rural microfinancing and women’s...

International Journal of Rural Development and Management StudiesVolume 5 • Number 1 • January-June 2011

RURAL MICROFINANCING AND WOMEN’SEMPOWERMENT: A CASE STUDY ON RURAL WOMENCLIENTS IN DESSIE ZURIA DISTRICT, ETHIOPIA

Aragaw Yimer*

Abstract: As elsewhere, rural development policy makers and practitioners in Ethiopia haveoverstretched the role of microfinancing beyond mere poverty reduction to women’s empowerment.The underlined interest of this study is to examine the extent to which women are utilizing ruralmicrofinance programs and assess microfinance’s potential effects on empowering women at a ruraldistrict. Flexible and mixed research design that combines quantitative, qualitative, and participatorymethods is adopted to examine complex and comprehensive facts at individual, household andcommunity levels. A mix of data gathering instruments (questionnaire, unstructured interviews, focusgroup discussions, case story narrative, document analysis and review tools and site observations)were then employed to collect field data from mainly 80 women clients, who have been in the programfor the past three and over years. In a multi-faceted examination, the results of the study, in general,revealed the existence of sufficient evidences that substantiate the possibilities of rural microfinancingfor empowering rural women. The move towards rural women’s empowerment through microfinancingis not same and alike to all women however. Microfinance’s potential effects are also dependant upon an array of issues ranging from institutional design, product diversification, triple role burden ofwomen, livelihood assets of individual women, to the physical environment where rural women clientsare leading their life.

Keywords: Rural microfinancing, Women’s empowerment, Dessie Zuria district.

INTRODUCTION

Throughout the foregoing half-a-century efforts, several development approaches have beenintroduced, and shifted from, for instance, the emphasis on developing infrastructure and financinglarge capital intensive projects in the 1960s, to the focus on meeting basic needs of people inpoor communities in the 1970s, to the priority on structural adjustment and stabilizing economyin the 1980s to today’s attempt to construct a sustainable development framework against thebackground of increasing globalization (Otero, 2000; Robinson, 2003). Despite these changesthere is generally inherently a relentless use of the market logic to attain equity and sustainability.

Yet, it is now widely acknowledged that hitherto pursued approaches have not succeeded ineffectively addressing longstanding global challenges– poverty, gender and regional inequalities.This is particularly true in Sub Saharan Africa, where the economy is characterized by a sharpcontrast of increasing disparity between the rich and the poor, men and women, or urban andrural people. Poverty alleviation and elimination of gender and regional inequality are, thus,critical challenges faced current development endeavors in developing countries (Ellis, 2000).

* Lecturer at Addis Ababa University, College of Development Studies, Public Administration and DevelopmentManagement, Addis Ababa Ethiopia.

116 International Journal of Rural Development and Management Studies

Arguing on the fact that gender inequality still persists and is not a result of women’sintegration or lack of integration in development, or even their lack of resources, the Gender andDevelopment (GAD) literature came up with a recent breakthrough– empowerment approach.

Empowerment – A Recent Approach

Although unraveling empowerment here is unlikely due to limited space, it should be notedfrom the outset that evident from the many works on the concept are different definitions,conceptualization, and measurable indicators (Kabeer, 1998, 1999; Rowland, 1997; and Mayoux,2001, 2002). The term empowerment has become a stock-in-trade expression where ever in theworld of women and is one of the most loosely-used terms in the development lexicon, meaningdifferent things to different people, or more dangerously, all things to all people (Batliwala,1995). As a result, empowerment remains a loaded term that means different things to differentpeople and has subsequently gained a language command within the developmentdiscourse (Mayoux, 2001, 2002). In this paper, empowerment is operationalized as the processand outcome of women gaining access to, ownership of, control over, and benefit from livelihoodassets, activities and opportunities that in turn challenges the norms of social power inequality(Lakwo, 2006).

The empowerment approach, which comes out of a people-centered paradigm and then callsfor a bottom-up participatory development by placing women and men at the centre, as actors andbeneficiaries, of development initiatives, has become a centerpiece in current development discoursesacross the globe (Chambers, 1983; Kabeer, 2001; Narayan, 2002). Embedded in this approach issuch slogan as ‘if development is not gendered then it is endangered’. The empowerment approachunderscores that the root cause of the problem lies in the social structures, institutions, values andbeliefs, which create and perpetuate such hegemonic social relations.

The approach acknowledges the importance of empowering women for greater self-relianceand internal strength (Moser, 1994). It also views power from the intrinsic and extrinsic situationof women. This is identified as the right to determine choices in life and to influence the directionof change, through the ability to gain control over crucial material and non-material resources.And yet, empowerment is a holistic process and outcome that can be attained beyond improvedlivelihood status on the development impact level. Thus, the empowerment approach seeksbottom up women’s organizations to raise women’s consciousness to challenge theirsubordinations and recognizes the triple role of women (Moser, 1994). It is in the means ofachieving such needs that the empowerment differs most fundamentally from previousapproaches. The debate on women’s empowerment has thus reached the level of mainstreaminggender in all development programs (Fetenu, 1997).

Microfinancing

Likewise, microfinancing is an inevitable corollary of such a shift in rural developmentapproaches. Robinson, (2003), Mayoux, (2001) and Otero, (2000) often accentuate in responseto persistent poverty and gender inequity in the distribution of resources, promoting microfinanceprograms is a key strategy for addressing both poverty alleviation and women’s empowerment.Evolving into a type of independent financial system, microfinancing has become an acceptedinstitutional framework to reach out the rural un-served poor.

Rural Microfinancing and Women’s Empowerment: A Case Study on Rural Women Clients in… 117

Microfinance, in broader understanding, refers to the provision of financial andsocial intermediations services to low-income clients, including the self-employed (Ledger wood,1999). Financial services generally include savings, credit; credit cards, payment services,money transfers, and insurance services. Besides, social intermediation services includegroup formation, and training on development leadership, management capabilities andfinancial literacy among members of a group. Microfinance creates access to productivecapital, the input necessary to generate income. Capital for investment, from savings or borrowedmoney, takes a critical place in the economy of all human actors regardless of their levelof income.

MICROFINANCING AND WOMEN’S EMPOWERMENT – A CONTESTED REALITY

Initially, microfinancing role in poverty alleviation is often stressed as clients of microfinanceinstitutions (MFIs) are typically poor rural households who are landless or who seize, usuallyunproductive, small landholdings and seek self-generated off-farm and on-farm employmentand/or poor city dwellers housed in slums or squatter settlements (Robinson, 2003; Dunford,2000; Webster& Fidler, 1996). Microfinance then enables to mobilize and organize the poorand women at grass roots level and provides hitherto denied access for critical assets to them(Amin et al, 1998). Recently, however, the role of microfinance is overstretched beyond merepoverty reduction to women’s empowerment. This has led to a new wave of mushroomingpolicies and products aimed at transforming microfinance into an industry (Mayoux, 2001).Nevertheless, a good deal of debates tends to persist as to whether the provision of microfinancehas impacted on women’s empowerment. Evident from numerous research-generated-knowledgeat different parts of the world are contrasting views:

Some researchers (Goetez & SenGupta, 1996; Dowla, 2001; Park and Ren, 2001; Padma &Getachew, 2004) are essentially optimistic about the possibility of microfinance programs forempowering women world-wide. Many of them, however, point out the limitations ofmicrofinance to empowerment, but attributed these limitations to poor program design (Mayoux,2002). According to them, microfinance-women empowerment interface lies at both intrinsicand extrinsic levels. While the extrinsic level refers to gaining greater access to and control overfinancial and physical assets, the intrinsic level involves changes within, such as the rise in self-reliance, confidence, motivation and positive hope for the future.

Others hold counterarguments on microfinance’s potential in promoting empowerment,but see it as a key ingredient important to alleviate poverty: empowerment in this view needsto be addressed by other means. For instance, loans do not create economic opportunities,rather they help people, and enterprises position themselves to take advantage of opportunities(Rutherford, 2000; Rhyne, 1998). Small loan size often requires further ‘loan patching’ inorder to establish a business, so success cannot be tied to microfinance per se (Ackerly, 1995).In sum, this view centered its argument mainly on the fungibility of money, and hence,attributed the changes to intervening factors such as age, education, skills, householdcomposition, etc other than microfinance programs (Padma & Swamy, 2003; Rhyne, 1998;Schuler & Hashemi, 1994). A brief review of counterarguments on positive assertions tomicrofinance impacts on poverty and women’s empowerment has been summarized in tabularform as follows:


The point is that the issue of microfinance and women empowerment is a persisting debatethat needs further consideration and reconsideration, and empowering women is dependent onspecific contextual realities. Perhaps due to such contention, microfinance practitioners, donors,policy makers and governments are more interested in knowing what actually is happening onmicrofinance clients, and are keen to understand the contexts and extents at which beneficiarieshave perceived improvements in their life. The present study is meant to assess realities in ruralEthiopia, by taking rural women clients of the Amhara Credit and Saving Institution (ACSI) asa case.

METHODOLOGY, DESIGN AND DATA

An explanatory research methodology had been employed to examine the nexus betweenmicrofinance program and women client’s empowerment. The design, however, adopted a flexibleand mixed research approach that combines quantitative, qualitative, and participatory methods.Whereas the quantitative method deals mainly with the extent of women participation andutilization of microfinance program and economic empowerment indicators at individual level,the qualitative and participatory methods are meant to examine social and behavioral indicatorsat household and community affairs. Besides, the study adopted a “before” and “after” approachand not be the “with and without” technique-control group.

Primary data were collected from mainly 80 matured women clients (ie. who have beenactive clients since the past three and over years) in a two-round trip made in February andApril, 2009. The samples were selected by a proportionate random sampling from 5 sub-districtsin the study area. More over, 5 dropout women, 5 non-client women were included as keyinformants based on judgments on their willingness and awareness to provide adequateinformation about the operation of the program. Focal persons from District AdministrationOffice, Women’s Affairs Office, Agriculture and Rural Development Office, and ACSISub-branch Offices were also included in the study.

A mix of data gathering instruments (questionnaires, unstructured interviews, documentanalysis and desk review tools, Focus Group Discussions (FGDs), case story narrative and fieldobservations) were employed to generate and triangulate information. The questionnaire containsitems separately for male-headed and female-headed households and it captures both quantitativeand qualitative data. All the questionnaires were completed and returned- a 100% rate of return.Besides, the returned questionnaires were all usable, except few items left un-answered by somerespondents in certain issues. Comprising of 6 major parts, the questionnaire was designed tocapture comprehensive sets of data on household profile and demographic characteristics, programoperation (distance of sub-branches from clients’ home, microfinance’s attractive features, loansufficiency, operational modalities set along with each financial products, etc), women’s economicempowerment (housing conditions, number of animals owned, possession of household items,household’s source and proportion of income, decision making and control over assets, financialindependence, etc.), and psychological/ personal capabilities (self confidence, self worth,entrepreneurial capacity and skills, etc.), socio-political dimension of women’s empowerment(participation in meetings at grassroots organizations, social status, family and community respectand freedom of movement) using the “before” and “after” approach. Document analysis andreview tools were meant to collect district-wide gender disaggregated data from sub-branch


offices on trends and extent of women’s participation in the different financial products. It isthen substantiated by unstructured interviews and FGDs. In addition, case stories were intendedto generate more detailed qualitative information from a few selected women who have uniqueimpact experiences.

DESCRIPTION OF THE STUDY AREA & ACSI

The study is conducted in Dessie Zuria District (DZD), one of the 23 administrative districts ofSouth Wello Administrative Zone (SWAZ) in Amhara National Regional State (ANRS), Ethiopia.In the current federal arrangement of Ethiopia, the districts are subdivided into constitutionallyrecognized Sub-district Administrations (locally known as Kebele Administrations), which formthe lowest administrative tires. In the year 2008, DZD has a total population of 278, 725 (143,377females and 135,348 males) occupying 1,105.86 Square Kilometer area. It is among the mostpopulous districts of Ethiopia with an average density of 252 people per Km2 (CSA, 2008).

DZD is known for its famine and food crisis history since 1970’s. It has been repeatedlystricken by recurrent drought, disaster/famine crises. The drought cycle period is now decreasingand the area is affected by drought more and more often than was the case 15 and 20 years ago(Ali, 2005). Livelihoods are confined to rain-fed agriculture- crop production, livestock rearingand agro-forestry, which are so vulnerable to climate variability. On-farm and off-farm activitiesare closely related to safety net program and rural high way construction.

Amhara Credit and Saving Institution (ACSI) was established in 1996 and sponsored by theANRS government as a key rural development policy strategy in view of providing financialand ancillary intermediation services particularly to women and the rural poor. ACSI’s primarymission is to improve the well being of low income, productive poor people in the region mainlythrough increased access to microfinance services. Poverty alleviation and stimulating the region’seconomic growth by giving due priority to rural and remote communities, particularly womenhas been the forefront organizational objective of ACSI since its establishment.

RESULTS AND DISCUSSIONS

Demographic and Household Profile of Respondents

Nearly three-fourth (59) of the respondents is purely illiterate, while one-half (11) of the remainingcan read and write only, typically reflecting the realities of rural Ethiopian women. Youthswithin the age range of 21 to 25 account for only 6% of the respondents. Young women’sutilization of rural microfinance is so limited perhaps due to lack of targeted products attractingsuch section of the population.

Just over three-fourth of the total respondents are Muslims and the remaining are followersof Orthodox Christian, matching with the study district population as 85 per cent of them arefollowers of Islam. The notion that the “sheria” has often acted as one of the deterrents particularlyfor women from utilizing microfinance programs is found to be irrelevant in this respect. Althoughthe number of married women dominates, some 9 widowed, 27 divorced and 4 unmarried womenhave been involved in the study. Such wide spectrum of age and marital status of respondentshas been found important to examine the interests and challenges of different groups of thestudy population in utilizing microfinance services.


In regards to household headship, 35 women are heading their respective households andthe rest 45 are headed by husbands or elder sons. Respondents were also asked to indicate theirhouseholds’ current wealth status according to their own perception.

Table 2Household Profile of Respondents

HH Headship Number of Household Members Wealth Status of the Household

Male Female 2 or less 3 to 4 5 to 6 Over 6 very poor Poor Middle Rich

No 45 35 12 36 9 23 9 17 54 -

As such, two-third (54) of the respondents perceived themselves as they are in the middlestrata, 17 as poor and 9 as very poor. No one respondent has considered her own household asrich. The lesson on gender dimension of rural microfinance is that, on one hand, relatively poorand very poor women among rural women themselves have gotten the opportunity for utilizingservices, opening the first gate to participate economically marginalized women. On the otherhand, although a considerable number of poor and very poor women (26) have participated inmicrofinancing since the past three and over years, they reported that they did little or noimprovement in terms of wealth status. This fact will also be confirmed in the subsequent sectionsdealing with empowerment.

Women’s Participation and Operational Requirements

The very important point that should be bore in mind is access to and utilization of microfinanceservices are two different things. The challenge is therefore to distinguish between voluntaryand involuntary exclusion. Poor women could be voluntarily excluded due to lack of appropriateproducts or services; some specific financial products are not attractive to some customers onethical or religious grounds; for instance the case of Sheria. Involuntary exclusion of womencould result from lack of awareness of products if microfinance institutions do not target theirproduct toward certain groups; even if microfinance programs exist, the poor, particularly women,may not have anybody in their social network who understands the various services that areavailable to them. Lack of education may also make it difficult for them to fill out loan applications,

Table 1Demographic Profile of Respondents

Educational Age Marital Status No. of years inStatus microfinance

program

Level No Range No Religion No Status No years No

Illiterate 59 21-25 5 Muslim 63 Unmarried 4 3 26Read & Write 11 26-30 9 Orthodox Christian 17 Married 40 3.5 31Grade 1-4 4 31-35 35 Others - Widowed 9 4 8Grade 5-8 3 36-40 17 - - Divorced 27 4.5 4Grade 9-10 - > 41 14 - - - - 5 8Grade 11-12 3 - - - - - - Over 5 3Total 80 Total 80 Total 80 Total 80 Total 80


and the small number of transactions they are likely to undertake may make loan officers thinkit is not worthwhile to help them. Physical distance to MFIs’ sub-branch out lets may alsomatter (WB, 2008). In this connection, the following sections examine the level of rural womenand men participation in microfinance program, the extent at which women’s utilization of andinvolvement in the different types of loan and saving products, and identify which operationalrequirements acted as encouragement or deterrent to women’s participation.

Trends in Women and men Participation in Microfinance Program

Recent trends in Figure 1, shows a considerable increase in the number of women and menclients served in the study district through out the past three years. Currently 6,547 clients aregetting microfinance services in the study district. Total number of clients able to get the servicealso increased on average by about 44.4 % of the previous year figure to the next year during2006 to 2008.

In terms of gender, a closer analysis of same figure indicates a different reality. The percentageproportion of women who have taken loans as compared to men clients happens to decline fromthat of 32.4 % in the year 2006 to 27.3 % in 2008. In other words, in the year 2006, 32.4% of thetotal clients in the district were females while this proportion declines to 29.1% and 27.3% inthe subsequent two years respectively.

Figure 1: Three Years Trends in the Proportion of Women and Men Clients

Contrary to this, the percentage proportion of males vis-à-vis the total clients showstremendous increase from that of 67.6% in the year 2006, to 70.9% and 72.7% in 2007 and2008 respectively. Besides, from the table hereunder one can read the same reality, but withan increasing trend. Generally, the proportion of women utilizing voluntary saving facilityis far less than that of their counterparts. For instance, among the total 2446 voluntary savers in2006, only 343 or 14% were women. It however rises to 30.5% in the year 2007 and to 32.1% in2008.


Table 3Trends in Average Voluntary Saving Size, and Loan Size by Gender

December, 2006 December, 2007 December, 2008

Items Male Female Total Male Female Total Male Female Total

Number of Voluntary Savers 2013 343 2446 2200 965 3165 2135 1008 3143Average V. Saving Size 55.2 133.8 66.2 231.6 239.1 233.4 144.6 140.2 143.2Average Loan Size 2518.8 1611.1 2224.8 2772.6 2208.8 2609.1 3319.3 2694.1 3123.1

In spite of small in number and proportion, women’s average saving size surprisingly exceedsthat of the male clients’ in the year 2006 and 2007, with slight decline in 2008. This means thatwomen clients in general have tended to use better savings facility, and they happened to savemuch more money than male clients. These situations have a profound implication to microfinanceproduct design and diversification; well diversified savings facilities could attract much morenumber of women clients.

The gender disaggregated figures in loan disbursement indicate that average loan size towomen clients is very small. It is on average 500 to 1000 birr less than that of males’ throughout the past three years. While very small average loan size indicates the extent to which poorand very poor women are reached by the service providers, the small maximum amount of loanhappens to be a source of dissatisfaction to women clients. Moreover, whereas the number ofnew female entrants to the program has increased, the number of deserted female clients isincreasing as well year to year. Women who had dropped out of the program in 2006 were 138;went up on to 274 in 2007 and to 516 in 2008.

According to deserted women key informants, even though the reason(s) for each drop outwoman differs, the major ones include group related problems, relatively high interest rate chargedon regular loans, health and death of family member and/or client, which leads to inability torepay loans, bad treatment of staff (there was no female loan officer in the observed sub-branchoffices), small loan ceiling and short repayment period (the loan ceiling or maximum amount ofloan is 3000.00 Birr with a very short repayment period of one year). These have an adverseimplication to women’s involvement and utilization of microfinance program. Given with theexisting huge unmet demand for microfinance- until now catering for only less than 10% of thedistrict demand- and what so ever reasons, significantly low proportion and declining trend inthe proportion of women clients, as compared to men, coupled with continuous increasing rateof deserted women clients are important evidences for women’s limited utilization of ruralmicrofinance services in the study district.

Range of Financial Products and Women’s Participation

Diversified and client driven financial products as well as clear and simple operationalrequirements are essential components for attracting hitherto un-served rural people to effectivelyutilize microfinance programs. In this regard assessing the different financial products withrespect to operational requirements is found important at least for two clear reasons. First, itdetermines access and actual utilization of the services. For instance, in a situation where thereis possibility of benefiting from microfinance services (access), most needy rural poor may beinvoluntarily excluded due to unfriendly requirements for obtaining loans. Second, it helps to


point out products that are gender friendly as well as meet the changing demands of the variouscategories of rural women. Consequently, an attempt was first made to assess the differentfinancial products and accompanying operational requirements set vis-à-vis each product.Observations then follow on gender disaggregated participation in the range of financial products.

Table 4Range of Financial Products with Main Operational Requirements

Delivery Modalities and Operational Requirements

Service Products Minimum Max. Loan Service Interest Repayment Collateral TargetsType Name Amount Amount Term Charge Rate Frequency

(Birr) (Birr) (Month) (%) (%)

Credit RegularLoan 300 3000 3-12 3 18 Monthly Group Any oneServices Food Security loan 1000 4000 4-12 3 12 Monthly Group Any one

Asset Loan 5000 15,000 12-36 3 10 Monthly Salary/other GOassets Employee

MSE Loan 20,000 Un 12-36 3 12 Quarterly Group+other Any one

limited collateralSavings Compulsory 10% + 1% Until 3 — — —Services of the loan/ retire

month

Member 5 Un 3 — — —Voluntary limited

Non-member — — — — 3 — — —

voluntary

As seen from available services, rural microfinance is limited to financial intermediationservices only. A minimalist approach is adopted in the current microfinance provision in thestudy district. Although the legal framework in Ethiopia allows microfinance providers to engagein non-financial intermediation activities, it is found unlikely to rural microfinance programs tooffer such kind of “subsidiary” services in the current situation. There exists in fact so called“training” to new entrants as well as to clients who transfer from one loan cycle to the subsequentlyhigher loan cycle. But it is rather an orientation than training to the rules, regulations and businessethics of ACSI.

Besides, the range of financial products available in the study district is very much limited.Loan and savings are the basic services with limited varieties of products. As can be observedfrom Table 4, loan/credit products are currently limited to four types; namely regular loan, foodsecurity/agricultural loan, asset loan and micro & small enterprise (MSE) loan. The regular loanis a general purpose loan given to retail trades, handicrafts, processing, manufacturing, services,etc. It comprises of both term and installment loans so that it has more flexible repaymentschedules.

Designed for a fixed term of repayment ranging from 4-12 months, the food security/agricultural loans are meant to finance activities of cattle rearing, cattle fattening, poultry farming,sheep and goat rearing, purchase of farm animals, vegetables and fruit farming, beekeeping,cereal production, and agricultural inputs such as purchase of seeds and fertilizers, etc accordingto sub-branch reports.


The recently introduced loan- asset loanis provided to employee of established institutions.The asset loan is designed to provide it to salaried employees against the guarantee of theirmonthly salary. Employers are requested to pledge to deduct and transfer to the ACSI the amountrequired for repayment from the salary of the employee each month, and inform the MFI in casethe individual is transferred to other offices, or terminates his/her job contract. Individualemployees are also required to present guarantor, mostly a salaried person, as additional guarantorfor the loan. The loan period for such loans is up to five years, while the maximum loan ceilingis birr 15,000 or five times the monthly salary of a borrower. Except asset loan the rest loanproducts have no specific target groups for which they are designed.

Interest rate charged on loans by loan products does show notable difference. While as highas 18% interest rate is charged at regular loans, it lowered to12% and 10% in the case of MSE,food security and asset loans respectively. More over, all loan products charge flat interestrates on loans regardless of the proportion of loans repaid before the period that the loan hasreached to due. Agricultural packages/food security and MSE loans are not the products ofACSI. ACSI manages these loans on behalf of the agriculture and rural development andSME development bureaus partly to protect the loan culture within their respective operationalareas. The interest rates charged on these loans differ from the regular loans, which still partlycause problems on the regular loans. Except variation in interest rate charged, purpose of theloan and maximum amount of birr that can be borrowed by a client, both regular and foodsecurity loans are almost similar products in terms of loan collection schedule, group collateraland untargeted client. In both loans the principal and the interest rate are paid at the end of theloan term.

The same is true for savings products. Saving products are compulsory and voluntary savingsincluding institutional savings. Savings products largely concentrate on compulsory saving.Voluntary saving is not well developed. There is no non-member voluntary savings facility forinstance. As a rule, compulsory savings are not allowed for withdrawals unless that particularclient has totally abandoned the service. The regulation has also taken it as non-withdrawnsaving. Since MFIs interest payment to saving is far low as compared to loan interest rate, andsince clients can use the money more productively, a considerable number of clients who savedfor five years and over have opted to dropout the MFI for the mere reason for obtaining thataccumulated money.

In general, the financial products are not sufficiently diversified. The loan products andlending methodologies are supply driven. Clients are forced to fit in to the procedures of themicrofinance service in the study district. For women and poor households, credit is not theonly, or in many cases the priority financial service. The need for good savings, insurance andpayments (domestic as well as international) services may rank higher. Focus group participants,for instance, identified the need for insurance service. Since activities financed by loans in ruralareas, most often than not, are related to agriculture and dependant on climatic variables ingeneral and in drought prone areas like Dessie Zuria district in particular, the need for devisingcontext specific and targeted financial products such as insurance services are vital forempowering women through realization of sufficient participation.

Interesting observations can be made from gender disaggregated participation figures to therange of financial products. The SME loan, which has begun in the year 2007, is a recent design


following the food security/agricultural package loan so that there was no client to this loan typein the year 2006.

Table 5Gender Disaggregated Participation in the Range of Financial Products

No of Average RepaymentClients Loan Size Rate*

End of Range of Financial Products M F T M F T M F TDecember

2006 Regular Loan (term & installment) 1933 983 2916 2,496.6 1535.7 2173.7 80.3 60.5 75.6

Food Security/Agri. Loan 77 11 88 1797.7 1890.9 1797.7 55.2 86.5 62.2

Asset Loan 94 35 129 3670.8 3764.4 3696.1 87.8 73.2 83.8

2007 Regular Loan (term & installment) 2339 1206 3545 2863.9 2148.7 2619.1 76.7 57.1 71.2

Food Security /Agricultural Loan 690 36 726 2401.4 2962 2428.7 95.8 99.3 96

Asset Loan 98 36 134 4260.2 3711.8 4115.9 84.3 85.1 84.2

MSE Loan 103 10 113 1344.9 1400 1349.2 34.6 39.7 35.9

2008 Regular Loan (term & installment) 3173 1881 5054 3691.2 2650.8 3304.6 82.7 70.1 79.6

Food Security /Agricultural Loan 857 46 903 2401.4 2962 2428.7 98.5 100 98.6

Asset Loan 141 49 190 4797.3 4162.4 4633.2 80.2 80.4 80.2

MSE Loan 306 87 393 1360.7 2643 1631.4 31.1 54.2 39.9

*Amount of loan disbursed divided by amount of loan collected in that specific year.

As matter of fact well over 80 % of the total clients in each of the observed three years havetaken loans from regular loan product. The participation of both male and female clients to theremaining three loans was found limited. The generally accepted reason given to this by loanproviders is that preference to take loans from among the available products is reserved tocandidate clients/their group.

Viewed from the gender perspective, women’s case is worse than males’. That total numberof women, who have taken loan from agriculture/food security, asset and MSE loans in each ofthe three consecutive years has been found insignificant, or accounts only 3-5% of the totalwomen clients. Stated differently, about 95% to 97 % of women are limited to utilize the regularloan product, which implies that such proportion of women clients have perhaps engaged in totraditionally female-oriented activities as retail trades, small handicrafts, local beveragesprocessing, services, etc as the purpose of the loan suggests.

In fact, one can pose a multitude of questions with regard to such situation. For instance;what are the main reasons for women’s limited utilization of rural microfinance program ingeneral? Do most women really prefer taking loans from the regular loans to the rest loanproducts as the former allows them more flexible repayment schedules? Why rural womenclients are actually very much limited in number to agricultural/food security loans and MSEloans where these loan options have lower interest rate than regular loans?

In an FGD held with women clients, participants have identified that lack of awarenessabout the existing financial products, financial illiteracy and the institution unspoken rule thatdiscourages shifting from a loan product, which women are already enrolled in, to another hasdeterred rural women from participating in agricultural/food security and MSE loans. It is also


confirmed in some policy documents that lack of appropriate products and services for low-income households and micro enterprises is another important barrier to access financial services(WB, 2008). On the way of finding sufficient answers, further assessment of the major operationalmodalities /institutional regulations/ has been made in the subsequent sections.

Assessment of Operational Modalities

Screening and Selection Procedure

Selection of clients takes place after promotional works are made in a selected area of operation.Loan officers in collaboration with sub-district administration conduct promotional works atpublic gatherings, sub-district meetings, churches and other places including funeral ceremonies,according to key informants. Such forums are often used to give explanations on the objectivesof ACSI, and its benefits to the individual borrower, and how it works. Such kind of informationdelivery mechanism has been done once only when operation is launched for the first time innew program areas.

Soon then after, a Loan and Saving Committee is organized at sub-district level. Mostoften, a local agriculture development agent, a village level (gotte) representative, and the sub-branch office loan officer involve in the Loan and Saving Committee for screening potentialclients, and to recommend people on the basis of their character and potential of doing productiveworks for eligibility to loans. Recommendation at the sub-district Loan and Saving Committeedoes not automatically qualify the candidate for loan. He/she must find a group to join and thegroup is organized in to center where the individual in the group is further evaluated at thecenter meetings. If any candidate is rejected by such evaluation, he/she looks for any othermembers to join in order to satisfy the minimum group number. Disbursement of loan takesplace after orientations and signing of applications is done in the presence of witness. It is alsoknown that this process often takes 2 months on average.

Group Methodology

Group-based lending scheme, which was derived from the Grameen bank, is employed throughout microfinance programs in Ethiopia. The regulatory framework governing the Ethiopianmicrofinance industry has also prescribed this method. The rationales behind group-based schemeare that group can serve as collateral in lieu of other physical assets for group members arejointly and severally liable for a defaulting member(s) of their group, and that social pressuresin the group can enforce loan repayment as the entire group will pay penalty, if one of themembers delay in paying his/her loan. Group members who want to borrow the next round loanwill also put pressure on those who do not settle their due.

The group that is formed voluntarily includes neighbors, friends or relatives who knoweach other best as well as peer groups in the village. Number of members in a group isexpected to be 5 to 7. Each member in a group needs to attend center meetings bimonthly and isexpected to contribute compulsory saving 1% of the loan monthly. Although such stringentprocedure is found important and deemed appropriate for mitigating risk in the case of serviceproviders, FGD participants revealed their dissatisfaction regarding the general operationalmodalities.


First, information delivered during promotion work at the above mentioned meetings havebeen found inadequate and unclear, particularly for women. They commented that no oneindividual has obtained clear information about the different financial products available atsuch particular juncture. Such gaps in getting clear information about the microfinance servicehave halted more women than now being clients. This has adverse effects not only on makingdecisions to take loans but also on limiting women’s choice to one among the different financialproducts. Women living in farthest sub-districts were also unable to obtain clear informationfrom sub-branch offices due to lack of time and distance they need to travel to get these offices.For most women the main sources of information about the program are their neighbors orfriends who already have participated in the program.

Second, women need to show prior experience in dealing business to get sub-district levelapproval. In this connection, it is stressed that both the sub-district loan and saving committeeand ACSI have unspoken doubts about landless women, particularly youths so that these groupsare often marginalized and not allowed to participate in the program. Third, there are ampleinstances where an individual recommended by the sub-district loan and saving committee couldnot find a group willing to accept him/her. Since group formation is on voluntary basis, membersaccept to their group only individuals with potential ability to pay. Besides, such problems aremore pronounced on women than men so that they have profound implications to deter womenfrom benefiting microfinance program in general and sufficiently utilizing the existing financialproducts as well.

Effects of Microfinance on Women’s Empowerment

Empowerment assessment is extremely complex activity, in which the main challenges lie onreducing the various dimensions to a set of workable indicators. Having this in mind the studytried to examine respondents’ perception to empowerment indicators with respect to economic,social and political dimensions at individual, household and community contexts.

Effects on Women’s Economic Empowerment

While dealing with effects of microfinance on women’s economic empowerment, this sectionbegins with respondents’ cumulative loan size and loan financed activities, and further considerseffects on individuals in terms of level of income and diversification of income sources, and ontotal income, housing conditions, possession of non-cash assets, etc. and decision-making athousehold level. Table 6 hereunder shows the number of respondents in different loan cycles. Italso depicts the total loan amount clients have taken since they have begun participating in theprogram. The series of loan cycles can inform the number of years a client has stayed with themicrofinance program as a loan cycle often represents one year.

Thus, while majority (57.5% or 46) of the respondents have actively taken loans frommicrofinance program for the past three years, the remaining 20%,10% and 12.5% of them havedone it for the past 4, 5 and 6 years respectively. As cumulative amount of loan taken byrespondents suggests, women each year have borrowed very small amount of loans. Theregulatory frame work of the institution has also restricted the maximum amount of loan that aclient can take during a loan cycle to Birr 3000, and as tradition, this maximum loan amount canbe allowed after a client has proved to repay his/her due timely in certain successive loan cycles.


Table 6Distribution of Respondents by Loan Cycles & Amount of Cumulative Loan

Cumulative Loan Amount in Birr Respondents’ Max. &Mini. Loan Size

Loan No. of 2000- 4001- 6001- 8001- >10001 Mini. Max.Cycles Respondents 4000 6000 8000 10,000 Loan Size Loan Size

3rd cycle 46 23 21 2 1000 2400

4th cycle 16 3 7 6 1000 3000

5th cycle 8 5 3 750 3000

6th cycle 10 2 5 3 1000 3000

7th cycle - - - - - -

Total 80 26 35 15 3

Women informants strongly complain about the loan ceiling of 3000 ET Birr (H” 200 USD)as well as the tradition as it is noted at an FGD held with women clients. To put it in theirwords:

… for the group or each of us, we have been told to take only 2000 ET Birr for three and overconsecutive loan cycles while we have often requested over. It is only in this year [2009] thatACSI has allowed for some of us [women] to borrow 2500 ET Birr. Besides, we often take smallamount of loan, which has to be paid back within a short period of one year and it is alsoaccompanied by monthly recollection schedule, which does not consider the return of the loanfinanced activities.

As such, there are instances, in most cases, where women are forced to cover two or threemonthly repayments from the amount of money they have borrowed; before they invest it toproductive activities.

Discussion with ACSI’s loan officers confirmed this situation. The major problem accordingto them is with ACSI’s decision making system. Decision making in ACSI remains until now ina highly centralized manner so that sub-branch offices do not have the mandate to pass decisionsnot indicated in the operational guidelines they have been provided with, a system that prohibitscontextualizing decisions as well as financial products. Notwithstanding to this, the Zone branchoffice of ACSI has been lifting the loan ceiling to 4000 Birr since 2008, but practically it is hardto find any matured woman client with such amount of loan.

FGD participants have also stated that since the value of money steadily deteriorates with inshort period of time and since there is always a sharp increase in market prices for every items,the amount of money they borrowed from ACSI is not adequate enough to buy sheep, let aloneoxen, for fattening. And thus, households in many cases are forced to take loans from differentsources. For instance, the wife may borrow from ACSI regular loan and her husband can takeloan from Concern-Ethiopia, Cooperatives loan, friends/relatives or any other credit providingagents so as augment the amount money borrowed in order to cope up with the recent inflationinduced rise in the market prices.

In connection to this, respondents were asked to indicate activities/businesses they havefinanced by the current loan in order of importance by assigning first rank to activities/businesses


they invested more portions or the entire loan and so on. From a lengthy list of activities, theresults are summarized and depicted in Table 7. In addition the table can also suggest the currentoccupation and livelihood activities of respondents.

Table 7Ranked Activities/Businesses Financed by Loans of Respondents

Respondents financing their business from loansin order of importance

1st Rank 2nd rank 3rd rank

Type of Activities/Businesses No % No % No %Financed by Loans

Agriculture 19 25 31 54.4 - -

Vegetables Gardening 3

Cattle Fattening 3

Sheep & Goats Fattening 12

Diary Farming 1

Poultry 31

Handicraft 21 36.8 20 60.6

Spinning 14 11

Pottery & Basket making 7 9

Trade 46 60.5 - - -

Cereal trade /chircharo/ 19

Coffee &Chat trade 4

Sheep & Goats trade 9

Micro goods Vending (Sheketa Sheket) 14

Services 11 14.5 5 8.8 13 39.4

Micro restaurant (Shay Bet) 2

Local Food & Beverages 9 5

Other Activities

Computer/type skill training, funeral and

other social obligation 13

Total 76* 100 57 100 33 100

* Of 80, only 76 respondents furnished responses.

Although women apply and take the loan basically for only specific loan purposes; commonlyfor animal rearing and fattening, purchasing inputs to agriculture such as oxen and undertakingmicro-business ventures, they have practically invested the loan to a wide range of activitiesthat they think profitable, as observed at Table 7. Stated differently, while the lion’s share of theloan was utilized to finance first rank activities/business, certain portion of it was taken up toundertake 2nd and 3rd rank activities. The reason to do this is that most first-rank financed activities/businesses are less likely linked to repayment cycles or frequency of loan repayment schedules.Thus, loan diversion seems a must.

Utilization of the fund to 2nd and 3rd rank activities, according to respondents, was justifiedfor such businesses can; in short period of time usually a week or two, yield products that can be


sold in the market, thus serve women clients as means to relieve from the monthly repaymentpressure. In addition, such activities were thought of by women as risk mitigating strategy. Aconsiderable number (13) of respondents have also diverted the loan to learn skills in computerliteracy and typing and, to improve their house wares and fulfill social obligations.

Generally, the foregoing situation has profound implications to women’s economicempowerment. First, in certain cases, because of the short loan duration with repayment pressurestarting in one-weeks time after the loan has been disbursed, women use other livelihood assetslike cash from other sources or borrow money from another source, part of the loan portfolio, oreven sell other assets like their labour, small animals, etc to repay the loans. This means that incertain cases the loan does not even reach the investment stage. In some cases only a portion ofit is invested. The loan would have then been ‘diverted’ from its indicated purpose to other usethat the client felt more beneficial then.

Second, the situation can force women to engage in to livelihood activities that can best fitinto such operational systems, or they tend to choose certain activities that can be financed bymicro loans as well as activities that have fast transaction rates. This is not an assumption, but itcan rather be confirmed by examining activities depicted in Table 7 about 60.5% of therespondents are engaged in petty trade.

Third, as matter of fact individuals, households or groups borrow and top up the loan andthen invest their cumulative assets into a livelihood activity. The livelihood activities are normallywhat women are familiar with (not usually with mastery of) as can be observed from the abovetable. Notwithstanding to its positive side, restriction to such activities/businesses, perhaps dueto tight operational systems or lack of skills, could curtail women’s vision and initiation to thinkabout sustainable livelihood strategy, and hence, undertake hitherto male considered livelihoodassets and activities.

Effects on Level of Income and Diversification of Income Sources

Respondents were asked whether they have perceived any of change in the level of income theyearn, diversification of income sources, capacity to save and personal asset possession afterthey have been participating in microfinance program. Notwithstanding to operational pitfalls,the program has had a positive impact on diversifying women’s income sources, level of income,saving capacity and personal cash assets as in all the four cases nearly three-fourth and over(58, 61, 71 and 68 respectively) of the respondents have witnessed both significant and slightimprovements after obtaining a series of loans.

Table 8Effects of microfinance on Respondents Income Level and Source

Number of Respondents in the Extent of Change

Effect of Micro-finance Increased Increased Stayed Decreased Decreased Do not Totalon respondents’ Significantly slightly same Significantly know

Income Source(s) diversification 27 31 19 3 - - 80Level of Income 22 39 16 3 - - 80Saving Capacity 38 33 5 4 - - 80Personal Cash Assets 37 31 9 3 - - 80


The extent of change induced through microfinancing, as perceived by majority of women,on their income level and income sources diversification was slight however. A safer conclusiondrawn here is that microfinance program has made a significant contribution to improvingwomen’s personal cash assets, saving capacity and habits. It is understood that such improvementin women’s income levels, saving capacity and personal cash assets would have led them togain greater levels of financial independence (see Table 8).

An assessment was also made whether realities observed here have ensuing effects athousehold level in terms of any change in total income, housing conditions, possession of non-cash assets (animals, household items, etc), children’s schooling and living conditions. As theseitems are often measured using several discrete indicators for housing and housing conditions,possession of non-cash productive assets, only summary of the qualitative responses are presentedin Table 9.

Generally the results at household (HH) level indicate noticeable improvement in greatmajority respondents’ housing condition and women’s participation in decision making.

Table 9Effects of Microfinance on Selective Indicators of HHs’ Living Condition

Number of respondents in the Extent of Change

Any Perceived Change by Improved Improved Stayed Deteriorated Deteriorated Do not TotalRespondents at respective HH level Greatly Slightly Same Greatly know

Total Income 6 24 28 9 3 - 70*

Housing Condition 35 30 15 - - - 80

Participation in Decision making 42 19 6 - - 3 70*

Non-cash Assets 7 29 39 5 - - 80

Access to Social Facilities - 12 56 - - - 68*

Living Condition 5 28 34 13 80

*Only the indicated furnished response.

Owning house as well as house improvement and repair is an indicator of the asset possessionlevel of respondents. Significant positive change has been observed on housing and housingconditions. Twelve women who did not have house before joining microfinance program becamehome owners; while 7 of them have constructed huts with thatched roofs and mud wall(‘sar bet’), the remaining 5 built a house with galvanized iron sheets roof and mud wall(‘korkoro bet’). Respondents explained that funds generated from the loan-financed businessactivities did make a lot of contribution in constructing their houses. Among the rest 68 womenwho were home-owners before the program, 35 of them changed their former ‘sar bet’ to ‘korkorobet’ and some others made several home improvements as building additional rooms or smallhuts that serve for animals and other purposes. ‘Korkoro bet’ is an indicator of better economicstatus of a household, particularly in the study area.

Well over one-third of the respondents have also perceived slight improvement in respectivehousehold’s total income, possession of non-cash assets (especially number of cows, sheep &goats, donkeys, chickens and oxen owned) and living condition after they have been participatingin microfinance program. The rest about one-third of the respondents reported that their


households’ income, non-cash assets and living condition remain the same as they compareeach with their situation before joining microfinance program. However, a considerable numberof women clients (5, 9 and 13) responded that their household income, non-cash assets andliving conditions now have deteriorated as compared to their situations before. Respondentswere then asked to indicate reasons for this. The main reasons as they indicated were climaticvariability, which induced draught, crop failure, animal diseases and bad harvest, and death offamily member. Indebtedness due to credit and sell of oxen and assets to manage repaying loanswere mentioned by 5 clients only.

Effects on Decision-making

Households are looked at as the smallest and finest unit exhibiting both “cooperative andconflictive” behaviors, usually at the same time (Sen, 1990) and are structures at which thebargaining power of women has been exercised. Although decision making at household levelcan be looked in relation to several intertwined issues like social division of labor and the timedevoted to various tasks, sexual relations, property rights, women’s participation in civil andpolitical affairs, etc, decision making here is assessed only in terms of its two related dimensions-credit and decision making and intra-household decision making- on some selective matters.

For credit and decision-making, respondents were asked to indicate the principal decision-makers on utilizing loans, (managing) loan financed activities, and income generated from loanfinanced activities. Male-headed and female-headed households’ responses were also treatedseparately. With regard to intra-household decisions, they were supposed to indicate the decision-maker on type of crops to cultivate, harvest to sell, purchase items at the market, childrenschooling, etc. The results were then summarized in a manner that shows comparison betweenmale-headed and female-headed households’ responses before and after joining microfinanceprogram.

The results generally show that decisions on loan investment, utilization of incomes generatedfrom loan financed activities are made “jointly” as the majority cases in male-headed householdsand female-headed households have confirmed. That means a woman with her husband in theformer and with her children in the latter case. The context of rural life as well as rural businesses/activities may have forced women to do this.

Since rural women’s businesses/activities are, most often than not, labor intensive in nature,members of the household, in one way or in another may involve in managing loan financedbusinesses/activities. It is therefore hard to conclude that women have no or little control overtheir income. Perhaps due to acknowledging their contribution towards increasing the overallhousehold income, feeling of financial independence, or fear of risks, women’s participation inintra-household decision-making has become significant compared to “before’. More over, aninteresting point drawn from these observations is the development of significant shift frommale-dominating to a participatory decision making behavior at household level after womenhave joined microfinance program.

Effects on Women’s Psychological and Personal Capabilities

One of the interfacing points of micro financing and empowerment lies at the individual womanlevel. The argument here is that increasing material capital to women has impacts on their self

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image and certain personal capabilities. At this juncture, perception of respondents to possessionof certain entrepreneurial skills and, to certain psychological traits as self confidence, self worthand esteem have been assessed. For simple comparison each respondent was asked to evaluateher status before and after participating in microfinance program.

Table 11Respondents’ Feeling to their Entrepreneurial Skills/Capacity

Respondents’ Response

Before participation After participationto MF program to MF program

Did/Do feel Yes No Yes %No

That you can purchase items at the market? 27 53 69 11

Capability of handling money? 11 69 73 7

Capability of making business decisions? 12 67 69 11

That you are able to realize your future goal? 15 65 73 7

Financial Independence? 21 59 75 5

The general observation made from the above table is that great majority of women havedeveloped certain skills essential for making and managing businesses since they have beenparticipating in microfinance program. Women’s skills in purchasing items at the market, handlingmoney and making business decisions as well as their confidence to realizing future goals havebeen enhanced after they have been participating in microfinance programs. Providing themwith an independent source of income outside the home, the loan program tends to reduce thefinancial dependency of women on the household. Perhaps the process that involves the taking,investing and repaying of loans coupled with greater level of financial independence and improvedasset possession would have caused a personal transformation from a feeling of “I cannot” toone of “I can” do something.

In connection to this, the literature has also generally argued that when one secures his/herbasic needs, one can also be an active citizen; participating in the social and political spheres ofthe society (Otero, 2000), which also allows women and the marginalized group to exerciseleadership so that the participants build self-confidence (Dun ford, 2000).

As well over two-third of the respondents confirmed, women’s perception to their level ofconfidence has improved through time from what was before ‘low and very low’ state to that of‘high and very high’ state after joining the program. Women’s attitude towards their children’s,particularly to their daughters’, schooling is greatly changed. Sex-wise registration of the numberof children beginning schools in respondents’ household indicates that about 41 (16 male and 25female) children have been starting schools after their mothers have participated in the loan program.Most of these children were over age to the grade levels while they begun schooling. And yet 15children also dropped out of schools, which can be seen as an adverse effect of the program.

Effects on Women’s Social Status

In examining changes in social status of women, it is often recommended to focus on the householdand community levels. As such, assessments need to consider variables like the condition of


intra-household decision making, extent of respect from family and community members, freedomfor movements, and women’s social network and social wellbeing status. Besides, as suchvariables are often fluid, selective case story analysis has been made in order to solicit furtherinformation for in depth understanding.

According to Table 12 above , women perceive more respect from their communitiesthan they did before joining microfinance program as half (41) of the respondents felt thattheir respectability by community members is transformed to “high” or “very high” levels afterjoining the program. FGD participants also noted family and community members have nowexpressed due appreciation, trust and respect to women clients due to efforts they have exertedin improving their subsistence and livelihood status so that women clients have experiencedimproved status and gender relations in the household. Moreover, the results, depicted in theTable 30, showing the condition of intra-household decision-making, implies that women’sfinancial contributions to the household helped them earn greater respect from their husbandsand children, negotiate husbands’ and son’s help with co-managing loan financed activities andhousework.

Due to improvements in their level of self-confidence, business skills as well as communityrespect, women’s social networking is also expanding, according to informants. Women tend totake greater roles in giving advice within the community and participating in community-basedinstitutions and meetings such as kire /Iddir/-- local funeral institution- in part because they arenow able to contribute finance to social obligations and activities such as funerals.

Women have also secured more freedom for movements than they did before. After theyhave been in microfinance program, women have become freer than before and able to move bytheir own to markets places, health posts/centers, schools and other formal local institutionssuch as sub-district social courts, police stations, sub-district administrations, etc. in order toaccomplish their issues.

It is well observed that women clients’ social position has changed after joiningmicrofinance program as great majority (49) of them reported that they have noted improvementin their social position. Of course, as high as (31) of women who noted improvement intheir social position confirmed that the program did “much” and “very much” contribution forthis.

Table 12Respondents’ Perception to Their Own Level of Confidence and Respectability

Level of Confidence to Oneself Extent of Community Respect

Before After Before After

Very High 4 27 - 14

High 4 24 10 27

Medium 25 10 6 21

Low 21 12 35 7

Very Low 17 - 11 3

Do not Know 9 7 14 4

Total 80 80 76* 76*

* Only indicated responses are furnished.


Table 13Change in Respondents’ Social Position after Joining the MF Program

How do you rate yourchange Significantly Deteriorated Remained Improved Significantly Do notin your social Position after Deteriorated Same Improved knowjoining MF Program?

– 7 12 38 11 12

Very Much Little Very Little Do not knowMuch

If your social position has been 8 23 16 2 –improved or significantlyimproved, to what extent hasthe MF program contributed?

Although few in number, women have also experienced adverse conditions in their socialand economic status after they have been in the loan program. Unlike to those, who have quiteregistered significant improvement in their social and economic status due to the program, otherwomen experienced deteriorating social and economic positions. The reason why such twoextreme cases have happened to women clients is an important point that should be furtherinvestigated through systematic work in the future as it is beyond the scope of the study toconsider these cases exhaustively. For the purpose of substantiating the realities mentionedabove, only three case story analyses are presented hereunder.

Case Story 1: Ansha, Successful Female Client, (from Female Head of Household)

W/o Ansha, 48 years old, a divorcee, is the resident of sub-district 06 called Indodber. She has threechildren - one daughter and two sons. Ansha did not go to school. She got married in her early ages anddivorced in 1996 E. C. At time of divorce, a year after she has been ACSI’s client (i.e. 1995 E. C), she didnot take any asset with her except her three children. Moreover, Ansha’s family was one of the returneesfrom Wellega, where they were taken by the then resettlement program. Ansha’s family did not get landduring land distribution in Sub-district, as it was not there at the time. In fact Ansha had got a piece of landfrom her relatives. But, the land was not sufficient to sustain her family. Thus her family’s life conditionwas so precarious. Since 1995 E.C, she began preparing and selling tella and arekke (local beverages) bytaking 1000 Birr loan, payable within a year, from ACSI. And at same time she started to save 10 birr permonth. Besides she was performing spinning and poultry. Later on, in the 3rd loan cycle, she was allowedtaking more loan amounting 2,500 Birr, and she started cereal vending along with the former activities.

W/oAnsha reported that cereal vending did help her earn more profit than other activities. Shepurchases grains, particularly sorghum, from dega sub-districts some 35 KMs far away, and sells it inDessie town. She also partly uses it for preparing tella. By doing so she first bought a donkey fortransporting grains, and then she bought a calf and four sheep. Finally has managed to construct her ownsar bet (house with thatched roof). Currently she is at the 6th loan cycle without any default. For assistingher and keeping livestock, the elder son quitted from schooling, however.

W/o Ansha’s family is now leading better life than it did before. She and her children dressed well.She had entered into kirre/iddir by her own, and often attended and participated in community meetingsand affairs. Ansha has even managed to rent in land for cultivation. On the other hand Ansha wascomplaining about the small loan size and short repayment period as well as inability to withdraw hercompulsory savings as the former two couldn’t go with her future plan to undertake fattening andeucalyptus tree farming activities.


Case Story 2: Fate Yimer, Successful Women Client (from Male Headed Household)

W/o Fate Yimer, aged 32, married, is the resident of Sub-district 019, named Asgedo. Fate has twochildren and she is illiterate in terms of formal schooling. Her husband is carpenter and has some level ofquiranic education. Her household was better in terms of owning assets even before joining ACSI’smicrofinance program. Fate’s family has a house, two oxen, a cow, a calf and sheep. The house was sarbet, however.

In addition to her in door activities, Fate was spending much of her time on keeping her animals.One night W/o Fate arranged a discussion with her husband, and expressed to him about her wish to takeloan and run sheketasheket (vending commodity items) and renting in labour for managing her animals.They reached consensus her idea at that moment. She joined ACSI’s regular loan since 1997 E.C andtook 1000, 1500, 2000 and 2500 Birr for four consecutive years. She began selling sheketasheket in anopen space in front of her home initially and then built a separate room and opened quiask. Beyondcovering the cost the rented labor from the activities financed by the loan, coupled with it her husband’sincome, the family managed to improve their home from sar bet to korkoro bet and sent children toschool. In addition, she bought two donkeys for transporting her packs and carpentry equipments for herhusband. Fate was complaining about group loan in favor of individual loan scheme, however.

Case Story 3: Alemitu Ayele, Unsuccessful Woman Client from Female headed Household

W/o Alemitu, 38 years old, widowed, is the resident of Sub-district 011 named Tita. She has fourchildren. Alemitu had completed grade 10 in 1985 E.C, but not went further then. She got married andbecame housewife in Lasta, where she and her husband used to live. Her husband used to teach atelementary schools until 1988 E.C. In order to support her family as well as reduce her dependency toher husband’s salary, she joined ACS’s program in 1998 E.C. and took 1000 and 1500 Birr for twoconsecutive loan cycles for preparing and selling foods and beverages for daily laborers, and militariesresiding in the surrounding camp. By then she was doing well the business and managed to repay theloan successfully on time. Latter on, however, since the militaries had left the camp and the number ofher business customers has decreased, she has readjusted her plan to undertake sheep and goat tradingby taking 2500 Birr from ACSI regular loan set for the 3rd local cycle. In no time she took the loan, herhusband suddenly passed away, leaving her with four children. Consequently she spent about one-thirdof the loan to funeral ceremonies, and another one-third to household consumption. And with the remainingshe later bought four sheep for trading. Unfortunately, the sheep died in a couple of weeks and she alsofailed in serious illness. The husband’s pension is not enough to sustain the family. Eventually, she wasforced to sell household assets (radio cassette, bed, chairs, tables, books, etc) mainly to settle the loan aswell as for sustaining her family. She did not stop taking loans, however. At the time she has taken 700birr only, being detached from her former group and rejoined another after having experienced severalups and downs. But, she did not still invest this last loan. The only asset she remained with was herhouse. Two of her children dropped out of school due to such unexpected trauma and they lookedmalnourished. Her home was also bare.

Effects on Women’s Political Participation

Assessment of the effects of microfinance on women’s political participation is a formidabletask for the latter is greatly determined by uncontrollable external factors. The focus here is thusgeared towards examining, if not suffice, women’s level of participation in local/grassrootsinstitutions.


Table 14

Respondents’ Level of Participation in Local/Grassroots Institutions.

Village Gotte General Women’s Sub-districtCommunity / Kire/ Assembly Association General

Meetings Assembly

Extent of Participation Before After Before After Before After Before After

Frequency of Attendance?Never 14 16 19 9 22 9Rarely 24 14 25 9 33 48 29 38Frequently 33 47 31 56 28 19 25 29Always 9 19 4 14 - 4 - -Unable to determine - - 4 1 - - 4 4Total 80 80 80 80 80 80 80 80Level of Attendance?Do not speak 32 13 32 7 30 30 27 24Speak sometimes 19 41 20 47 21 34 20 37Speak often 15 26 12 26 9 16 7 15Hold elected position - - - - - - - -Total 66 80 64 80 61 80 54 76If speak often, extent of acceptance to your ideas?Never 4 2 5 7 6 6 3 2Sometimes 6 9 4 14 6 5 4 7Often 3 13 2 4 3 4 1 4Do not know 2 2 1 1 - - - 2Total 15 26 12 26 9 16 7 15

Some studies pointed out that a number of microfinance programs have increased women’spolitical participation, including involvement in civic action and women clients being elected tooffice. For instance, Myoux, (2002) reported that lending groups provide a means for women toknow each other; a forum for learning leadership and public speaking skills; and a basis fordevelopment of trust, friendship and financial assistance so that women clients’ participation inpolitical institutions has increased through time. It is, however, difficult to establish this fact inthis study. Certainly clear from the above table is the fact that there is more consistent improvementin women’s frequency of attendance, making speech and acceptance of their ideas at villagecommunity /iddir/ meetings than the rest. This is a reflection partly from improvement in theirsocial status as well as partly from covering expenses demanded for social obligations.

Respondents’ were then asked to indicate the reasons for not frequently participating inmeetings at these institutions. “Lack of time” notably deterred women from being visible inmeetings as did “lack of experience” followed by the “organization is not seen relevant” and“have not been asked or invited” for not frequently speaking while attending meetings. In thisconnection a key informant noted, in her words: “we [women] were in the home for long, eventhough we are now out of door, it is difficult for us to develop the skill in public discourse. Mostoften than not, only those affiliated to politics are elected and invited to speak.” This might beone of the reasons for none of the respondents reported elected position in local/grassrootsinstitutions.


CONCLUSIONS

The findings of the study, in general, suggest the existence of sufficient evidences that substantiatethe possibilities of microfinance program for empowering rural women. Empowerment is aboutchange, choice and power. It is a process of change by which individuals and groups with littleor no power gain the power and ability to make choices that affect their lives. The changes arealso pervasive and can be reflected in economic, social and political spheres at individual,household and community contexts. In this connection, the study has revealed in majority casesthat matured women clients have gone through considerable transformation, for instance, interms of skills essential for making and managing businesses, level of confidence, self esteemand worth, personal cash assets, level of financial independence, income, diversifying incomesources, at individual level as well as in terms of participation in intra-household decision making,access to and control over livelihood assets, particularly housing conditions, and social positionat household and community levels. That means micro financing has created pervasive initiationon rural women clients in diverse dimensions. Contrary to this, about one-third of the respondentsdid not perceive meaning full changes in their life however, or perceived little/no changes.Thus, the effects of microfinance are not same and alike to all matured women clients. Theability of a rural woman to transform her life through utilizing microfinance service depends onmany factors however: some of them linked to her triple role burden, individual situation, abilities,prior asset portfolio, business type, others related to institutional rules and requirements associatedwith microfinance products and services diversification, and still some others are linked to herphysical environment, particularly good climatic conditions, and trauma. In general, microfinanceprograms can only have tremendous impact on women’s empowerment process if their productsand services take these factors into account.

Given with the existing unmet demand for microfinance, only less than 10% are currentlyreached, however the many reasons, declining trend in the proportion of women clients ascompared to men coupled with continuous increasing rate of deserted women clients is animportant evidence for women’s limited utilization of rural microfinance services in the studydistrict. Moreover, about 95% to 97% of women’s participation is only in the regular loanproduct, which implies that such proportion of women clients have tended to engage in totraditionally female-oriented activities such as retail trades, small handicrafts, local beveragesprocessing, services, etc as the purpose of the loan stipulated. Thus the need for devising need-responsive and context specific financial products on one hand and putting in place genderfriendly soft institutional factors such as operational rules on the other hand is a sine-qua-nonefor rural women. Credit may not the only, or in many cases the priority, financial service womenneed: good savings, insurance, payments services may rank higher. Therefore, this suggests theneed to have more inclusive financial services that would allow the opportunity for more ruralwomen to participate, which in turn could lead to have more effects in the process of women’sempowerment.

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