,
microfinance is likely to provide protection to women within their household, and violent acts
and abuse by men against women can now be subject to third party scrutiny. This, in turn,
should act as a deterrent against domestic violence, and more generally, as an instrument for
women to promote their group rights and improve their bargaining power vis-à-vis their
husbands or other male family members. With some support and group facilitation, groups of
economically empowered women can also take steps to address the cultural and legal barriers
that limit their social and political empowerment.
Grameen Groups Vs. SGH Groups: Worth further investigation is ‘which type of groups’?.
As we move away from high population density areas into remote and less densely populated

24. 24
rural areas where the majority poor reside, increasing evidence suggest that among financial
service providers, banks are the most centralized, focussing on cities and urban areas while
MFIs, SACCOs and ROSCAs/ASCAs29
are increasingly decentralized models. In
decentralised models clients have a greater role in organisational decision making. They
argue that decentralized models have inherent advantages in reaching remoter and poorer
people, although they face significant challenges in terms of their long-term effectiveness and
sustainability.
Compared to Banks and MFIs the cost structure of SACCOs is different. First, funds can be
raised at low cost because they are mobilized among a group, which often has a common
bond or purpose. Second, the interest on these funds is usually in the form of a dividend that
is calculated as a residual rather than a committed cost at the outset. Third, when SACCOs
start, they usually do so in low-cost offices with low overheads and voluntary labour or low
salaries (especially compared to bank staff). In terms of default, the costs of recovery can also
be kept low because of guarantees based on a member’s own shares and guarantees from
other members. ROSCAs and ASCAs manifest similar features with very minor variations.
SACCOs, ASCAs and ROSCAs as user-owned and managed models offer additional features
that appeal to poor people, especially poor women. First, these organizations’ survival
depends on the degree to which they respond to their members’ needs for financial services.
Second, there is a high degree of client ownership and participation: users have a direct
influence in determining the financial services that are provided, including the interest rates,
and they are able to renegotiate the repayment schedule when they face genuine financial
difficulties (Johnson, et al, 2005). After all, people are there to assist one another and offer
social support. This flexibility means that members are not as ‘frightened’ of taking loans
from these systems as they would be from others. Moreover, unlike the case of MFI group-
solidarity systems, other members of a group are not forced to make repayments on the
defaulter’s behalf30
.
Apart from the poverty and population density justifications highlighted above, others
provide socio-cultural reasoning related to the sustainability of each one of the models in
different contexts, as well as the relative potential for reaching the poorest, especially women,
and empowering the community. Harper (2002) highlighted why the Grameen model is
popular in Bangladesh while Self Help Groups (SHGs) are more common in India. He
argued, among other things, that Bangladesh village communities are more generally socio-
economically homogenous, and less divided by caste (as well as more disciplined and less
individualistic) than their Hindu equivalents in India. It may therefore be easier in
29
While banks and MFIs are relatively familiar types of institutions, it is important to briefly explain how
ROSCAs, ASCAs and SACCOs operate. ROSCAs are the simplest form of financial intermediation: a number of
people form a group and contribute an agreed amount on a regular basis. The fund is usually given to one
person who takes all of the money, until everyone in the group has received the money in turn. The system
has a very high degree of flexibility, with the participants determining the amount to be saved; the number of
people involved; the frequency of contributions; the number of people receiving the payout; and how funds
can be used. ASCAs build on this basic model by introducing a central fund into which the contributions are
deposited. Instead of the fund being automatically distributed to each member in turn, members can take
loans at an agreed interest rate. The nature of guarantees and collateral required will also be agreed. SACCOs
are essentially a formalized version of an ASCA, which allows for legal registration and hence greater scale of
operations. The essential organizational principle of a SACCO is one member- one vote rather than one share
one vote as in a company so that all members have an equal role in governance (Johnson et.al, 2005).
30
There is increasing evidence (CGAP, 2006) suggesting that externally funded community finance
programmes risk failing, as they tend to face high level of default, as the injected money tend to be considered
by members as ‘cold money’.

25. 25
Bangladesh to persuade people to form Grameen-type groups, which follow a 'standardized'
system. The more flexible SHGs may be more appropriate for the Indian situation where the
difference between and within states is often higher. The Table below outlines some of the
key differences between Grameen groups and SHG groups. Programmes which tend to
‘copy’ either model should consider if the modality is appropriate to their context.
Table: Grameen Groups Vs. SGH Groups
Features Grameen Groups SHG Groups
Financial
Intermediation
Undertaken by MFIs Undertaken by Community
Flexibility Less Flexible: Regular meetings;
group size; terms and conditions;
repayment rhythm; interest rates
Highly Flexible: Determined by
the group
Reaching the
poorest?
Difficulty to reach the poorest? Reach marginalized (but can be
exclusionary; ‘hijacking by elites’
Cost to clients Higher because of overhead costs Lower: because they (often) use
local staff; ‘voluntary labour’
Empowerment Members dependent on MFI
terms and conditions
Group determine conditionality
Sustainability High sustainability – advantage of
economies of scale; stronger
(educated) management, etc
If not supported in capacity –
fragile social entities; weak
governance, internal control
Popularity Bangladesh (homogeneous,
disciplined, ‘group’ formation..)
India (heterogeneous, divided by
caste, ‘democratized’)
Source: Harper, 2002
Saving services
Microfinance programmes worldwide generally tend to be overwhelmingly focussed on
microcredit, to the neglect of saving, insurance, and other services. Saving increasingly
proved to be one of the most valuable service to the poor. Indeed, if there is one thing those
with too little have too much of, it is the awareness that even the kind of life they have is far
from guaranteed. Small things can upset the applecart. An unexpected illness can push a poor
family deeper into poverty. For many in the lower middle class, such emergencies can push
them right back into the ranks of the very poor (Grameen Foundation, 2014). So for the poor,
it is especially important that one manage money well and self-ensure, and managing money
well begins with hanging on to what one has (Rutherford, 1999). For the poor, particularly
those with low, irregular and unreliable income, saving is therefore critical.
Indeed, the poor tend to save fixed amounts of money regardless of income31
, varying their
consumption according to income. In other words, poor people do not save according to the
equation Savings = Income – Fixed Consumption, but according to the equation,
Consumption = Income – Fixed Savings32
. Their decision to save is, therefore, not an
income-surplus function, but rather a reserve. Global experience suggests that there is a huge
demand for a convenient, safe and reliable saving services among the poor. Just as the
31
This is mainly because tomorrow’s income is unreliable, can be even worse, as it is vulnerable to many
externalities, market, prices, rainfall, etc (Collins, et al, 2009)
32
There are debates on the need to ‘’teach’’ the poor on savings. Those arguing in favour relate the issue of
mismatch between people’s ‘needs’ and ‘wants’. Not everyone makes a wise use of money, people’s
immediate ‘demand’ does not prove their benefit, people may ‘want’ cigarettes (or other ‘temptation goods’,
like alcohol, gambling, etc) but they may not ‘need’ them (instead they may need ‘milk’).

26. 26
existence of moneylenders indicates a demand for credit among the poor, the widespread use
of informal savings mechanisms may signal demand for formal deposit services (CGAP,
2006 b). But in many contexts, the poor, especially women, have limited access to such
services, thus facing serious challenges in money management.
It is estimated that eight out of every ten microfinance clients (80%) are women (DFID,
2013). However, it has become increasingly recognised that the rigidities of microfinance can
be limiting for women, especially because microfinance has tended to be credit-led, rather
than providing the broader range of services that poor women (and men) need, notably
savings. Savings vehicles are important for women to build security and decrease
vulnerability to shocks. Such savings, however small, can help women meet small
expenditure for themselves and their children without having to look for the husband's
permission. Many studies have identified that for many women, the status of being a
supplicant in relation to men is galling and humiliating, particularly as in contexts of scarcity,
where they have to literally plead for every penny to meet basic foods and other needs
(Kabeer, 1999). Moreover, a woman’s individual savings can also play the most critical role
of securing her by enhancing her bargaining power, to resist (and perhaps leave) a bad
relationship -- particularly if a woman can keep savings under her control (and is anonymous)
(Vonderlack and Schreiner, 2001). It also enables them to plan and to invest. Unfortunately,
while there has been some effort to support the development of mechanisms to help very poor
people save in small amounts, much less attention has been paid to the development of
appropriate long-term savings products (e.g. for housing, education and pensions), which
benefit the economy of a country (by creating a source of long-term funds that can support
the development of capital markets) as well as the saver (DFID (2013).
There are now some innovations on saving mobilization in the microfinance sector:
Learning from the informal ‘daily collectors’: Informal daily collectors are now very
popular in many developing countries, especially in high density, business areas. Known in
Ghana and other western African countries as ‘Susu collectors’, these business people are
providing a saving service highly demanded by clients. They move around to business
premises or houses of their clients to collect a fixed, pre-determined amount of money
every day through out the month. At the end of the month (or a month and half) the collector
give the accumulated sum -- less on day’s collection -- back to the saver. There is no interest
on saving. In effect, the collector charges the client a service fee (the one day collection),
which can translate into a 3% fee, or negative interest rate of 7% (CGAP, 2006 b). There is a
big demand for the service by clients mainly because they do not spend time for saving, and
because it allows them to put aside money earned every day before they spend it on some
trivial expenditures. Some microfinance institutions, including those supported by Action Aid
are trying to mimic these experience into their mainstream microfinance saving operations.
Commitment Savings: A focus on ‘’money management’’ does not shut out more ambitious
aspirations such as improving health, education, and farming practices. On the contrary, it
can help to realize them. A striking example was found in a study of fertilizer adoption in
western Kenya. The biggest difficulty farmers adopting new technologies faced was not in
‘understanding’ the methods and their benefits, but in timing savings in order to purchase the
fertilizer when they needed it. When financial tools were provided that solved this problem –
cash proceeds collected from farmers at ‘time of crop sale’ and put in a ‘commitment saving’
account at a local bank -- fertilizer use and production increased. This was made possible by
getting the fundamentals right – by making it easier for poor people to get a ‘’grip on time