By Vivek Tiwari
The microfinance revolution that began in the Indian subcontinent in the early 1970s, has spread far and wide across the globe and has evolved into an important poverty alleviation tool for several developing economies. Unfortunately, despite the crucial role microfinance plays in facilitating the upward mobility of society, there is still a glaring inequity in the distribution of its benefits between women and men.
Even today, only a minute proportion of women in Indias rural and semi-rural regions can access financial tools for their livelihood or entrepreneurial ventures. At the same time, a large number of women in India continue to be marginalised due to poor literacy levels, gender-based issues, as well as cultural and social norms, and as a result, are held back from taking financial decisions in their own households.
However, over the decades, microfinance and the creation of womens self-help groups (SHG) have led to the development of entrepreneurial abilities amongst women in rural regions.
Women empowerment: key to holistic and inclusive economic growth
Several organisations and institutions have been established in the country to promote and facilitate women empowerment at the grassroots level. However, due to the massive inequity in the distribution of resources means those at the bottom of the socio-economic pyramid receive the least amount of benefits in a trickle-down economic system, while the wealthy, or those at the top of the pyramid, receive the most. Given how a large number of women in the country are still economically dependent on male members of their families, they are usually the bottom-most recipients of any residual benefits from the trickle-down economic system. As a result, a huge section of the female population remains poor and vulnerable, and lacks access to credit for their and their familys betterment.
Improving womens access to credit and finance has proven to have a multiplying effect on the members of their families, since women spend, save and invest money in fundamentally different ways than men. When women have the decision-making power within the household, they usually prioritise spending on their families. Thus, financially empowering women is critical to realising the goal of financial inclusion, alleviating poverty, and driving sustained economic growth. Financially empowered women are better able to contribute to the well-being and productivity of their families as well as their communities.
Role of microfinance in empowering women
Educating women and empowering them economically is crucial for driving positive changes in society to create an environment where other girls and women can thrive. Providing adequate capital and entrepreneurial tools can help women become more self-reliant, confident, and increase their self-esteem.
Microfinance has emerged as a powerful tool for women empowerment in the new economy. In India, the group lending model of microfinance is a highly impactful and cost-effective method of connecting the economically challenged sections of society to financial services and credit. The primary focus of most microfinance programmes is to empower women since they are often the most vulnerable section of the population, and investing in women has a two-pronged effect. It leads to faster and long-term economic growth at both the micro as well as macroeconomic level. In the context of India, microfinance has been seen as a positive influencer in enhancing womens social capital and helps in their collective empowerment.
Challenges to increase access
However, there are a few challenges to facilitating access to microfinance for women in the country. These include increasing awareness of financial products among low-income women with higher illiteracy levels, understanding the behaviour of low-income women so that the right microfinance solutions can be developed to address their needs, and raising the rate of adoption of microfinance solutions among low-income groups. Although, with the integration of technology in the microfinance sector, credit providers have developed better tools to address these challenges as compared to the past. The increasing reliance on technology among microfinance institutions also means that they can leverage it towards developing new lending models and more inclusive credit lending policies in order to target more people from economically marginalised sections of society.
In rural and semi-rural areas where employment opportunities are limited and skewed largely towards the male population, women micro-entrepreneurs continue to contribute immensely towards economic growth and act as job creators for other women in their respective communities. Hence it is extremely critical that they are encouraged further to help achieve inclusive and sustainable growth in the economy.
Vivek Tiwari is CEO and Managing Director of Satya MicroCapital.