Poverty is often associated with issues such as famine
Poverty is often associated with issues such as famine, lack of clean water, limited access to healthcare, and lack of education. Yunus (2010) reveals that inaccessible bank credit is the most harrowing consequence as it keeps the poor trapped in a cycle which makes it difficult to overcome their financial situation (p. ix). In theory, people have the ability to take out loans from a bank in order to invest that money and repay their debt using the profits. However, this is not a possibility for the poor since banks in developing countries unwilling to give them loans as a result of their lack of collateral and moneylenders take advantage of the situation by charging high interest rates (Banerjee & Duflo, 2011, p. 158). Microfinance is seen as a means to rectify this situation as the poor can borrow money, without collateral, at low interest rates and can repay the debt via weekly installments (Yunus, 2010, p. xi). Therefore, these people can use microfinance programs in order to systematically repay their debt while continuing to grow their business. Studies have indicated that with an increase in female microfinance clients, there has been significant improvements in women’s social status and, consequently, in education as well as in health. To this effect, empowering women via the use of microfinance can be used as a means to combat poverty on an international scale.
To begin, women’s use of microfinance programs in developing countries allows for them to better provide for their families thus, improving their status in society. Social inequality between men and women is inherent in a nation’s culture as a result of traditions which, ultimately, limit women’s freedoms. For example, Sanyal (2009) explains that “women are viewed as representatives of the family’s honor and are largely confined within the household” (para. 6). By earning an income for their families, women have the opportunity to break free from such limitations by actively changing the culture through their work. This idea is illustrated in Bangladesh where women had the opportunity to work for the Grameen Bank, who partnered with Danone, as door-to-door saleswomen; they also took out a microfinance loan in order to pay for a cell phone which would help increase yogurt sales (Yunus, 2010, p. 39). Furthermore, microfinance programs provide women with a sense of community. Women in the same microfinance program will meet on a weekly basis in order to discuss business tactics and future loans (Sanyal, 2009, para. 25). Consequently, these women develop a close relationship which emboldens them to participate in societal activities outside of the program as, according to Lavoori & Paramanik (2014), such groups serve as “platforms from which women become active in village affairs, stand for local elections or take action to address social or community issues” (para. 11). Therefore, microfinance programs give women financial and communal support which enables them to take actions that challenge the culture in which they were raised as well as to change their social status.
Moreover, microfinance programs allow for increased investments in education which leads to an increase in knowledge workers. Yanus (2010) notes that, when he established the Grameen Bank, which provides microfinance services to the poor, “of its 8 million borrowers, 97 percent were women” (p. x). As a result of this high percentage, those who take out loans via a microfinance program will, inevitably, mostly be lower-class women and their children. Therefore, we see that a large number of individuals gain the opportunity to a higher education as “more than 50, 000 students are currently pursuing their education in medical schools, engineering schools, and universities with financing from Grameen Bank” (Yanus, 2010, p. xi). The Grameen Bank also goes as far as to create new colleges as well as to have guaranteed jobs and salaries for graduates (Yanus, 2010, p. 62). Microfinancing gives women the financial means to take advantage of such opportunities which allows them to become knowledge workers in fields such as nursing, engineering, etc. Ultimately, the state benefits from this change as, when these students enter the workforce, their contributions to society will aid in stimulating a developing economy.
In addition, women’s improved social status provides them as well as their families with access to better healthcare. As a result of education, there is an emphasis on the importance of things such as vaccinations and women will use their new income in order to spend on healthcare. This point is further reiterated as, according to Schuler, studies surrounding women in microfinance programs found “gains in … nutrition, immunization coverage, and contraceptive use” (as cited in Kim, Watts, Hargreaves, Ndhlovu, Phetla, Morison, Busza, Porter & Pronyk, 2007, para. 2). Therefore, through microfinancing, women can address their childrens’ health needs more effectively. Also, since their social status improved, women gain a certain level of protection against sexual assault as Kim et al. (2007) found that, by providing microfinance loans, “the intervention reduced the levels of … intimate partner violence by more than half” (para. 37). So, through a decrease in intimate partner violence, we see a change in women’s status in society as well as in the household. Furthermore, Dunkle, Jewkes, Brown, Gray, McIntyre, and Harlow, emphasize the fact that “intimate partner violence increases vulnerability to a range of negative health outcomes, including HIV/AIDS” (as cited in Kim et al., 2007, para. 5). Consequently, intimate partner violence is considered a women’s health issue. Such trends illustrate that, as a result of women’s emancipation, there is a decrease in domestic violence which, in turn, should lessen cases of sexually transmitted infections. This change ultimately helps an developing economy as, when a nation’s population is healthy, it is not burdened by excess expenditures in healthcare and as there are more people in the workforce who can utilise their purchasing power.
To conclude, microfinance programs allow for an improvement in women’s social status as it gives them an opportunity to earn and manage money from a growing source of income. As a result, they have the means to invest in education and healthcare for themselves as well as for their families thus, increasing future contributions in the workforce which stimulate the economy. These improvements help combat poverty by alleviating the symptoms associated with it which keep people and their nations stuck in such economic situations.