One of the reasons microfinance institutions deal largely with women is because they (women) typically lack social and economic assets owned by men in those regions. It is no secret that microcredit, along with micro-savings and group solidarity, brings about visible changes in the lives of women.

Women empowerment, which is achieved by instilling ideals such as justice, equality and freedom of women, is the central goal of many development institutions (including microfinance institutions).

The search for these social virtues is not unique to the field of microfinance, nor is it a recent phenomenon.

It dates back to the 1970s and the beginnings of the international women’s movement. Many women’s organizations worldwide set up credit and savings components as a way of both enabling women to increase their incomes and come together to address wider gender issues. Source: GenFinance.

Women empowerment is difficult to measure directly, yet studies have observed the slight differences in the behavior of women who use microfinance services, as pointed out by IFAD and FAO:

• They no longer believe they should be dependent (women enjoy greater economic security and tend to jointly make household and business decisions with their husbands)
• Women involved in microfinance become leaders, instigating change in social practices and relationships and mobilizing social action (one study reveal a reduction in domestic violence as well).
• Women’s status, both in their homes and communities, is improved when they are responsible for microloans and for managing micro-savings (this would enhance the social support offered in the group lending methodology)
• Microfinance improves access to networks and markets (for women) giving wider experience of the world outside the home, access to information and possibilities for development of other social and political roles
• When they generate and control their own income (through microfinance services), women gain a level of power that means they can make decisions independently and command more respect.

Lastly, there is greater acceptance among men that women can participate in the rural economy and deal with men in the roles of service providers or vendors. This works towards the Millennium Development Goal to promote gender equality.

Further Reading: Summary of Social Performance Measures for Microfinance Institutions by SPTF: Part I