"Microcredit Empowers Women."
Not so much. The microcredit movement began in the 1970s. In sync with the global movement for gender equality that began at the same time, microcredit has focused mainly on women. Promoters have asserted that the loans "empower" female borrowers. Women who came home with loans, it was said, gained more leverage vis-à-vis their husbands in household decisions about whether to buy food or beer, to invest or consume. Meanwhile, women who had been traditionally confined by their culture to the domestic sphere, as in Bangladesh, found liberation in being able to conduct business in public at the weekly meetings where loan installments were paid. Some nonprofit microfinance programs include classes about such subjects as basic accounting and prenatal nutrition.
But though credit is a source of possibilities, it is also a bond -- potentially an oppressive one when enforced through peer pressure. Indeed, greater sensitivity to social pressure helps explain why microlenders have favored women: In many cases, they have paid back more reliably, putting up less argument than men.
Anthropological studies have found a mix of stories about the link between credit and empowerment. In some cases, women gain increments of liberation, just as hoped. After studying female microcredit users in Bangladesh in the mid-1990s, Syed Hashemi, Sidney Schuler, and Ann Riley concluded in the academic journal World Development that the Grameen Bank had empowered female borrowers on average. They wrote:
Several of the women … told the field investigators that through Grameen Bank they had "learned to talk," and now they were not afraid to talk to outsiders. In both programs some members have the opportunity to play leadership roles. One woman told the researchers, "I have been made the [borrowing group] Chief. Now all of the other women listen to me and give me their attention. Grameen Bank has made me important."
But there are also sad stories. Anthropologist Lamia Karim has documented how in Bangladesh, where most borrowers are female, women who defaulted have had their possessions -- in extreme cases, their houses -- carted off by their jointly liable peers to be sold to repay their loans.
From what I can tell from the fragmentary evidence, the most famous form of microcredit -- group-based credit as pioneered by Grameen -- is the least empowering and most fraught with risk, because of the way it marshals peer pressure to enforce loan repayment. Individual microloans, given one-on-one, without the burdens of weekly group meetings and peer pressure, appear to have less of a dark side. If microbank staff can't outsource loan decisions to the group, though, they must spend more time vetting customers, making the whole enterprise less profitable and less likely to focus on the neediest.
YURI CORTEZ/AFP/Getty Images
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