WUNRN
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Small
Loans to Women Make Big Changes |
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"There was no hardware
store," explains Mary Ellen Iskenderian, who first visited Ms Wafukho
after becoming head of the non-profit organisation Women's World Banking in
September 2006. "After borrowing from family members
and scraping some savings together, she started selling nails and screws from
a kiosk." She also sold tomatoes, "not your
standard DIY stock," laughs Ms Iskenderian. However, she needed more investment.
"Try as she did, she couldn't get a bank loan for love or money,"
said Ms Iskenderian. But she heard about the Kenyan Women's
Financial Trust (KWFT) and borrowed $70 (£35). The money revolutionised her business. Other benefits In fact, it did more than that. The loan also improved the prospects of
Joyce's three children considerably, enabled her sister to study for a
doctorate and created local employment.
Seven years later, Ms
Fawukho employs more than 20 people in her hardware business, says Ms
Iskenderian, visibly delighted in recounting Joyce's story. "This is one of the most exciting
parts," she adds. "The 26th person she has hired is her husband. He
had left to work in another village as a policeman. "Microfinance can help women, but it
can also reunite families." 'Real difference' Joyce's story, told during a small event on
microfinance at the London Stock Exchange, prompted smiles from investors and
academics alike.
It may be just one Kenyan
woman's story, but it makes a wider point about how small-scale loans can
empower women. The Women's World Bank has a network of
microfinance institutions helping women on low incomes. Local organisations can provide support,
advice, technology and even space to help nurture a project. Ms Iskenderian, who spent 17 years at the
World Bank's International Finance Corporation (IFC) and has also worked for
investment bank Lehman Brothers, talks about how enjoyable it is to meet the
women who have secured loans. "What is exciting is you are making a
real difference," she says. Nobel prize The idea that providing a small amount of
money can make a big difference is not new. But microfinance schemes have gained
increasing interest, especially since Bangladeshi economist Muhammad Yunus
and the Grameen Bank were jointly awarded the 2006 Nobel Peace Prize. Mr Yunus, who founded the bank in 1983, was
a pioneer behind micro-credit lending to poor people, notably women in
Bangladesh. "Traditional finance tends not to
cater to women - either because the terms of the loans are not favourable or
because they are such small fry that most individuals are not worth a bank's
attention," explains Ms Iskenderian. Nowadays, microfinance loans are available
in many other parts of the world, from Pakistan to the Philippines. They tend
to be given to women, who make up the majority of the world's poor. Saving Helping women in business activities -
whether they want to open a hardware store, sell solar panels or buy
livestock - is only part of the story. It also gives them to chance to put money
aside. "Saving is a huge problem," says
Anton Simanowitz, a socio-economist at the Institute of Development Studies
(IDS).
Poor people can and do save
at home, but this is often insecure. However, lending money that is then
invested in a small business can create a source of income for the borrower
and savings. "If people can save, they can reduce their
vulnerability and plan a bit," adds Mr Simanowitz. Community investment One of the most striking aspects of these
small loans is the reliability of the borrowers. Repayment rates in certain micro-credit
organisations are about 95%. What distinguishes men and women when they
borrow small amounts is how they choose to spend it, says Ms Iskenderian. When women are the recipients of
microfinance loans, they spread the money around, so the children and the
household tend to benefit more.
Women tend to invest in
three things: health, their children's education and the home, she says. Men, on the other hand, put more back into
the business. And it is not just in the developing world
that microfinance has a use, says Paul Barry Walsh, founder of the UK-based
Fredericks Foundation, which provides business loans to those who tend to be
ignored by other lenders. These tend to be single parents, disabled
or unemployed people - mainly women. "Microfinance is a very powerful tool
that has been grossly underestimated," even in the developed world, says
Mr Walsh. Social roots Microfinance is far from cohesive and
questions remain about how effective it is as a long-term solution to
poverty.
Nonetheless, there has been
a growing interest from larger investors who want to tap into this sector. But this has also raised concerns that the
involvement from bigger players could detract from its social aims. Even
investment bank Morgan Stanley has been getting involved in microfinance. "It could become the victim of its own
success," warns Ms Iskenderian. Advocates are keen for the social goals of
microfinance to be maintained. "Most people are not entrepreneurs. They
are trying to generate income for their families," says Mr Simanowitz.
"It is a financial means to an end." Joyce's story reveals that it is far more
than about one woman's business. If the end - as in her case - means
empowering women and their families, it is a hard goal to challenge. |
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Microfinance
can help women, but it can also reunite families 
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