Poor Women’s Empowerment: The Discursive Space of Microfinance

Introduction

This article lays out a broad discursive space with some insights from the ‘field’, first to bring together the triad of poverty, empowerment and microfinance in the context of an international development discourse going largely the neoliberal way, and second, to indicate towards some strategies which a microfinance organisation with a strong focus on women’s rights could adopt in these circumstances. It argues that in the backdrop of a neoliberal economy, microfinance can at best become a coping strategy for poor people, with the onus of survival falling disproportionately on the shoulders of women, without necessarily benefiting them in terms of rights and entitlements. It shows further that women’s rights-based groups can, however, subvert the neoliberal agenda of individuating questions of poverty and empowerment, and use microfinance either as an additional tool or as an entry point to building larger collectives and programmes that strengthen women’s bargaining power as both economic and social actors.

This work is based largely on primary observations. The most extensively used source is a research project (henceforth Jeevika Project) conducted by the School of Women’s Studies, Jadavpur University, Kolkata, India. ¹ The Jeevika Project entailed documenting the process of the formation of a federation of self-help groups (SHGs) named Swayamsampurna, owned and managed by women, and promoted by ‘Jeevika’ in South 24 Parganas, West Bengal. Jeevika, a women’s rights-based organisation registered under the West Bengal Society’s Registration Act, began microfinance activities in the early 1990s on a small scale. Swayamsampurna was registered as a Mutual Benefit Trust in February, 2010. As part of the project, focused group discussions (FGDs) were conducted with SHG members, and leading members of Swayamsampurna and officials of Jeevika were interviewed. ² The themes for the FGDs and interviews included questions of women’s ownership in the institution and knowledge about its functioning, the reasons for joining and experiences post membership. The focus of the project was to study processes and experiences rather than impact. This article therefore uses a lot of insights from internal debates and discussion over Jeevika’s policy decisions, as well as experiences of its members.

The first section briefly outlines the international political economic space within which microfinance as a development agenda was popularised. It tries to locate the emphasis on individual initiative, championed by programmes like microfinance, in the valourisation of the idea of individual freedom. The second section looks at how this particular political economic space simultaneously constructs the agenda of poor women’s empowerment. It problematises particularly the shift in international perspectives on ‘third world’ women from ‘victims’ to ‘agents’, which enables their construction as prime recipients of microcredit who would emancipate poverty-ridden families through the creation of small enterprise. The third section explores the specific Indian context in which microfinance as a large-scale programme emerged and the larger debates within microfinance, as also the critiques of it. In the process it tries to establish that microfinance survives in India hand in glove with neoliberal policies, and even the most generous of programmatic schemes have little capacity to tackle structural problems. The fourth section situates the question of poor women’s empowerment in the microfinance discourse and exposes the myth of women’s empowerment predicated upon livelihood generation. Further, based on some primary insights from the field, it looks at alternative strategies adopted by some microfinance organisations that use microfinance for a larger purpose and which help them to connect to a feminist agenda. Examples are drawn from Self Employed Women’s Association (SEWA), which uses microfinance in addition to other programmes and trade union activities, and from Jeevika, which enters communities through microfinance and engages them in other collectives and programmes. The concluding section consolidates the arguments in the article and suggests that though microfinance is unable to shed its neoliberal inheritance, experiences of a few organisations point towards strategies that can bring about meaningful changes at a micro level.

The Political–Economic Backdrop of Emergence of Microfinance

By the turn of the last century, microfinance had become the most hyped poverty alleviation strategy, promoted by international development organisations, national governments and the local non-governmental organisation (NGO) development sector. Interestingly, many international venture capitalists, notably from the Silicon Valley, international corporate business, commercial banks and development financial institutions also started taking an active interest. This was accompanied by the flourishing of ‘commercial microfinance’ which boasted of profits with poverty alleviation. The exalted position of microfinance can be seen in the Millennium Development Goals (MDG), where it is considered to be ‘… one of the practical development strategies and approaches that should be implemented and supported to attain the bold ambition of reducing world poverty by half’ (UNCDF, 2005, p. 5). In fact, the UN declared the year 2005 as the International Year of Microcredit.

The solidarity of business and development, of course, does not originate in microfinance. If ‘development’ as a contemporary discourse is understood as having originated within embedded liberalism ³ of the post-Second World War era, then the neoliberal turn in the mid-1970s situated this discourse within the political project of re-establishing conditions of capital accumulation (both domestic and foreign) and restoration of the power of economic elites. ⁴ Thus, through what came to be known in the 1990s as the Washington Consensus, different countries in the world, especially the so-called ‘third world’, shifted from a state regulated model of nation building to a model of free (deregulated) market economy. Accompanying this political project was the ideological apparatus of establishing the principles of human freedom and dignity, as the justificatory ethical text of the paradigm shift. It is another matter that this freedom essentially translated into dismantling or rolling back commitments of the welfare state (such as, social housing, public health), privatisation of public enterprises, liberalisation of trade, cuts in fiscal spending and curbing of labour rights. Most of the countries of the ‘third world’, notably Latin America, witnessed spiralling inflation, unemployment and poverty, which were initially written off as ‘collateral damage’ of structural adjustment. The free market embodied the notion of the free individual as the active consumer or seller (of labour, goods or services) who makes rational economic choice fed by the desire for self-maximisation. The fact that choice was circumscribed by historically produced social structures and institutions was systematically ignored. Margaret Thatcher, who was elected to office in May 1979 in Britain and went on her reform drive, had famously declared that there was no such thing as society, only individual men and women and their families (Harvey, 2005). It would be well to remember also that in post-socialist Russia, reform based on the ideal of ‘freedom’ meant the closing down of crèches, community kitchens and an active mandate for sending women workers back to their homes so that their dependent status on ‘free’ men could be re-established and families could reclaim rights over the reproductive labour of these women. ⁵

The formal onset of neoliberal policies in India came in 1991 with the adoption of structural adjustment policies (SAP) at the behest of the World Bank and IMF. It unleashed all the elements of a free market ideology leading to liberalisation, privatisation and globalisation, accompanied by major cuts in subsidy and social sector spending by the government. Importantly, a rationale of ‘development’ informed the public discourse on SAP. Be it eviction, displacement, unemployment, poverty or a crackdown on protests and resistance, the logic of the state was inevitably ‘development’. In India, the worst affected were Dalits, tribals and the rural and urban poor, the brunt being borne by women. In the backdrop of rising discontent around the globe, the World Bank emerged in 1999 with its Poverty Reduction Strategy Papers (PRSPs) in which each of the national governments were asked to draw up PRSPs in consultation with local NGOs and streamline concerns of gender equality. Though PRSPs did in many cases reverse the tendency to downsize public spending on health and basic education and produce safety nets for vulnerable groups, they firmly stood by basic principles of neoliberal policy (Brym et al., 2005). Simply put, the understanding was that while neoliberal policies are the best way forward, groups affected adversely by it need to be protected (through safety nets) and included (through targeted programmes). Further, women were the new agents of change, the main actors in this scheme of survival. It is this notion of gender empowerment and poverty reduction that forms the backbone of the concept of the ‘human face of globalisation’, or what is also commonly called the post-Washington Consensus. The emergence and popularity of mainstream microfinance that focuses on poor women needs to be situated within this context.

Empowering Poor Women

Recent research on women and poverty, notably by Cagatay (1998) and Chant (2006), highlighted the important phenomenon of ‘feminisation of responsibility and obligation’. ⁶ The notion of ‘time poverty’ that women face owing to their double burden of productive and reproductive responsibilities was also raised. Additionally, the idea of ‘human poverty’ or multidimensional poverty brought issues of education and health into the assessment of well-being and development. In line with the ‘capability’ ⁷ framework, the idea of development began to be understood as an expansion of people’s choices. Empowerment too began to be read as a shift from lack of choice to choice, as, for example, in the case of girl’s education, where some studies found that educated women could experience greater choices of health and livelihoods (Kabeer, 2005). Indicators such as gender empowerment index even brought forth issues of women’s political participation.

Despite these developments, notions of multidimensional poverty or empowerment as choice, usually expand the set of indicators (of poverty and empowerment) while continuing to focus on individuals or individual households through targeted social policy (such as, safety nets and special programmes). Such targeted policy usually maintains a deliberate silence over macro policies that deepen poverty or patriarchal power relations that restrict choice. The historic collusion of caste, class and gender in the Indian context that disempowered women is not called into question while imagining a change for the better. Such individuation of poverty would not have been ideologically possible without the valourisation of the idea of individual freedom where the individual is encouraged to think of her condition in reductionist terms and in a sense of separateness from her community. In this scheme, each individual is solicited as an ally of economic success through her investment in the management and success of her own economic capital (Rose, 1996). Thus, the individual is held entirely responsible for her poverty and the amelioration of it.

It is within this context of individuation of poverty that the question of empowerment of poor women has to be considered. John (1996) has shown how the influential World Bank report, Gender and Poverty in India of 1991, converts poor ‘victim’ women of India overnight into active economic actors. Suddenly the discourse changes from women being the ‘poorest of the poor’ to women being the ‘best managers of poverty’! The multiple tasks poor women have been historically performing for survival is read not from a perspective of exploitation, but from one of efficiency. Thus, the widely used jargon of ‘inclusion’ of women in development not only stems from apparent concern over their erstwhile exclusion, but is largely built around the idea of women as efficient contributors to the welfare of families as well as nations. This brings us to a very critical query. Why has the world suddenly woken up to the realisation of women’s role in development?

Feminist researchers have written extensively on the issue that the problem is not absence of work for women (most women are overworked!) but of invisibility, devaluation and undervaluation of women’s work. ⁸ They are often unpaid workers in the context of both reproductive and productive labour (say in the case of unpaid helpers in family enterprise or in subsistence farming). Further, the nature and extent of women’s paid work is circumscribed by reproductive responsibilities (Bhatt, 2001; Jain and Banerjee, 1985). In fact, the idea of women’s ‘flexible’ labour derives from their ability to switch from one task to another and combine it with other duties, the paid work being amenable to frequent stops and starts (Banerjee, 2004). Perhaps it is this perception which often renders women’s work and income ‘supplementary’, even if they are the principal breadwinners of their families. S. Sen (1997) records that in colonial India, the typical working class family was crucially dependent on the poorly paid or unpaid work of women and children as much as on men’s industrial wages. She argues that women’s activities on marginal farms (or seasonally for hire) or non-farm activities like ‘making and selling’ were increasingly being differentiated at this time as womanly and poorly paid.

During the period of the Second World War, there was a sudden rise in the visibility of working women in Europe, probably because most of the ‘breadwinners’ had gone to war. After the war, there was a move by the emerging male trade unions to keep women out of formal jobs and relegate them to poorly paid and informal contracts. Post globalisation, once again a certain feminisation of labour has been observed, though poorly paid and in the worst conditions (Standing, 1999). In India, however, such a feminisation thesis has been contested on a general scale on account of the fact that here, women’s work is concentrated in a few sectors, such as, export-processing industries and sub-contracted, home-based work (Banerjee, 1997; Mukherjee, 2004). What is important to note are the ‘continuities’ of poor women’s work, at least in India, over the last two centuries. Be it unpaid or underpaid work on the farm and non-farm sector, or piece-rate work, globalisation does not mark a watershed event. Rather, what it does is to seize upon the nature and perception of women’s work in a patriarchal society to identify poor ‘third world’ women as the cheapest and most flexible source of labour.

The recognition of poor women as small entrepreneurs, as managers of poverty, is long overdue. Third world feminists have been struggling since the second half of the 20th century to articulate and recover women’s agencies in labour, art and literature. But when the understanding of agency is turned on its head to individuate poverty, deny the exploitative and disempowering aspects of such work, and turn a blind eye to its roots in dependency relations of capitalist patriarchy, it becomes a matter of concern. The co-option of the feminist agenda of agency by leading international organisations, such as, the World Bank and IMF, is laid on the ground of neoliberal thought, where women are seen or thought to be the best recipients of doses of the ‘human face of globalisation’ carried through special programmes such as microfinance projects. The fact remains that the kind of small entrepreneurship envisaged in these programmes fits into the model of women’s flexible labour that is intermittent, home-based, poorly paid or yielding minimal revenues. Most of the income generation or consumption smoothening (as we will see in the fourth section) is often of a nature that is acceptable to families as long as women do it, because poor women have always been doing it as a survival strategy. For example, there may be new companies or markets absorbing products made by women, but a large number of poor women have been ‘making and selling’ in the past as well. The idea of empowerment as predicated by income-generating activities or micro-financial resource has little impact on entrenched power relations, whether feudal, capitalist or patriarchal. Rather, most programmes take a piecemeal approach without disturbing existing power relations. It is as if contribution to household economic survival is something poor women have suddenly discovered and will alter their status and lives radically! Another interesting dimension is the significant role women’s cheap and flexible labour play in global commodity and service markets, in lowering costs, raising profits, avoiding unionisation and thereby in capital accumulation. This has happened in the past and would have continued into the future even without an articulation in the framework of empowerment. Why the need arose to talk about women’s inclusion and empowerment by leading agencies of the world needs further research. As a preliminary thought, it could be said that just as neoliberalism, as an ideological project, champions values of human freedom and dignity, similarly, it foregrounds the value of women’s empowerment, in so far as it ideologically justifies the use of women’s productive and reproductive labour in its agenda. In a way, therefore, it accommodates the voices and challenges from the margins after considerably reshaping and redefining, suitably clipping the claws and converting them to allies. This is why perhaps, from the decade of the 1990s, the ideation of women’s movements, at least in India, shifted largely to service provision, awareness raising and capacity building. The language of struggle, somewhere down the road, seems to have been lost.

Situating Microfinance in the Indian Context

The specific context of large-scale microfinance in India emerges in the aftermath of the rollback of social banking, the worldwide acclaim for microfinance as a financially sustainable tool of poverty alleviation at platforms, such as, the Microcredit Summit in 1997, the resounding success of India’s neighbour, the Grameen Bank of Bangladesh, and the home-grown models of organisations like the SEWA, Ahmedabad, which had been experimenting with micro loans for self-employed women from the beginning of the 1970s. In 1992, the National Bank for Agriculture and Rural Development (NABARD) launched a pilot project of linking 500 SHGs to commercial banks. The success of the pilot project prompted the Reserve Bank of India (RBI) to include Linkage Banking (SHG Bank Linkage or SBL) as a mainstream activity of banks under ‘priority sector’ lending in 1996. Further, in 1999, the Integrated Rural Development Programme (IRDP) merged with several other programmes into the Swarnajayanti Grameen Swarozgar Yojna (SGSY) with a strong component of subsidised microcredit for below poverty line (BPL) families. The main reason for adopting microfinance on such a large scale was its strategic importance in counter-balancing the adverse effects of financial liberalisation. Financial liberalisation in 1991, which was basically a reversal of the social banking policy followed since 1969, led to a fall in share of rural credit, fall in credit to small and medium borrowers and rise in interest rates. It was a matter of concern that there were strong indications of a return of the informal moneylender. ⁹

It is indeed ironic that microfinance, which occupies centrestage in Indian rural development and poverty alleviation policy from the late 1990s onwards, speaks a language of financial inclusion in a situation where profitability of banks and exclusion of the marginal borrower go hand in hand in mainstream banking and credit discourse. Microfinance comes with a mandate to challenge the informal moneylender, fill the credit gap (of poor people) in rural areas, facilitate small-scale income generating activities especially in the non-farm sector, and thereby alleviate poverty. By virtue of being especially targeted at women, it is supposed to empower them through financial and economic self-sufficiency. Microfinance appears to structure the imagination of not only public policy but also rural development practitioners and organisations focusing on women’s empowerment. Several NGOs either emerged, expanded or replaced earlier programmes to create SHGs of poor women and link them with banks. By the middle of the last decade, another brand of microfinance, commonly called commercial microfinance, made its entry largely in the form of non-bank financial companies (NBFCs) with a stated goal of financial sustainability. They were funded by commercial banks like ICICI, development banks like IDBI, venture capitalists and other overseas investors. ¹⁰ In one case they even went public—SKS Microfinance led by Vikram Akula, who transformed the organisation from a non-profit to a for-profit venture in 2005. Commercial microfinance now commands the largest share of the market after public programmes like SBL and SGSY.

Robinson (2001) has attempted to categorise the vast array of microfinance practices the world over with a simple schematic: the financial systems approach versus poverty lending approach. The financial systems approach, which is the dominant model, focuses on financial sustainability or commercial viability, arguing that to reach the maximum number of poor people, costs have to be recovered. Regarding credit as the missing link in development, it aims exclusively at financial provision of small loans at market rates of interest. ¹¹ This is known as the ‘minimalist credit’ paradigm since it refrains from any other assistance like livelihoods training, market linkages or other facilities like education/literacy programmes, and is based on the logic that poor people know best what to do with that money. The poverty lending approach, largely dependent on subsidised funds (from donors and lenders), focuses on reaching the core poor through a ‘credit plus’ approach where credit is provided along with other assistance required for management of funds and investment in a productive enterprise. Another distinguishing feature is that most poverty lending approaches have a focus on livelihoods generation and asset creation, whereas the minimalist approach does not have a stated policy regarding the end use of loans. In both the approaches, there is an insistence on joint liability as a method of ensuring repayment. ¹² In both the cases, repayments are made at a regular interval of a week or month. Leading organisations of the world such as Bank Rakyat in Indonesia are pioneers of the minimalist paradigm whereas organisations such as Grameen Bank follow the credit plus approach. In the Indian context, NGOs as well as the SGSY largely follow the poverty lending approach. Though both SBL and commercial microfinance follow a minimalist approach, there is considerable difference between the two. On the one hand, commercial microfinance, catered mainly through NBFCs and connected to international investors, often deals with individual ‘clients’ rather than groups and has a mandate of generating profits which get channeled into dividends for shareholders, high returns for investors and exorbitant salaries to its managers. In short, these are corporations. The SBL, on the other hand, builds on the vast network of banks created during the bank nationalisation phase (1969–1991) and links SHGs with banks, often through the facilitation of NGOs. They have a mandate to be commercially viable if not profitable, and the market rates of interest charged are usually below that of NBFCs.

Microfinance proposes to eradicate poverty and empower women through a process that does not cost the state too much and can be self-financing at worst and a profitable business at best. Nair (2001) writes that microfinance in general, and the financial system perspective in particular, clearly assume that there is an administrative solution to poverty. It is a logical extension of the managerial and programmatic approach to poverty being followed since the 1960s. In fact, the reliance on self-employment through credit as a path of poverty alleviation is heavily contested even within the livelihood, employment and income generation debates of the 1960s where it initially originated. If credit truly was the only missing link, then over-indebtedness of the rural population would never have been a hurdle to development. ¹³ There has never been any absence of credit in rural areas; only an absence of institutional credit at low cost. Microcredit does link the informal with the formal through minimisation of paper work, doorstep delivery and group formation. The interest rates, though much higher than the usual bank rates, are lower than that of informal moneylenders. As a financial innovation or ‘banking the unbankable’, it has interesting possibilities. But to constitute it as the most revolutionary development agenda of contemporary times is stretching it too far and is probably off the mark. Can microfinance whisk away all the limitations of power structures, food insecurity, infrastructural bottlenecks, lack of basic education, health care, water and sanitation that cripple the lives and livelihoods of rural people? Many scholars are of the opinion that even as a programmatic agenda, wage employment, provision of basic resources, investments in infrastructure and democratisation of institutions of governance are perhaps some of the best ways to tackle the staggering menace of poverty and other forms of deprivation. Although many such schemes and policies are in place in India, their reach and effectiveness are severely constrained. In this scenario, the provision of credit, even through a large-scale government-led credit plus approach, can touch only the tip of the iceberg. As for the other end of the spectrum, commercial microfinance locates the problem and its solution in the individual and attempts to give free flight to her entrepreneurial skills simply through a small loan. Commercial microfinance is a classic case of invoking the idea of ‘development’ and ‘free enterprise’ to legitimise capital accumulation. Another question that needs further research: what happens to the savings mobilised by microfinance organisations? The small individual amounts of mandatory savings collected by microfinance organisations actually constitute a huge resource which, considering the country’s banking history, could be transferred to urban projects and big business.

Microfinance arrives and gains popularity in most of the ‘reforming’ countries, including India as part of a discourse of development situated strictly within a neoliberal political economic space (Weber, 2002, 2004). From multinational business to the United Nations to governments of ‘third world’ nation states, what is the connecting thread of consent to microfinance? Big business acquires social responsibility (and respectability), globalisation gains a human face and national governments are able to manage fiscal austerity without disappointing their large mass of poor electorate. Microfinance is a master stroke by which both the empirical and the discursive space of development are captured by a free market ideology that enters all macro-meso and micro units of governance. Most importantly, this process is scripted through the ‘agency’ of the poorest of the poor: ‘third world’ rural women.

Microfinance and the Question of Poor Women’s Empowerment

As already mentioned, one of the first instances of successful microfinance in its contemporary form is SEWA, Ahmedabad. SEWA is a different model from any of the cases discussed because microfinance emerged in response to the credit and savings needs of a group of self-employed women (informal workers attached to the textile industry) which SEWA, as a trade union, was organising. SEWA established the country’s first women’s bank for its members in 1974 through their own management and ownership. Although this bank operated on a financially sustainable basis, it was only one of SEWA’s programmes. Through multiple activities supported by donor funds and a strong base of campaigns and bargaining, SEWA aimed to ensure better working conditions and wages, improve assets of women as well as other dimensions of well-being, all of which were expected to enhance capabilities to repay loans at market rates. Most importantly, SEWA’s model of microfinance and its subsequent expansion into rural areas was demand-driven (microcredit groups were formed only when SEWA members demanded it and not to meet physical targets), rather than the supply-driven approach to group formation followed by different microfinance institutions discussed earlier. Thus, microfinance became a tool which enabled women already engaged with livelihoods to augment investments in their trade, business or asset base. Moreover, federations, cooperatives, research and market linkage formed an integral part of the idea of livelihood strengthening.

Unfortunately, most of the proponents of the financial systems approach cite SEWA’s story in parts: focusing on the financially sustainable microfinance model without considering its integrated approach. Microfinance was hardly the last word in poor women’s empowerment. It was simply an additional tool of development. This is very different from the dominant approach to microfinance today. The claims of dominant microfinance are manifold: it empowers women members through economic self-sufficiency in terms of income generation, food security, access to health, children’s education, visibility, mobility, solidarity, ability to interact with public officials such as in banks, financial literacy, greater decision-making power in the household, reduction in domestic violence, community and political participation. Broadly, therefore, it is supposed to be a ‘magic bullet’ for poverty and social problems faced by women. The point of this article is not to engage in a case by case analysis of each of these claims either from secondary or primary sources because this is an oft-repeated exercise of ‘impact studies’. Rather, it approaches the discursive space and questions some of the fundamental assumptions of these claims, occasionally with reference to empirical findings.

First, unlike SEWA, most microfinance institutions do not specifically target self-employed women who have a ready need for investment in business. Most recent studies, including the Jeevika Project, show that either the loan is invested in somebody else’s business (usually the husband’s) over which the woman has no control, or used for consumption and emergency purposes, for repair work in the house, and significantly, for repaying an earlier loan or mortgage. ¹⁴ Even assuming that women start their own business or have a share and control in family business, the loan amount is too small and the repayment schedule too tight for a meaningful investment. The absence of market linkages or glut in the market is a further complication. Moreover, women are usually encouraged to engage in trades and commodities that are traditionally considered womanly (such as, candle making, making of spices and pickle, tailoring), much of which is home based and does not require contact with male-dominated markets for input and output. Even when such a need for contact arises, the male members deal with the market, consequently controlling the cash income. Jeevika’s policy was an interesting exception to this. The Jeevika Project found that not too many women availed of its income-generation programmes. While this would normally be considered an outright failure of the programme, on closer scrutiny, it was found that the reason lay with Jeevika’s insistence on livelihoods training at its own office premises in sectors, such as, computer, tailoring and soft toys. Despite the fact that there was demand for village-level training for home-based work, Jeevika did not comply. This was because it intended to induce mobility and give greater opportunities to women for ‘coming out’ for training and full-time work. In fact, the study found that while many women did not take part in the training themselves, they often sent their young unmarried daughters who benefited from the process.

Generally speaking, there is no simple linear relationship between microfinance, income-generation activity and poverty. Many studies, such as, by Armendariz and Morduch (2007) and Cull et al. (2008), show inconclusive results for the impact of microfinance on poverty while others, such as that by Hulme and Mosley (1996), actually show that in some cases the poorest are worse off because of microfinance. Rogaly (1996) argues that if poverty alleviation is understood not as a jump in income but as protection against a sharp downward fluctuation in income, then microfinance can serve the purpose through emergency and consumption loans. Following this line of thought, several organisations (for example, Jeevika, Bihar Rural Livelihoods Promotion, Association for Social Advancement, Bangladesh) introduced a specific component of such loans in their microfinance programmes. Consumption smoothening is indeed a vital function without which basic food security and other necessary forms of consumption may be jeopardised, the brunt of the crisis being borne by women. Moreover, use of loans for covering expenditures on health and education cannot so easily be written off as ‘unproductive’. Does this mean that microfinance is able to make a dent on poverty through consumption smoothening, if not income generation? The point here is that in the absence of social security nets and in the presence of macro policies that increase vulnerability, microfinance becomes the market alternative to coping with crisis. Income generation on a sustained basis and in sufficient amounts increases ‘capabilities’ vis-à-vis the present context of microfinance as a coping strategy.

Considering the question of feminisation of poverty, loans to women neither means control over the loan, nor control over any cash flows as a result of the loan. This has been brilliantly demonstrated by Goetz and Sengupta (1996). Moreover, the distribution of resources within the household is a crucial determinant of whether women gain from a rise in income. What could happen, instead, is that women take the pressure of repayment without any share in the gain. Many studies, such as by Rahman (1999), find that repayment demands as well as issues over control of the loan often lead to increased violence on women. Many women, therefore, take up additional paid work to be able to repay the loan. Even when the woman is directly engaged in an enterprise related to the loan, it need not necessarily mean an increase in other entitlements at home, including decision making. This then becomes a classic case of feminisation of responsibility and obligation.

A critical question is why women are specially targeted by microfinance. Different studies point to issues, such as, the large presence of women in the non-farm sector (Cull et al., 2008), women’s lower mobility and lack of an alternative borrowing source (Morduch, 1999) and the understanding that women are better repayers, more pliable, patient and cheaper to service (Rutherford, 1995). Moreover, in many ‘third world’ contexts, it is assumed that poor women have minimum personal expenses and contribute more altruistically towards the overall welfare of the household than men. Given the ambiguity around the impact of loan, one can now ask whether the targeted woman’s economic well-being is an end by itself or a means to an end. In serving the larger/other end, is her end served at all?

Moving away from the economic to the social, microfinance as an empowering tool has been celebrated for another very significant purpose: creation of an ‘extra family’ network of women or simply a solidarity group. In the Jeevika Project, it was found that most members of a particular SHG were of the same caste group and were extended if not direct kin. The SHG was a kind of extended zenana, where younger women were ‘allowed’ to go because of the presence of older women of the same extended family. Another reason for allowing women to be part of SHGs was also the fact that they became ‘vehicles’ of loans to the family. In terms of solidarity, this sometimes had contradictory possibilities. In the event that a particular woman was a victim of domestic violence, some members, by virtue of being relatives, had the power to intervene. On the flipside, since it was the same extended family, the other women often shared the same values and prejudices against the battered woman and failed to support her. The bargaining power of women, as shown by Agarwal (1994), depends, among other things, on the extent of social support garnered by her which, in turn, depends on the legitimacy of her claims. Given that the SHG constitutes an extension of her familial space, the chances of challenging patriarchal notions of legitimacy are less. The more fundamental contradiction, however, arises from the fact that organising into an SHG sometimes pits women of the same community against one another in case of failure of loan repayment. In the Jeevika Project, despite the fact that the organisation took a compassionate view of genuine cases, some members were seen to be very aggressive during the FGDs whenever the issue of non-repayment came up. They said that they would forcibly collect the repayment amount, no matter what. In a situation of bank loan without joint liability, a defaulting borrower had to face the flak only from the financial institution which was often an ‘outsider’. In the context of microfinance, the defaulting woman faces the pressure and threat of ostracism from her own community. Joint liability reduces the risk of default. It is supposed to increase social capital in terms of solidarity groups. But it also needs to be recognised that in the event of default, it can lead to severe erosion of social capital and loss of dignity in the community. Given that women are responsible for repayment, they are the ones who are hounded by officials of microfinance organisations and other women members of the SHG, whether or not they had any role in the use of the loan or its non-repayment. Is this then also an argument for including man’s name as guarantor of the loan or joint borrower of the loan so that they are legally liable to take responsibility? A similar discussion took place in Jeevika during the formation of Swayamsampurna. As a counter argument, it was suggested that this would be a violation of women’s right to access credit on individual terms and prevent ownership in the capital generated. Further, there might be women who require loans for a variety of purposes that need not have the approval of their husbands. It might also be the case that if the husband does not know about the loan, there is less fear that he will wrest it from her and misuse it. As a rights-based women’s organisation, Jeevika deemed it important to give greater credence to these latter arguments and did not include the man’s name as guarantor or co-signatory.

During FGDs with members and interviews with Jeevika officials as well community leaders of Swayamsampurna, it was found that some of the most empowering aspects of women’s association with Jeevika came from their presence and participation in programmes such as Alor Disha (forum for addressing violence and sexual harassment), the theatre repertory (formed by women members under the guidance of some experts) and occasional vacations (Jeevika organised an annual holiday, sometimes coupled with training sessions for different members of SHGs at a tourist location). As part of the project, the author had occasion to be part of such a twin holiday-training session at Vishakapatnam, Andhra Pradesh. The sheer joy of being away from domestic drudgery and the controlling atmosphere of home was palpable in the way the women looked, walked and talked. Most of them were so far away from home on their own for the first time in their lives and negotiating a new place was an adventure that taught them much more than any training session could. Another vital factor that contributed to the empowerment of some women was the investment in developing community leadership. ¹⁵ At a meeting with loan officers (selected from within the community), the author recalls the gusto with which stories of their experiences with bank officials were swapped. One loan officer told us how she had looked directly into the eye of a bank officer and said, ‘You are a bank officer, I am also a loan officer. We are equal. Treat me with respect!’ Undoubtedly, all women’s capacities are not raised, nor do they all take up roles of leadership and assertion. Perhaps the larger reality is that most women attend meetings simply to avail of the loan or save money and this does not have much effect on other aspects of their lives as wives, mothers or workers. However, the vision and the process of evolution of a financial institution owned and managed by women entailed life-changing experiences for a few women, especially the Board of Directors of Swayamsampurna, who have to take important decisions for the organisation, with support from Jeevika. One director said during an interview:

I used to get beaten up every day at home even for attending Jeevika meetings. Now the situation has changed. Although I don’t earn much, my husband is aware of my role and influence in the organisation. My children have also been supportive. He knows I will no longer take the beatings silently. He does not dare to touch me now.

In fact, talking about Alor Disha during an FGD, a younger SHG member made an important statement: ‘The men are afraid of us now. They do not dare to tease us on the roads. They know we have Alor Disha.’ The study did not look at how successfully Alor Disha has been able to address issues of violence and harassment. However, the fact that the organisation is capable of creating a sense of threat among potential harassers and a sense of pride and courage in some women is itself an achievement. This author’s earlier study on SEWA as well as studies by others have made similar observations. The clout SEWA enjoys with several stakeholders as well as the sheer strength and visibility of the organisation implied that sometimes simply flashing a SEWA membership card was enough to ward off police harassment of women street vendors.

Some affirmations of positive change were sounded by the majority of women members in the FGDs. First, the organisation allows them a space to make small savings. In fact savings, as much as the possibility of loans, was the primary reason for their joining the SHG. Second, all these women showed an awareness of the financial instruments and processes involved in the functioning of SHGs. When women, generally regarded as incapable of taking financial decisions, prove to be so aware of minute financial operations, it is a slap in the face for several people including male family members and male officials of the institutions they interact with.

The experience of the Jeevika Project or even the research on SEWA does not negate any of the concerns and contentions cited earlier in the article. Microfinance, as a stand-alone policy, is able to achieve very little except in terms of a new kind of financial tool that is able to tap resources of a population historically considered unbankable. Even if livelihoods and income are generated, this does not necessarily challenge gender relations in the family or the household. As in the Jeevika case, the real potential for empowerment comes through alternative organisations that are not mercenary and where women’s mobility and participation are not tied simply to loans. Further, when any organisation emphasises leadership building from within the community, an opportunity that the family and community often denies women, it has tremendous potential to challenge patriarchy emanating from the ground, not necessarily as a direct fall-out of microfinance, but as a corollary of confidence building and development of a self-identity outside the family. Incidentally, such processes do not involve large amounts of money. It is not about the extent of donor support. Rather, it is about the perspective of organisations and their understanding of the nature of women’s oppression and the challenge to it. The outcome of such processes may not be quantifiable in terms of amount of income generated, number of workshops conducted or number of livelihood training programmes. This is far more intangible and manifests through attitudes and experiences.

Concluding Observations

It should be evident by now that this article is neither about microfinance bashing nor about measurable outcomes. The incidents of fake microfinance organisations (fly by night operators), of overindebtedness, high interest rates, coercive collection methods and unsustainable livelihoods over which women have little control exist and exist widely. However, the thrust of the article has been to argue that even in the case of best practices, microfinance alone can achieve little with regard to poverty or women’s empowerment. As an innovative tool of financial inclusion, it could cover a wide spectrum. Even in this, the irony is that a state like Andhra Pradesh, which experienced massive expansion in microfinance at one point, also witnessed debt-trapped farmer suicides around the same time. In the presence of larger macro policies which resulted in a switch to production of cash crops for international markets at the expense of food security, simultaneously with reduction in institutional credit to agriculture, microfinance could do little. Similarly with foreign direct investment (FDI) in retail trade: the expected livelihoods from microfinance at least in urban areas get jeopardised since a large segment of the borrowers veer towards retail trade through the sale of vegetables and other items meant for household consumption.

As far as women’s empowerment is concerned, we have argued that neither the financial system approach nor the poverty lending approach can address the real issue, nor does organising into an SHG necessarily lead to solidarity. It could even result in the breakdown of solidarity. Livelihood generation, even when it happens, need not imply a sustained way out of poverty or women’s control over income and decision making. In fact, it could lead to an increasing burden on women without a concomitant rise in entitlements. The indication of an empowering process in the case of the SEWA model stemmed from its integrated approach of organising, campaigning, building institutions managed by women, assistive programmes and microfinance. Unlike SEWA, Jeevika, on a much smaller scale, entered a community through microfinance. However, its empowering potential arises through the use of this platform for organising women into much more than microfinance activities. The emphasis here is on a third approach beyond both the dominant models of microfinance. The domain of women’s empowerment neither lies exclusively in access to credit or livelihood, nor in the exclusion of it. Certainly there is no blueprint for empowerment and nor is it legitimate for a group of feminists or development ‘professionals’ to decide the exact mode of empowerment of different kinds of poor women in different contexts. But what the article has tried to explore is processes of organising and capacity building which gave rise to an articulation of self-hood, identity and assertion outside normative boundaries. Incomes and livelihoods certainly help and so does credit even if only for consumption, so long as the capacities to repay are built into the system. But it can only lead to meaningful changes in gender relations when women relate to each other far beyond the narrow utility of finance and step out of expectations of womanly behaviour. For example, mobility for getting a loan is not enough. It often stops there. Significant changes occur only when women become mobile, say, to act in a play, go for a holiday without family guardianship, or go to the market to sell her product.

The third approach then treats microfinance as a tool or a strategy, not a philosophy of development. Even when organisations build the third approach into their goals and policy, this does not uproot microfinance from its neoliberal moorings. The individual-based managerial approach to poverty and empowerment remains. And as has been repeatedly argued in this article, women bear the brunt of this individual onus of poverty reduction as well as the cost of its failure. However, while being conscious of its neoliberal anchors, organisations can play the World Bank’s own game and turn this tool on its head. Just as large-scale AIDS funding was used by gay rights groups all around the world to gain visibility, organisations can use microfinance to build campaigns and collectives of women far beyond the immediate purpose of microfinance. Hence, the process of individuation can in some instances be countered with solidarities of women around, for instance, protests against violence, movements against the sale of arrack (government-backed sales of country liquor), platforms of creative expression or simply for vacations. A bottom-up approach to community managed and owned institutions where women members of SHGs have an increasing role in the articulation of policy as well as campaigns and other collectives, could be a new starting point. But a note of caution at the end: one needs to be wary of the caste–class configuration of these groups and organisations because the process of self-selection of SHGs could mean the elimination of the poorest or the most socially marginalised.