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Microfinance challenges: empowerment or disempowerment of the poor?

Isabelle Guérin
Jane Palier

Part I - Questions as to definition: what is understood by empowerment?

7. Can microfinance empower women?

Joy Deshmukh-Ranadive

Texte intégral

1Currently, microfinance has become the endorsed solution to poverty alleviation. Over the past few years microfinance has been advocated internationally as the formal route to offering opportunities for livelihoods and pulling the poor out of poverty traps. Small sums of credit are made out to persons who are supposed to put the money to productive use, thereby guaranteeing repayment. Women are seen as more creditworthy than men and hence the bulk of microfinance is directed towards them. In this process, it is argued, microfinance will result in the empowerment of women. This paper presents a framework within which the impact of microfinance interventions upon women’s empowerment can be ascertained. The framework is both conceptual and analytical in nature, and can be used in further research as a tool to gauge women’s empowerment in the context of microfinance.

1. What is empowerment?

  • 101 It has been reported that corporate giants such as Hindustan Levers Ltd., use women from SHGs to he (...)

2Today, empowerment is the most frequently used term in the dialogue on development. It is also the most nebulous and widely interpreted of concepts. Advocates of microfinance claim that the very process of forming self-help groups (SHGs) is empowering and that a critical mass of people is formed, which can be harnessed to pull households out of poverty traps. The converse side of this is that the same critical mass of people can be manipulated by larger political and economic interests to promote their own agendas, by which women are further disempowered101. Further, empowerment cannot be achieved through the handling of money alone, since credit by itself does not create enough of a bond between women to begin the process of empowerment. Other social and development issue need to be addressed to create a bond between groups so that they can metamorphose into vehicles of empowerment. Another issue of debate relating to microfinance and women’s empowerment is that credit can only address practical gender needs and not strategic ones; hence one must not be over-ambitious about the goal of empowerment. The process of a microfinance programme does not directly affect structures within households or attempt to change hierarchies within it. Hence, membership within an SHG does not automatically carry the dynamics of empowerment into the household, even if it has begun within the group. No doubt, women can also get empowered by virtue of membership in a group that is struggling towards a common goal of equity, but often these processes isolate them from the household and increased tensions develop within the family.

3In the context of development, empowerment cannot be given to anyone, nor is it a goal that can be reached by an organisation or state. It is a process that takes place when inequalities move towards equality. The inequality that has to alter into equality is the inequality in participation in the various processes of development such as education, health services, housing, livelihoods, employment, remuneration and so on. Empowerment is a process whereby constraints that impede equal participation are reduced so that the inequality starts moving towards becoming equality. Often, with development interventions such as microfinance, targets are chased and the achievement of those targets is confused with the achieving of empowerment. A question that comes to mind is, “what are these constraints that impede equal participation in the development processes?” These constraints are most often structural and connected to both the macro environment and the domestic environment that women find themselves in. Since empowerment is connected to structural constraints, the conditions that have to be generated for it are contextual and specific to the location and situation, in all its dimensions – geographical, socio-cultural, and political. That is primarily the reason for the myriad understandings of the term and the fuzziness that affords activists the freedom to interpret and act according to the situation they face in the field.

  • 102 For a detailed outline of the use of “spaces” as a concept to capture power and empowerment, see De (...)
  • 103 Space is different from capability in the sense that the term “capability” as used by Amartya Sen a (...)
  • 104 These dimensions of space are not necessarily exclusive of each other. The purpose of demarcating d (...)

4In order to understand how constraints can be reduced, we have to move on to the concept of “spaces”102. The stimuli for empowerment as a process to take place comes when something alters in a person’s/woman’s life, which expands “spaces” – that which allows a person, the place/freedom/margin, to do what she intends to do103. Initially every person has an allotment of spaces at any moment in time. This allotment is determined by the domestic and macro environment within which the person lives. Both these environments have the same dimensions as spaces, namely, physical, economic socio-cultural and political. Spaces determine a person’s capacity to act, and also the ultimate behaviour, both within the household and outside it. A constriction of spaces amounts to a lack of power to act. It also accounts for fewer alternatives within which behavioural decisions can be taken. Constricted spaces negatively affect power over, power to, power with and power within. Spaces are also an end for which negotiations take place. Hence, in domestic power dynamics, it is the expansion and contraction of spaces that explain the relative positions of the members. Spaces include both tangible and intangible features of categories that are economic, socio-cultural, political and physical104.

  • 105 Physical space has been the focus of analysis within feminist geography, where behaviour and space (...)

5Physical space constitutes a women’s access to the physical space of her body, and of mobility across spaces outside her house and within it105. Women’s ownership, access and control of physical space have a significant bearing upon their position in intra-domestic power dynamics and outside the domestic unit. Economic space allows a woman ownership, access and control of goods and services, which enhance economic independence. Within economic space are included ownership, access to and control of immovable property (which can alternatively be translated into physical space), movable property, assets, both tangible and intangible and income. This space allows a woman ownership, access and control of goods and services that enhance economic independence. Socio-cultural space enhances women’s power within the domestic sphere. This space widens when a person’s position within kin-based hierarchies is relatively higher than that of others. The placing within families, of members, is an essential part of the milieu the family is based in. The type of family (nuclear, joint, extended) and the kinship structure (unilateral or bilineal), throw up complex determinants of hierarchies. Age and marital status are also important determinants of socio-cultural space. Caste and class are important determinants of socio-economic status both within society and within a family. Political space can be perceived at two levels, private political space and public political space. The first level relates to the political situation that exists within the domestic unit. The conceptualisation of this space is different from the socio-cultural space since the latter determines the placement and political space deals with the dynamics of the working of those placements. Hence when one is concerned with power dynamics within the domestic domain, it is political space that answers questions as to how those dynamics work, while physical, economic and socio-cultural spaces answer questions as to why members are so placed. Political space hence correlates to hierarchical placements of authority and responsibility that are sanctioned by socio-cultural spaces. The second level of political space is related to women’s access and control of public office. Political activity takes place within the public domain and is connected with the administration and governance of society/institutions locally as well as in a larger context. This space is not easy to come by. It is also a function of personality traits such as courage, determination and qualities of leadership.

2. Spaces that shift

6When spaces expand, it is not always necessary that it will always result in the process of empowerment. It is important to evaluate the quality of that space. For example, often it is found that an intervention such as microcredit, which has given economic space to a woman in terms of an income, does not empower her, because she has no control over that income. On the contrary, it may even lead to an increase in domestic violence, as has been found in the case of studies in Bangladesh (Goetz and Sen Gupta 1996). That is because the intervention has not altered her socio-economic space. We have to remember that the woman does not live in a vacuum. In as much as the microfinance intervention does nothing to alter the socio-economic environment of the household, an expansion of economic space for the woman will not empower her. There is no linear relationship between empowerment and the expansion of non-mental spaces. The most important condition for empowerment to take place is an expansion of the person’s mental space. Mental space is metaphysical in nature and consists of the feeling of freedom that allows a person to think and act. An expansion in this space implies a change in perceptions, which lend a feeling of strength since it precedes action. It empowers even before action is taken since there is mentally a movement away from restriction and constraints. When there is an expansion of this space it facilitates action in a positive direction.

7There is, however, no linear relationship between the expansion of physical/economic/socio-cultural/political spaces and the expansion of mental spaces. What then, actually leads to an expansion of mental spaces? It has been found that when women operate through collectives, processes of empowerment are unleashed. The release of mental spaces that allows for action on the part of women is most often facilitated by her membership of a collective that is addressing a similar problem. Microcredit as is practiced currently in India, necessitates the formation of collectives. One has to investigate the actual role of these collectives in the lives of the women members. If the SHG is a forum where common problems can be addressed, and if there is a feeling of solidarity emanating from membership of these groups, then there is hope for empowerment. However, if the group is only centred on the collection and disbursement of money, then there are fewer chances for empowerment processes to begin.

8The second factor that leads to an expansion of mental spaces is information. Information is a very important source of power as well as empowerment. Most often, women are oppressed because they are illiterate and do not have access to knowledge. The information that is most critical to unleash a process of empowerment is knowledge of the structures of power within which lives are placed. Another kind of information that is vital is of their rights and duties, both as citizens and also as members within families. This information includes knowing about legal machinery, as well as about human rights and entitlements. Information is very important in social mobilisation. In sharing experiences, groups like SHGs often gain in strength and solidarity. Apart from these kinds of information, knowledge about matters related to livelihoods, finances, political processes, and so on also equip women to be able to take action in order to change the situation they find themselves in. The intervention of microcredit by definition imparts information to women. This information is about the handling of savings, investments, financial decisions, livelihood choices, and so on, but is not geared to question any existing power structures relating to gender, caste or class. If, however, the facilitating organisation takes into account hierarchical structures that contribute towards poverty and disempowerment, then microcredit interventions can form the catalysts to initiate processes of empowerment.

9Just as the individual woman is placed within a domestic environment and has to negotiate her spaces within it, the domestic unit is placed within a larger macro environment, which comprises similar components of the physical, economic, socio-cultural and political. One finds that macro changes, in the nature of state-enforced political and economic interventions, alter micro-level dynamics, thereby changing opportunity patterns of families and individuals. Policies and interventions by state and non-state bodies act upon the macro environment, which in turn alters the domestic environment. This has a consequent effect in altering spaces for the individual. This has been illustrated in the following flow chart.

  • 106 It may seem as if a conceptualisation of power and empowerment in terms of spaces confines empowerm (...)
  • 107 A project, “Gender Equity in the Family” was conducted in the district of Mahbubnagar, Andhra Prade (...)

10Interventions such as microcredit succeed in impacting upon the macro environment. However, of all the components of the macro environment, the socio-cultural environment is the most stubborn and difficult to alter and in consequence, the socio-cultural space is difficult to negotiate. The cost of an expansion in this space is often high for an individual woman since it isolates her. That is the reason why collectives and collective action is a more effective vehicle to set into motion a process of empowerment. Further, a process of empowerment cannot accelerate unless there is an expansion of the socio-cultural space. This is because while an expansion in physical, economic and political space can lead to an expansion in mental space, with socio-cultural space the logic has to be turned on its head. There has to first be an expansion in mental space for there to be an expansion in socio-cultural space106. In order for this to happen there is need for outside interventions, which supplement economic interventions such as microcredit107.

Chart 1. Women’s acces to control of spaces

Chart 1. Women’s acces to control of spaces


11Just because microfinance interventions are routed through women, it does not necessarily imply that gender concerns have been addressed. The mere presence of women does not guarantee that issues of gender are in focus. Microfinance interventions that are limited to addressing only financial transactions have a limited impact upon the expansion of women’s spaces. When interventions extend their ambit to focus beyond finances, and in particular also delve into the household, then their capacity to empower increases. Women cannot be understood independent from their domestic environment and even while concentrating on their roles within SHGs, one cannot lose sight of their roles as members of domestic groups. Empowerment has to be understood as a complex process, and one that connects to multiple dimensions, beyond economic considerations of livelihood generation.


101 It has been reported that corporate giants such as Hindustan Levers Ltd., use women from SHGs to help sell their brands of products like shampoos, oils and soaps. (Email communication from, November 28, 2001).

102 For a detailed outline of the use of “spaces” as a concept to capture power and empowerment, see Deshmukh Joy Ranadive (2002b).

103 Space is different from capability in the sense that the term “capability” as used by Amartya Sen and developed by Martha Nussbaum (1995) signifies characteristics within human beings, which, if deprived, do not allow for a human or a humane existence. Space on the other hand, is that which allows a person to move, maneuver and negotiate to develop capabilities.

104 These dimensions of space are not necessarily exclusive of each other. The purpose of demarcating different kinds of spaces is to facilitate analysis and to devise reasonably differentiated categories that can be operationalised in research.

105 Physical space has been the focus of analysis within feminist geography, where behaviour and space are recognised to be mutually dependent. One method used is of time geography, where everyday routines of women are traced to ascertain the spaces they occupy. The divide between the “male” public space and “female” private space is seen as one of the most oppressive aspects of women’s lives. See Women and Geography Study Group (1997) and Gillian Rose (1993).

106 It may seem as if a conceptualisation of power and empowerment in terms of spaces confines empowerment to a static understanding and is in conflict with the actual dynamic nature of its being a process. However, the act of negotiating for more space is the dynamic characteristic of the struggle towards empowerment. Further, in as much as there is action to elbow for more spaces within altered spaces afforded by external stimuli, there cannot be a static understanding of empowerment.

107 A project, “Gender Equity in the Family” was conducted in the district of Mahbubnagar, Andhra Pradesh, under the Andhra Pradesh District Poverty Initiatives Projects (APDPIP), which used folk theatre to open up the family and household for questioning before entire villages. This project was initiated since it was observed that the formation of microcredit SHGs aggravated household tensions since women were becoming economically independent and also held positions of power outside the home by lieu of being in the groups. The purpose of the project was to alter perceptions within households, so that mental spaces expand, which would then lead to an alteration of established hierarchical sociocultural spaces. See Deshmukh-Ranadive (2003).

Table des illustrations

Titre Chart 1. Women’s acces to control of spaces
Fichier image/jpeg, 131k


Senior Fellow, Centre for Women’s Development Studies, New Delhi (India)

© Institut Français de Pondichéry, 2005

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