WOMEN
Globalization and Microfinancing
By Sharon Howell
The current wave of globalization has greatly improved the lives of women worldwide, particularly in the developing world. But women remain disadvantaged in many areas of life, including education, employment, health, and rights. According to the U.S. Agency for International Development and the World Bank, 57 percent of the 72 million primary school aged children who do not attend school are females. Additionally, girls are four percent less likely than boys to complete primary school.(1) Human trafficking has become such a part of these women’s lives due to globalization. Microfinancing would enhance their opportunities greatly and can reduce a lot of this from happening now.
To most, microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their very small businesses. Like many of us, poor people need and use financial services all the time.(2) Microfinance generally targets poor women because they have proven to be reliable credit risks and when they have the financial means, they invest that money back into their families, resulting in better health and education, and stronger local economies. By providing access to financial services, loans and responsibility for repayment, maintaining savings accounts, providing insurance - microfinance programs send a strong message to households and communities. Studies have shown that women become more assertive and confident, and are more visible in their communities and play stronger roles in decision making. (2)
South American women also find they must participate in the labor force more as they age, because they want to contribute income as their household grows due to marriage. But women in the Middle East and North Africa cease working in large quantity when they marry and have children.
The differences in many cases are cultural barriers, the relationship between women and men within households and their communities too. Globalization is changing these cultural norms. The new global developing economies demand women in the different sectors of work. In fact, globalization has the potential to improve women’s economic achievement. Although the conditions may not always be tolerable, but they are willing to work very hard towards their goal to relinquish poverty for themselves and their families.
Globalization and Microfinancing
By Sharon Howell
The current wave of globalization has greatly improved the lives of women worldwide, particularly in the developing world. But women remain disadvantaged in many areas of life, including education, employment, health, and rights. According to the U.S. Agency for International Development and the World Bank, 57 percent of the 72 million primary school aged children who do not attend school are females. Additionally, girls are four percent less likely than boys to complete primary school.(1) Human trafficking has become such a part of these women’s lives due to globalization. Microfinancing would enhance their opportunities greatly and can reduce a lot of this from happening now.
To most, microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their very small businesses. Like many of us, poor people need and use financial services all the time.(2) Microfinance generally targets poor women because they have proven to be reliable credit risks and when they have the financial means, they invest that money back into their families, resulting in better health and education, and stronger local economies. By providing access to financial services, loans and responsibility for repayment, maintaining savings accounts, providing insurance - microfinance programs send a strong message to households and communities. Studies have shown that women become more assertive and confident, and are more visible in their communities and play stronger roles in decision making. (2)
South American women also find they must participate in the labor force more as they age, because they want to contribute income as their household grows due to marriage. But women in the Middle East and North Africa cease working in large quantity when they marry and have children.
The differences in many cases are cultural barriers, the relationship between women and men within households and their communities too. Globalization is changing these cultural norms. The new global developing economies demand women in the different sectors of work. In fact, globalization has the potential to improve women’s economic achievement. Although the conditions may not always be tolerable, but they are willing to work very hard towards their goal to relinquish poverty for themselves and their families.
This approach has been used worldwide because it produces self-employed, empowered entrepreneurs, which alleviates the alternative to non-sustainable charity-giving. Microfinance projects for women have targeted arts and crafts, mining operations, agriculture, and environmentalism, among others. Numerous banks and projects throughout the world are dedicated to microfinance projects specifically targeted at women.(3)
The main idea behind microfinance is that poor people, who can provide no collateral, should have access to some sort of financial services. Microfinance began with microcredit: the provision of small loans to very poor families to help them engage in productive and self-sustaining activities. Since the successful initiation of formalized microcredit in the 1980’s a number of other complementary services have popped up around the globe, including microsavings and microinsurance. (4)
Microfinance clients are self-employed entrepreneurs who lack the resources to invest in their business and their future, and needs financial help to uplift themselves from a life of poverty. A typical microfinance success story taken from the United Nations Capital Development Fund: (3)
“A UNCDF microfinance project in Bangladesh provided beneficiaries loans of about $30 US. Most of the loans were spent on productive purposes such as rice production, cattle fattening, and small-scale entrepreneurial initiatives. The activities that were financed were essentially carried out by individuals, in their homes or on plots of land. To receive credit, however, a small-scale or landless farmer had to be incorporated in to a group of his/her peers who would agree to jointly accept responsibility for repayment. The project has proven to be highly successful. " One small loan enabled me to improve the livelihood of my entire family" said Anwar Begum, who borrowed enough money to purchase a small cow. In three years she quadrupled her investment by selling both milk and calves from the original cow, and has built a new house for herself.” (3)
Microfinance is not a solution to all the world’s problems, but seems to be effective in encouraging entrepreneurship, increasing the income of the poorest and helping them to build viable businesses.(4)
When celebrities work on behalf of a cause, there is always more attention given. Actress Natalie Portman is advocating microfinancing with FINCA International and the Village Banking Campaign. The Village Banking Campaign was launched by FINCA in 2007 because of a great need and desire to find a solution to poverty as outlined in the U.N. Millennium Development Goals. The operation provides financial services for neighborhood enterprises in the poorest of communities and areas.(5)
Natalie was named the first Ambassador of Hope by FINCA International and she also co-chairs the Village Banking Campaign with Queen Rania Al-Abdullah of Jordan. As Ambassador of Hope, she has traveled to Uganda, Guatemala and Ecuador and also filmed a documentary on FINCA Mexico. Her role as "Ambassador of Hope" for FINCA International and co-chair of the Village Banking Campaign is primarily one as a communicator, the other people are really doing a lot of the work. The individuals who live there and help the women to get started and the women themselves who work so hard towards the goal to create their own businesses. She communicates to the public and helps fundraise, speak to politicians about helping finance the programs and also advice on improvement. Because of her celebrity, and originally from Palistine herself, she had a chance to meet with Queen Rania of Jordan. Queen Rania was the one who guided her into microfinance. She said “microfinance is a way to even out the hope gap, which is what exists between the poor and the rich; this is a way to improve the status of so many people who are suffering and that’s what leads them to … that kind of despair. So, if we want to create a sort of social equilibrium, we have to create an economic equilibrium first.” (5)
(1) The Levin Institute, SUNY, (2011) Globalization 101, Retrieved May 14, 2011 from http://www.globalization101.org/issue_sub/woman/participationintheEconomy/
(2) Financial Womens Association, (2011), About Microfinance, Retrieved May 12, 2011 from http://www.fwa.org/community/microfinance.htm
(3)East Villagers News, Chao Foundation (2011), Microfinance and Women’s Empowerment. Retrieved May 14, 2011 from http://news.eastvillagers.org/2010/11/05/microfinance-and-women%E2%80%99s-empowerment-part-1/
(4) Waterberry Mentor Program, (2011) Introduction to Finance. Retrieved May 13, 2011.http://www.waterberry.org/articles/Introduction%20to%20Microfinance.htm
(5) Happy News, Elizabeth Chang (2009, August 21). Actress Touts Microfinancing to Women in Developing Countries MSNBC. Article retrieved May 12, 2011 from http://www.happynews.com/news/8212009/actress-touts-microfinancing-poor-women-developing-countries.htm
12 comments:
Sharon-
I really enjoyed reading your blog post. The title really caught my eye and made me want to read more. I was actually shocked by the large amount of females that don’t attend school. This type of information truly shows the outcome of globalization. “According to the U.S. Agency for International Development and the World Bank, 57 percent of the 72 million primary school aged children who do not attend school are females.” Microfinancing was a great subject to talk about in your post and it helped to see what could happen if it was used. In my personal opinion, I think that it would help women to better themselves and in return better their families. Like you said, globalization can be a great chance for women of different cultures to work in different areas of work. Microcredit and Microfinace and provide people with the funds to help their lives for the better. I believe that it is beneficial and could help people all over. You did a really nice job on your blog and your subject was very interesting to read.
Thanks
Amy
Sharon,
I have never heard about Micofinance, I learned a lot from reading your post. It good to know that a lot of people are receiving help, but it's sad to see what is going on all around, especially with women and inequality.
Amanda
Thank you Amy. It was really interesting to read about, the pros and cons. I wanted to focus on the pros because ultimately it does more good than bad, but there are people (banks) out there that do take advantage of an unfortunate circumstances. There are many ways to become part of the microfinance industry right here from the United States if someone wanted to do that. I'm always interested in women's issues throughout the world because as an American woman I can do anything I really wanted to do, but in other countries, there are so many limitations. Thanks again for your comments.
Thank you Amanda. Although being poor in a 3rd world country is bad for men and women alike, the women usually suffer the most because of lack of rights and labor opportunities. Microfinance is a great start to something that can change a life and an entire family's future.
Sharon-
You are more than welcome. Thank you for all of the great information that you gave us all!
Amy
Hi Sharon,
I also enjoyed reading your article. It is good to see that their are programs out their to help empower poor women in foreign countries to better their lives. Unfortunately, as you say most women in foreign countries don't have the ability to finish school because they need to work. Ironically, if women were given the opportunity to at least finish high school, they would also have the capability to improve their lives. Since I'm a banker by nature, I'd be interested in finding out the details surrounding microfinance such as interest rate, repayment terms, etc...
Carmen
Hi Carmen,
The Baruch School of Business (CUNY) has classes on Microfinance, you probably can go to their website to see how to start to find out about them. I know they have videos online if you just do a google search for Microfinance.
Sharon
A very informative article on women and microfinance Sharon. Certainly globalization has a very mixed record in terms of its impact on the poor. But small loans, especially to women, who are a better risk than men who have tended to misuse the loans are a factor in helping poor families.
Mohammed Yunus won the Nobel prize for his ground breaking work in beginning microfinancing in Bangladesh. Interestingly, microfinancing has now moved from just the developing countries to the more impoverished areas of the U.S.
Hi Professor,
Microfinance, used in its correct form, can be very liberating. I think that it was one of the smartest ideas that one could come up with.
Sharon
Hi Sharon, thank you for the interesting blog,I found it to be educational, I was vaguely aware of microfinancing but never really gave it much thought. It is sad that there are such disparity in the level of living around the globe, that $30 can make such a difference. It does show though that with a little help and a lot of work anyone can improve their lives.
Sharon,
Your essay was very interesting and informative. It is great to see that with these small loans these women are able to become entrepreneurs. I was really impressed with the story about Anwar Begum who borrowed money to buy a cow and turned in to a business by selling calves and milk and made enough money to buy a house for her family. These women are inspiring and it is great to see that they are getting a chance to run their own businesses and build a better lives for themselves and their families.
Great topic and treatment, Sharon. I have heard many good things about microfinance, in particular from an African student who has seen its benefits first hand. The women in her community had an organization that on the surface appeared to be social, but was actually a support and sharing network, for women to "pay forward" small self-employment loans; the moral support and advice were as beneficial to the entrepreneurs as the start-up money. The "pay it forward" aspect of microfinance reminds me of Heifer International's policy of asking recipients of rabbits, chickens, lams, etc., to give to others when their animals have offspring.
Absolutely, women are the hardest hit by economic, health and food crises, and help to women invariably resonates throughout families and communities.
Thanks,
April
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