Microfinance, BRAC, and Issues of Women’s Empowerment
By Anna Dipple
Microfinance is a relatively new phenomenon, and one that has taken the development world by storm. It has, in various instances, been touted as the cure-all for development issues in third world countries. The premise is that by giving impoverished populations access to microfinance services, such as small-scale loans, that they would not normally have access to, it will enable these populations to lift themselves out of poverty through entrepreneurship or good investment. Microfinance is especially marketed as a way to empower women and give them the resources to equalize the gender gap. Women are seen as prime loan receivers because of the high payback rates that have been recorded from women, as well as the assumed empowerment it will bring them. There are many organizations practicing many different methods of microfinance, including the common theme used by organizations such as BRAC (Bangladesh Rehabilitation Assessment Committee), where a small amount of money is lent to a group of women in the community, with relatively low interest rates. Although these organizations can often have some positive impacts on society, they are not cure-alls, and are often band-aid solutions as opposed to long-term poverty-alleviation practices. Issues such as the lack of women’s empowerment, the high risk of high debt rates in clients, as well as many others make microfinance a less-than-optimum solution for addressing development issues. Although microfinance can have a positive impact on the lives of women and the ultra-poor, it cannot be treated as a one-ticket solution for poverty alleviation and women’s empowerment in the developing world.
The idea of micro-credit is not a new one, but it is one that has recently been reestablished, and brought back into the limelight, in the 1970s by (most recognizably) the formation of the Grameen Bank. The Grameen bank was founded by Muhammad Yunus, the head of the Rural Economics program at the University of Chittagong, India, and came out of an action-research project based on developing a money lending system for the impoverished (Hulme, pg. 290). The Grameen Bank, as it is known today, originally started in Bangladesh and developed out of Yunus’s action project and into a full-blown microcredit organization that has over 2,565 branches throughout the world. Its focus is on giving out small-scale loans ($20-$40) to impoverished clients, especially women (women make up 97% of borrowers) who have unequal access to financial assistance, such as loans (grameenbank.com, 5 March 2011).
