The last article discussed the advantages of dealing with women in microfinance while this post mentions some disadvantages microfinance institutions as well as women themselves, may face as a result of microfinance programs.

Challenging the Status Quo

A wide power gap exists between men and women in rural areas of developing countries, where women are less privileged. This makes it difficult for microfinance institutions to target women for microfinance programs, as these programs aim to empower women.

As reported by FAO and UNCDF, this autonomy may result in the “withdrawal of male support” or the resistance towards the involvement of their wives in credit programs. Naturally, this is detrimental to the success of the micro-enterprises as well as the microfinance institution itself.

Misuse of Funds by Husband

If certain microfinance institutions deal solely with women, their husbands and brothers may obtain loans through women. This is acceptable as long as the loan is used for productive purposes and repaid.

However, sometimes the loan may be used for purposes other than the stated intention of the microfinance institution, or it may be used to setup micro-enterprises over which women have little control (as explain by the FAO report). This not only harms the credit reputation of women, but also perpetuates the male-female power divide.

Lack of business acumen

The UNCDF report explains that microfinance institutions who deal with women felt the need to invest more in business training and workshops to compensate the poor depth of business experience and knowledge of women in running credit-based micro-enterprises. This requires more investment in terms of money and time.

Possible social drawbacks of working with women

The following excerpt from a paper by Linda Mayoux explains this well:

Small increases in access to income (microcredit for women) may be at the cost of heavier workloads for women, increased stress and their health. Women’s expenditure patterns may replicate rather than counter gender inequalities and continue to disadvantage girls. Without substitute care for small children, the elderly and disabled, and provision of services to reduce domestic work many programs reported adverse effects of women’s outside work on children and the elderly. Daughters in particular may be withdrawn from school to assist their mothers.