What are the impacts of rural credit programs on female empowerment?

Responsible researcher: Viviane Pires Ribeiro

Paper Title: Rural credit programs and women's empowerment in Bangladesh

Authors: Syed M. Hashemi, Sidney Ruth Schuler and Ann P. Riley

Intervention Location: Bangladesh

Sample Size: 120 households

Big theme: Gender

Variable of Main Interest: Female empowerment

Type of Intervention: Analysis of the effects of rural development programs

Methodology: Logistic regression models

Microenterprise credit aimed at women has become increasingly common as a poverty alleviation intervention in developing countries. Hashemi, Schuler, and Riley (1996) argue that credit programs empower women by strengthening their economic roles, increasing their ability to contribute to supporting their families, and that they also empower women through other mechanisms. The authors use a combination of ethnographic and sample survey data to describe and measure the effects of Grameen Bank and Bangladesh Rural Advancement Committee rural development programs in Bangladesh.

Assessment Context

Among low-income families in rural Bangladesh, systems of patrilineal descent, patrilocal residence, and purdah (the practice of isolating and protecting women to maintain social standards of modesty and morality) interact to isolate and subordinate women. They are socially and economically dependent on men. Cultural norms are based on asymmetrical assumptions about what is appropriate for each sex, what men versus women need, and what they are entitled to. Education is often considered irrelevant for girls, and from an early age they learn to accept deprivation in relation to male family members. Because of purdah, many women are confined to the property and the immediate surrounding area, and their contacts with the world outside the family are extremely limited, reinforcing their economic dependence.

Grameen Bank and the Bangladesh Rural Advancement Committee (BRAC), through its Rural Development Program, with about two million participants, with more than half a million female members, respectively, are the two largest and best-known non-governmental organizations that provide credit to the low-income population in Bangladesh. To participate and be entitled to credit, women are asked to organize themselves into small groups. In addition, there is a mandatory savings requirement, meaning each woman has her own savings account and passbook. Loans are repaid and savings are deposited at weekly meetings. Loans are made to individuals at commercial interest rates. There are no guarantees, but the group as a whole is responsible for ensuring that each member makes weekly payments.

Participants themselves decide how to use the loans. In most cases, loans are used for self-employment activities such as rice farming, poultry and livestock farming, traditional crafts, and petty trading. The average loan is around $75-100. Before receiving credit, new members must participate in training so that they understand the program's objectives and modes of operation.

Intervention Details

The analysis carried out by Hashemi, Schuler, and Riley (1996) uses a combination of ethnographic and sample survey data to describe and measure the effects of two rural credit programs (the Grameen Bank and BRAC programs) in Bangladesh across eight dimensions ( mobility, economic security, ability to make small purchases, ability to make larger purchases, involvement in major household decisions, relative freedom from domination within the family, political and legal awareness, and involvement in political campaigns and protests) and a composite indicator of empowerment. The authors address issues of women's control over credit and the relative magnitude of their economic contributions to supporting their families and discuss differences in the approaches of the two programs.

Ethnographic research was carried out in six villages during 1991-94 to document processes of change in women's roles and status. Data was collected through participant observations and informal interviews. The researchers observed and documented the two credit programs operating at the village level and interviewed program participants. Study sites were purposefully selected to include an area where BRAC and Grameen Bank had been in operation for more than six years and an area where programs were just beginning; Areas where both programs were operating in close proximity were avoided.

Therefore, a structured form (“household survival matrix”) was developed to collect detailed information at various points in time about the economic activities and income of members of the sample of 120 households. The form also included information about children's education and women's participation in credit programs, and families' responses to crises and economic stress events, such as weddings and other rituals. Information was collected monthly for a period of one year.

In addition, a survey of about 1,300 married women under the age of 50 was conducted in late 1992. Four separate samples were drawn, using a multi-stage cluster random design to include villages from all four geographical divisions of Bangladesh ( at the time of research, the four administrative divisions were: Chittagong, Dhaka, Khulna and Rajshahi). The four groups consisted of Grameen Bank members, BRAC members, non-members who resided in Grameen Bank villages (who would be eligible to join BRAC or Grameen Bank), and a comparison group who lived in villages without Grameen Bank or program BRAC, but who qualified to enter the credit programs. In the credit program villages, almost all women had been members of the program for at least 18 months before the survey. The survey included questions related to women's roles and status in the family and community, fertility, and contraceptive use.

Methodology Details

The analysis begins with sample survey data, using logistic regression models to explore whether Grameen Bank and BRAC affect different dimensions of empowerment. The first set of models examines the effects of exposure to BRAC and Grameen Bank credit programs and sociodemographic variables on the eight aspects of empowerment, the aggregate indicator of empowerment, and women's contribution to family support. In the next set of models, the contribution to family support is used as the independent variable. These models also examine interactions between participation in the credit program and women's contribution to family support. Predicted probabilities from the model employing the composite empowerment indicator are calculated to illustrate the levels of empowerment experienced by women who participate in credit programs and those who contribute to family support compared to women who are neither in credit programs nor contribute to family support.

The article then turns to data from the ethnographic study of six villages. Economic case studies, bivariate analyzes and qualitative results are used to further explore the question of how credit strengthens female empowerment, starting with the effects on women's economic roles and moving on to discuss other aspects of women's lives, such as physical mobility, interactions in the public sphere and domination and violence within the home.

Results

The objectives and strategies of Grameen Bank and BRAC are very similar, and the results suggest that the two programs have similar effects on women's roles and status. Grameen Bank, however, appears to be more successful in allowing women to control the loans they receive; it has a stronger influence on women's ability to contribute to supporting their families and on several of the economic dimensions of empowerment. The differences between the programs are subtle but seemingly important. First, in the communities where Grameen operates, it is widely understood that Grameen Bank's core objective is to provide credit to low-income women. BRAC appears to be an organization more broadly concerned with community development: it promotes education for girls and runs non-formal schools for children who have dropped out of the formal system or have not enrolled for economic reasons; and has a separate health program and, in collaboration with the government, runs grain distribution programs for needy women.

Of the eight dimensions of empowerment, participating in BRAC had a stronger effect than participating in Grameen Bank on two dimensions: mobility and participation in political campaigns and public protests. This may be because BRAC provides more opportunities for its members to participate in training programs, which often give them the opportunity to travel outside their villages, and because of its greater emphasis on raising awareness about social and political issues. BRAC's more holistic approach has been even more pronounced in the past. When it began in the early 1970s, its emphasis was primarily on awareness and organization, and credit was a relatively minor component in its program.

Secondly, Grameen Bank grants more loans and with a shorter period of time. Members get their first loan in two weeks, whereas BRAC members used to complete a three-month awareness and training course. As long as Grameen Bank members repay their loans on time, they obtain subsequent loans almost automatically. With BRAC the process takes a little longer. In addition, Grameen Bank provides separate loans for the construction of houses, with the requirement that the land for the property is registered in the name of the borrower. In some cases, this encourages men to transfer title to their land to their wives.

The third difference is Grameen Bank's greater emphasis on discipline, rules and rituals. Members are expected to salute, sit on the floor in rows and sing at weekly meetings. BRAC meetings are more informal, and women tend to come and go as they please.

Credit is at the heart of Grameen Bank's program. All aspects of the program are intended to facilitate the basic task of providing loans to low-income women and ensuring high repayment rates. This does not mean that Grameen is not interested in empowering women; it's just that its founder and directors see credit as the best way to achieve this. Grameen Bank's guiding vision has to do with poverty alleviation and social equity, and even women's empowerment is seen essentially as a means to these ends. While BRAC's broad goals of social transformation and economic development are similar to Grameen's, its strategy for achieving these goals is multifaceted. BRAC offers loans to women primarily through its Rural Development Program, which is very similar to the Grameen Bank program in the way it operates, but is generally less regimented and ritualized, less rigorous, and not focused exclusively on credit.

Public Policy Lessons

The success of Grameen Bank, BRAC and other similar programs in Bangladesh challenges the conventional idea that it is primarily sociocultural norms that discourage women from seeking paid employment. The success of these programs in reaching large numbers of women is clearly due to the promotion of economic opportunities. Although working women are sometimes criticized, particularly if they work outside the home, there is no shortage of demand for jobs among low-income rural women. In the six villages in the ethnographic study, there were abundant examples of women asking researchers, as well as women who already had jobs, to help them find paid employment. Rather than a lack of demand, it appears that a severe shortage of paid employment opportunities is limiting women's economic participation and impeding women's empowerment in Bangladesh.

Analysis suggests that involvement in credit programs empowers women. Participation in Grameen Bank and BRAC increases women's mobility, their ability to make purchases and major household decisions, their ownership of productive assets, their legal and political awareness, and their participation in public campaigns and protests. Despite focusing narrowly on credit, Grameen Bank (and, to a lesser extent, BRAC) functions as a catalyst in transforming women's lives. Minimalist credit programs provide access to an important economic resource and thus enable women to negotiate gender barriers, increase their control over their own lives, and improve their relative positions in their families. Most women involved in these programs maintain a significant measure of control over their assets and income. Although the magnitudes of their income may be relatively small, the effect on women's empowerment is substantial.

References

HASHEMI, Syed M.; SCHULER, Sidney Ruth; RILEY, Ann P. Rural credit programs and women's empowerment in Bangladesh. World development , vol. 24, no. 4, p. 635-653, 1996.