3.1 What does gender and development mean?

The concept of GAD stems from the realisation that unless one understands the differences between men and women and the way men and women interact then one cannot work towards ensuring that development instruments achieve the set purpose because one does not have a clear picture of reality.

Having a gender perspective means to be aware that for cultural, class, legal and/or other reasons men and women generally have different roles to fulfil, different access to and control over resources, different needs and priorities and as a result different constraints and opportunities and bargaining power in the way they relate.

These differences between men and women in a household, community and society as a whole vary according to the area and target group considered. It is therefore necessary to check the local reality before designing a development tool such as microfinance and related services.

While the intention of the European Commission is to integrate gender into all development instruments at all stages of the project cycle - referred to as mainstreaming - it does not exclude temporary positive actions in favour of the disadvantaged party to bridge major gender gaps (December 1995 Council Resolution). In general, the disadvantaged party consists of women which is why the focus is on women.

3.2 What are the goals of GAD? (Moser, 1993; Monimart et al, 1997, KIT)

The purpose of GAD is to ensure that both men and women can participate in, and benefit from, development in a way that is equitable. In view of widespread disparities it is a process comprising both short-term and long-term objectives - "practical and strategic needs" (Molyneux from Moser, 1993).

Development seeks to fulfil practical needs of men and women. These are concerned with everyday needs such as food, health, employment and finance. They are about having access to resources and services. However, the long-term goal of development is fulfilling strategic needs. These are about men and women having control over their own life and the ability to influence the society in which they live so that it will be more just. Increase in education, self-confidence and self-reliance are some of the factors that will result in empowerment.

Credit gives men and women the option to exercise choice in their life, at their own pace and level of ambition, both of which may vary over time.

It is generally considered that women and poor people have further to go to reach empowerment and that microfinance could be a significant tool in this process.

3.3 Does microfinance meet GAD objectives?

As we have seen above, GAD is concerned with meeting practical and strategic needs of men and women.

What does the literature tell us about these needs being met?

The evidence in the literature reviewed on the impact of microfinance on achievements in terms of practical and strategic needs is limited and sometimes inconclusive. Human beings are complex and their relations at all levels (household, community, society) even more so.

  • Credit impact on income, employment and technology (Hulme and Mosley, 1996)

    In 10 of the 12 credit schemes that Hulme and Mosley analysed they found that the increase in income of borrowers was substantially higher than that for non-borrowers (p87). This was less true for core-poor borrowers "whose needs are essentially for financial services that are "protectional" rather than "promotional" (p132).

    However, most borrowers' "income soon reach a plateau". Indeed, credit gives "borrowers an important 'one step up' in income; however, 'survival skills' rarely provide the technological or entrepreneurial basis for poor borrowers to move on to the 'escalator' of sustained growth of income" (p114).

    Borrowing has not induced "dramatic" technological changes or much "employment outside the family" (p102).

    A minority of borrowers were worse off which is maybe not so surprising (p114). Being an entrepreneur is risky (how many employees in Europe would venture into self employment?) but many people in developing countries have no other option than starting a MSE.

  • Control over loans and, credit impact on food intake and health (Goetz and Gupta, 1996)

    Some people are concerned about men hijacking loans taken out by women. In some cases men use loans given to women either because women are forced to hand them over or because they consider this alternative a better choice.

    When men use loans given to women, the status of the women in the household and community is sometimes enhanced and they seem to have increased access to food, new clothes and health care than without the loan option (Rahman, 1986, p60, from Goetz and Gupta, 1996). "Transferring a loan in and of itself" does not "signal a loss of power for women" (p52). Different studies indicate that women retain full or significant control of loans in 37% to 77% of cases in Bangladesh which is impressive in Islamic rural areas (Goetz and Gupta, 1996, p49; Rahman, 1986, from Goetz and Gupta, 1996).

    It seems that women's control over loans increases over time but only "up to a certain point" after which "control appears to diminish" (p52). Evidence suggests it may be related to lack of time and/or investment options, and/or a seeking after diversification (which is predominantly a female strategy).

    Also, loan control seems to vary in most cases according to the size of the loan. The smaller the size of the loan the greater the control by female borrowers (p51). Furthermore, it seems that control is also related to the activity in which the loan is invested. If the investment is in an area that is considered a female-type activity then she will have greater control (p50). Finally, control seems to correlate to the size and profitability of the business. Once the MSE gets larger and prosperous, men seem to take over the activity.

These conclusions raise many questions. What is the best way to ensure that women maintain control over their loans, invest in the most profitable activities (which primarily means male- dominated activities) and maintain control of the benefits from that investment? And from this economic and thus financial greater independence giving women greater bargaining power within their household and society, how does one maximise the chances of women controlling their lives and influencing society so that society becomes more just? Is there a better use of donor funds to meet practical and strategic needs of men and women? Or put another way would women be better off without access to finance? Would another type of support be more beneficial?

There are no easy or clear answers to these questions but the fact remains that women continue to borrow and to repay even when loans are hijacked by men and tension in the household increases.

Impact of credit on female/male relationships

Some studies give anecdotal evidence of rapid changes in female/male relationships in terms of increased freedom, autonomy and mobility. For example after some initial friction a woman could stay overnight in another village to market her products and another could take part in a week-long seminar.

Successful women entrepreneurs in Sudan, thanks to credit from ACORD, were treated with greater respect by their husbands and were allowed more say in the management of household financial affairs whereas before women feared social disapproval for being engaged in economic activities outside the home (Mayoux, draft 1997, p35).

Literature suggests that some women are worse off with loans. In some cases as a result of loans and/or activities in which they are invested women face increased tension and violence in the home, male economic withdrawal and even abandonment. Although a study in Bangladesh concludes that violence against women is pervasive and that it is unclear if overall credit makes matters better or worse (Schluter et al, draft 1997).

In certain cases, microfinance programmes have led to joint action to deal with issues such as violence, male alcohol abuse, dowries and harassment by official authorities (Mayoux, draft 1997, p37).

Impact of credit on workload and well-being

However, "increases in access to income are often at the cost of a heavier work loads" with "adverse effects on women's health and well-being" .. "as they struggle to combine income-earning with unpaid domestic responsibilities" (Mayoux, draft 1997, p33).

Impact of credit on children's education

A rise in the income of women, or loans themselves, increase the likelihood of children attending school particularly when programmes have an education component (Albee, 1996 from Mayoux, draft 1997, p33).

However, anecdotal evidence suggests that the interests and education of boy children over girls remain the priority (Kebede, 1997 from Mayoux, draft 1997, p34).


Donors have large amounts of funds to disburse and microfinance brings about many tangible direct results for many male and female customers in the shape of increased incomes, education, health and nutrition. Some women also become empowered which will not remain unnoticed and uncopied. Therefore, while one should carry out evaluation studies to understand what the impact of microfinance is and take appropriate action to increase positive results it is evidently clear from the limited information available at present that microfinance is one of the major tools discovered to help the poor this century.

Therefore the priority should be to provide financial products with characteristics and delivery mechanisms that are attractive to men and women and that they be advertised in such a way that men and women are aware of their existence. Evaluating the impact of microfinance will then make it possible to revise the approach and add tools to increase the probability of fulfilling practical and strategic needs.

Return to the Contents page

Return to the Virtual Library on Microcredit