The Case against Female-Oriented Microfinance – Why giving women loans fails to empower them

Asian Development BankCC BY-NC-ND 2.0

Western countries have a taste for offering credit, which peaked in the 1980s in the context of the world debt crisis, when conditional loans were used to propagate free market fundamentalism and neoliberal orthodoxy. Since then, ‘credit’ has turned its coat and is working with development, in the form of microfinance. Microfinance is often used in feminist empowerment rhetoric and is, if you ask me, one of the more noble manifestations of structural adjustment. The fundamental concept is: the poor, and especially poor women, are an untapped resource for entrepreneurship and can generate economic growth. In this movement called “the Girl Effect”, the World Bank markets women as vessels for economic return and markets female empowerment as a “weapon against poverty”2. This places the burden of development on the backs of women who already shoulder unpaid labour, and perpetuates traditional ideas about female gender roles. This shows there are ideological contradictions in the theory behind female-oriented microfinance, but attention must also be paid to the nefarious consequences of micro-finance schemes for women in the global south. Despite some of their benefits, I argue that microfinance programmes for women mostly fail to empower them; they unfairly pressure women to be the main actors of development, pit them against men in ways that make them vulnerable and ignore the pre-existing cultural norms that dictate local gender relations within the household and society. Development agencies sometimes ignore local legal frameworks that prohibit women from owning land or productive assets, which leads them to sign over their loans to their husbands or sons. Drawing on the majority of critical approaches to Development, I argue that programmes should be tailored to local conditions and aware of cultural, social and legal contexts that truly determine the success of microfinance projects for female empowerment.

I would like to start with a disclaimer; I don’t argue that all mircrofinance projects have endangered women, nor that they have done so intentionally. Let us put aside the incendiary title for a moment and look at the case for microfinance programmes for women. It is recorded that female beneficiaries from credit programmes truly valued the knowledge, training and sense of community that they received from loans, even above the material gains that they obtained4 . Some of the projects saw increases in women’s homestead employment3 and human capital because women tended to prioritise spending on health, nutrition and education7.

The World Bank and other loan providers target women through microfinance because of these differences in spending: “Women tended to spend income, when they controlled it, on household consumption and ‘security-related assets’ such as homestead land, whereas male borrowers were more likely to invest in further productive activities5.” Evidence also shows that daughters are more likely to go to school when female heads of household receive credit rather than male heads5. The logic for lending to women and not men is therefore engrained in gendered stereotypes and reaffirm problematic narratives. Besides, the positive outcomes on children’s educational attainment may be adversely impacted the withdrawal of children from education to help their mothers with income-generating activities4. The next generation of females may not receive educational opportunities for empowerment, perpetuating the conditions which called for loans in the first place.

Perhaps, the greatest oversight of micro-credit projects is the assumption that women have power over the loans that they receive. Male heads of household may control not only the productive activities developed from loans but also the expenses made with the generated income. There is no automatic relation between access to credit and control of credit. Indeed, numbers are misleading, since they only record women’s demand for loans and their repayment rates: measurements which hide the actual ownership of the entrepreneurial activity and spending power4. Indeed, only 28% of loans provided by the BRAC (Bangladesh Rural Advancement Committee) were fully or significantly controlled by women3. The rest are controlled either partially or entirely by their male relatives. Cultural norms surrounding gender roles can be so engrained that women choose to give away loans to their husbands and sons as they “don’t know what to do with this money”. Often, men run the businesses and women are employed as labour2, which only reasserts male dominance within the household and the workforce.

Microfinance programmes actually increase the vulnerability of women by giving them more economic power within contexts of historical oppression and economic exclusion, without changing the structures that created inequality in the first place. NGOs should not assume that women’s empowerment within the household will be peacefully accepted by their male counterparts4. Of four studies undertaken on the subject of marital violence, two show an increase in violence towards women who have access to credit3 while two suggest that these incidences are reduced as the household gains economic prosperity5. Although outcomes are mixed, we should remember that only an estimated 7% of women reported gender-based violence to a formal source (according to a survey 284,281 women in 24 developing countries, collected between 2004 and 2011)6. Therefore, I argue that loans actually endanger rather than empower, by suddenly giving women the means to act independently within contexts where historical and social norms are built to oppress and constrain them.

Essentially: loans do not transform gender relations.. The activities where women are most likely to control their loans are traditionally female activities which can be marketed from home (sewing, selling milk or chicks…)5, activities which only perpetuate the cultural images of the woman as a housewife. There are also country-specific legal institutions holding women back. Inheritance laws force women to register land and assets in their husbands’ names, showing that the dependence of women on men can be constrained by over-arching structures. Without addressing these, loans are merely remedial measures instead of long-lasting solutions. Social and cultural contexts can restrict women’s mobility by preventing them from travelling to NGO offices and government buildings as well as marketplaces.

Inadvertently, microfinance makes women more vulnerable, perpetuates traditional female roles and applies remedial solutions to structural issues of gender inequality in developing countries. I do believe that microfinance can be done right! In the wake of generalised government rollbacks and in a neoliberal climate of financialization, an economic approach to female empowerment is a most pragmatic one. But I argue that these loans must be accompanied by forums informing women of their universal rights as well as their local laws, and clear communication about the confidential services that are available to them should they be victims of violence. The final step is for NGOs to not only monitor the financial progress of women who are given loans, but also report on the evolution of their empowerment within their communities and perhaps most importantly, within their households. We must look beyond the numbers (loans and repayments) and investigate the evolution of women’s subjective empowerment through a set of qualitative research methods like surveys and interviews. Only then will we find out what we are doing right, and what is missing the mark.


Lili is a final year student in a BSc. Environment and Development at the London School of Economics. She writes for Sensus as an editor and website administrator


In her writings she usually approaches the monthly topic from an environmental, developmental or gendered perspective


1 Behrman, J., R. Meinzen-Dick, and A. Quisumbing (2012) The gender implications of large-scale land deals. Journal of Peasant Studies 39, no. 1: 49–79.

2   Cornwall, A., & Edwards, J. (2010). Introduction: negotiating empowerment. ids Bulletin41(2), 1.

3  Goetz, A.M. and R. Sen Gupta (1996), ‘Who takes the credit? Gender, power, and control over loan use in rural credit programmes in Bangladesh’, World Development, 24(1): 45-63.

4  Hunt, J., & Kasynathan, N. (2001). Pathways to empowerment? Reflections on microfinance and transformation in gender relations in South Asia. Gender & Development9(1), 42-52.

5   Kabeer, N. (1998), ‘“Money Can’t Buy Me Love?”: Re-evaluating Gender, Credit and Empowerment in Rural Bangladesh’, IDS Discussion Paper 363, Brighton: Institute of Development Studies.

6  Palermo, T., Bleck, J., & Peterman, A. (2013). Tip of the iceberg: reporting and gender-based violence in developing countries. American journal of epidemiology179(5), 602-12.

7 World Bank (2000) ‘Engendering Development: Policy ResearchReport on Gender and Development’, Washington DC: World Bank.