“Women perform 66 percent of the world’s work, produce 50 percent of the food, but earn 10 percent of the income and own 1 percent of the property (UNICEF, Gender Equality – The Big Picture, 2007).”
Such gender inequality is deeply embedded around the world. Women have been oppressed, unable to speak for themselves, receive education or use their potential for a more independent life. However, microfinance, one of the successful measures of poverty reduction, shows the great potential of women and the need for women empowerment.
Microfinance is well known to be implemented by Muhammad Yunus, the 2006 Nobel Peace laureate, and the Grameen Bank in Bangladesh. Microfinance refers to the system that lends small micro-loans to the poor, especially women, to generate income by self-employment. For example, with the small amount, a woman could purchase chickens, and sell the eggs and chicks for stable income (Grameen Foundation). The loan is repaid within six months, and they are recycled as other loans, so the money would be circulated in the borrowers’ hand (Grameen Foundation). The repayment rate is 95-98 percent (Grameen Foundation), indicating that there is a low tendency of borrowers to become trapped in debts.
There are countless stories of its success, and one of them is introduced in Grameen Foundation website. Bosede Ogunleye, from Nigeria, used to earn 26 cents a day by selling sachets of water, not enough to feed her two children. However, with the $90 loan from a microfinance institution, she started her own business. She bought a freezer and generator to sell frozen fish and meat, and now she earns nearly $ 4.5 per day. Her abusive husband was outraged at her success and the microfinance institution that lent the money to her wife. Even though her husband abandoned the family, Bosede now has the ability to feed and educate her children.
As numerous other stories like Bosdes’s show, microfinance is a proven way to eradicate poverty. We should also acknowledge that microfinance is different from other types of poverty alleviation methods, as it encourages self-sufficiency to end the vicious cycle of poverty, not by providing unconditional aid to the poor because they are poor. However, there are also many doubts on microfinance, especially its effectiveness, as there are little statistical evidence and actual progress rate. Thus, to fully utilize its merits and make it more reachable to the poor, both the advantages and disadvantages of microfinance have to be carefully considered, along with consistent evaluations and improvements.
Hyun Joo Cho, blogger
Hyun Joo Cho is a freshman at the University of Iowa majoring in International Studies. She became interested in microfinance after she attended the lecture ‘Global Poverty: Challenges and Hopes in the New Millennium,’ given by Ananya Roy, a professor of University of California at Berkley.