Microfinance as a Development Strategy amongst Poor Women - Case Study Example

Critically evaluate microfinance as a development strategy amongst poor women 1. Introduction Within the international community, the differentiation among specific parts of population is a common phenomenon. The most characteristic example of this situation is the case of women who suffer a severe violation of their rights in many sectors of their life (especially in their personal and professional activities). In this context, it is noticed by Stark (2000, 512) that ‘while women are obviously a diverse group, compared to men they are overwhelmingly disadvantaged economically; this is shown starkly and redundantly in U.N. data’. On the other hand, globalization has not helped particularly towards the improvement of women’s position internationally. In fact, it seems that globalization had a negative impact on the life of millions of women internationally. Current paper refers to the role of international organizations to the improvement of women’s life in countries around the world. Moreover, a particular strategy, this of microfinance, is examined as a ‘tool’ towards the development of poor women within the international community. Also, a characteristic example, this of Cambodia where the microfinance has been applied extensively as a development strategy amongst poor women, is presented and evaluated. 2. International organizations and poor women In accordance with a research presented in the International Trade Forum in 2007 by Francis, ‘the majority of the world’s poor are women; if we believe that trade is a means of generating wealth, then having women and small business at the table is key to improving the lot of the poor from the very start; big business is realizing that social responsibility, especially in developing countries, is key to their business strategies, and NGOs now use business models to link community projects to global markets’. The above research refers extensively to the provision of financial support of poor women in order to develop their own business. In fact this plan could be considered as significant if we take into account the range of modern business activities worldwide. Women could be involved in the business area actively and improve in this way their conditions of living. This effort could be proved to be helpful for other women that suffer from poverty. Women that have already experienced poverty could easily understand the problems of other women that suffer from poverty. Moreover, they could prefer to hire these women in their business; such an initiative could be valuable for poor women that have no many choices to enter the workforce. Generally, it should be noticed that poverty among women is an international and well known phenomenon. In order to help women that suffer from poverty governments around the world have taken a series of measures including the provision of financial support (even temporarily). On the other hand, international organizations have developed a series of programmes that refer to the particular issue (poverty in women). In this context, the study of Speth (1998, 277) proved that ‘the United Nations Development Programme (UNDP) has made poverty eradication its overarching priority for many years; in fact, last year's UNDP Human Development Report focused on poverty, introducing the concept of human poverty; the World Bank has also increased its efforts to end poverty’. Towards the same direction, Luckhaus (2000) highlighted the importance of the role of international organizations towards the reduction of poverty in women around the world. However, it is noticed by the above researcher that the provision of help to poor women around the world can face severe obstacles mostly because of the lack of the appropriate framework in order for the relevant plans to be effective. More specifically, it is noticed that ‘ability of social protection to provide an adequate and reliable source of income for women is problematic -- partly because of the other functions that, historically, social protection has been required to perform; these include the promotion of specific forms of financial dependency which are rooted in and characteristic of gender and employment relations in the wider society’ (Luckhaus, 2000, 149). In other words, it is not enough for governments and international organizations to admit the problem of poverty among women internationally. They should have the intention to proceed to all appropriate measures for the resolution of the problem through realistic and effective plans and initiatives. Otherwise, it is very likely that the relevant efforts will fail. 3. Microfinance as a development strategy amongst poor women – the case of Cambodia At a first level it should be noticed that generally women earn less than men. The reasons that have led to this phenomenon have been identified by Stark (2000) as follows: the differentiation between the remuneration of women and men should be based on ‘(1) the kind of work women do, and (2) their uncompensated "women's work," including their reproductive work’ (Stark, 2000, 512). In fact it has been proved that women earn less than men regarding all aspects of work: ‘they are paid less than men for doing the same work, and they are limited to low-income sectors by widespread sex-based occupational segregation’ (Stark, 2000, 512). On the other hand, women are more likely to believe that children could help them to face effectively a case of poverty (if this would occur in the future). In order for women to enter workforce, appropriate support should be given primarily by the government. In this way, it is supported by Merrick (2002, 41) that ‘programs that combine social and economic development and family planning services for poor women encourage them to have fewer children and thereby enhance their prospects of achieving a different, less-dependent kind of life; such programs also provide women with the tools they need to attain those two goals’. However, it should be noticed that the professional support to poor women should be combined with the appropriate financial support in order to help them to respond to their financial obligations on a monthly basis (i.e. support for studies but also provision of a monetary amount that could be regarded as a ‘salary’ lasting until the completion of the studies). An indicative example of the efforts made internationally towards the financial support of poor women in order to enter the business sector, is that of Cambodia. In the specific country, the conditions of work of poor women have been extensively examined specifically regarding the garment industry. In fact, a study published in the NPRS-RPF (2006) showed that ‘since 1997 the garment industry has been a vital source of income for Cambodia generating almost 95% of the country’s exports. Some 238 garment factories were active in the country in 2004; these factories provided jobs to an estimated 280,000 workers, of which 85–90% are women’ (NPRS – PRF, 2006). In accordance with the above, garment industry has been chosen because of its importance for women around the country (women represent the majority of the workforce in the particular industry). The conditions of work of women in the Cambodian garment industry have been examined in order to identify the sectors that should be improved. Towards this direction, it has been found that ‘increasing workers’ productivity, improving the working conditions in the garment industry (by raising garment workers’ consciousness on human resource issues and labor rights) and pilot-testing non-garment alternative self-employment schemes were the planned outcomes of Phase II of the (The Garment Employee Development Pilot Project)’ (NPRS – PRF, 2006), i.e. of the project applied in order to help poor women around the country to improve their conditions of living (through the fair remuneration and the creation of sufficient positions in accordance with the needs of the local population. The case of Cambodia is just an indicative one regarding the intentions of international organizations towards the reduction of poverty in women. Other schemes and plans have been also proposed throughout the years in order to help towards the limitation of poverty for women around the world (International Organizations, 2004). In developing countries, the provision of financial support to women in order to enter the business area is limited. However, there are cases of women that managed to create a competitive enterprise regardless the turbulences of the market and the negative provisions for the limitation of personal involvement in the realization of a specific project. Regarding the above, microfinance has been considered to be an effective tool for the limitation of women’s poverty worldwide. In fact, it has been supported by Maes (2006) that ‘by providing small loans and savings facilities to people who are excluded from commercial financial services, microfinance has become a strategy for reducing poverty; access to credit and deposit services is a way to provide the poor with opportunities to take an active role in their respective economies through entrepreneurship, building income, bargaining power and social empowerment among poor women and men’.(Maes, 2006, 8). However, it should be noticed that microfinance as described above could be applied effectively only to ‘upper poor’ classes and not to ‘extremely poor’. On the other hand, a research published by ABWI (2007) showed that ‘to work with governments, both domestic and international, chambers of commerce and other such entities to assist our members in keeping abreast of new developments, products, laws and operational policies, enabling them to remain trendsetters on the cutting edge of the business world’. On the other hand, specific initiatives have been taken in order to create appropriate and effective international organizations (that could help poor women to improve their living conditions). Towards this direction the Women’s Trade Council has been established (CSO Forum, 2006) ‘at the highest level - the World Bank having as a main purpose: 1) To facilitate and support the promotion of trade between women’s organisations globally; 2) To build capacity of global women’s business organisations to compete in the global markets; 3) there is a need to build capacity for entrepreneurs to enter the global marketplace’ and so on. 4. Conclusion The use of microfinance as a tool for development of poor women should be characterized as the most appropriate solution in modern market regarding the improvement of the conditions of life of poor women around the world. In fact, a relevant research published by Francis (2007) proved that ‘a change is under way; business, government and non-governmental organizations (NGOs) have realized that they must join forces if they are to tackle one of the biggest moral challenges of this century: ending poverty; central to this challenge is creating wealth through trade’. On the other hand, the entrance in the international community of a series of organizations dedicated to help poor women to survive, is quite importance. It is necessary under these terms to create the appropriate framework in order for these organizations to operate without obstacles. An issue that should be highlighted here is the fact that poor women are not all offered equal chances in order to enter the business area. In order for such an initiative to success, it is necessary that appropriate measures are taken primarily by the local governments. The role of private institutions and individuals could be also considered as significant. Works Cited Francis, P. (2007) Creating Wealth, Reducing Poverty, [Online], available at http://www.tradeforum.org/news/fullstory.php/aid/1184/Creating_Wealth,_Reducing_Poverty.html Luckhaus, L. (2000) Equal Treatment, Social Protection and Income Security for Women. International Labour Review, 139(2): 149-156 Stark, B. (2000) Women and Globalization: The Failure and Postmodern Possibilities of International Law. Vanderbilt Journal of Transnational Law, 33(3): 503-517 Speth, J. (1998) A Denial of Human Rights. Journal of International Affairs. 52(1): 277-285 Merrick, T. (2002) Population and Poverty: New Views on an Old Controversy. International Family Planning Perspectives, 28(1): 41-45 Status of women – Canada. 2004. Trade Agreements, Home Care and Women's Health, [Online], available at http://www.swc-cfc.gc.ca/pubs/pubspr/0662360565/200403_0662360565_17_e.html Chen, M., Kanbur, R., Mirani, N. (2005) Membership Based Organizing of Poor Women: Reflections After an Exposure and Dialogue Program with SEWA. In Gujarat, India, January 2005. [Online], available at http://www.wiego.org/papers/2005/unifem/13_MBOP_EDP_Compendium_Jan05.pdf Association Pour la Promotion des Exportations de Côte d’Ivoire (APEX-CI) Ivory Coast. [Online], available at http://www.intracen.org/wedf/ef2006/Global-Debate/Country-Team-Papers/Cote_d'Ivoire_Paper.pdf NPRS – PRF. 2006. Securing employment for the poor Women in Cambodia’s garment industry. [Online], available at http://www.adb.org/PRF/Cambodia-Garment-Industry.pdf Patricia R. Francis, Executive Director, ITC. International Trade Forum - Issue 2/2007 International Trade Centre.[Online], available at http://www.tradeforum.org/news/fullstory.php/aid/1184/Creating_Wealth,_Reducing_Poverty.html International Organizations: The Politics and Processes of Global Governance 2004. Margaret P. Karns and Karen A. Mingst. [Online], available at http://www.rienner.com/karns.pdf Broad Reach Foundation July, 2006.[Online], available at http://www.arts.cornell.edu/poverty/kanbur/MBOPVolumeOverview.pdf. SEEP NetworkJuly 2006. [Online], available at http://www.microcreditsummit.org/papers/Workshops/6_MaesFoose.pdf. “Poor Women’s interventions in the global trade” 15th September-2006, at CSO Forum, Singapore. [Online], available at http://siteresources.worldbank.org/CSO/Resources/AM_2006_WomenandTradeSession_Summary.doc The World Bank 2007. [Online], available at http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPAME/0,,contentMDK:20188187~pagePK:210058~piPK:210062~theSitePK:384263,00.html RURAL POVERTY PORTAL 2007. Dimensions of rural poverty. [Online], available at http://www.ruralpovertyportal.org/english/topics/index.htm Maes, J. (2006) Microfinance services for very poor people, [Online], available at http://216.239.59.104/search?q=cache:ewGsw2jYxpoJ:www.microcreditsummit.org/papers/Workshops/6_MaesFoose.pdf+International+organizations+and+poor+women&hl=en&ct=clnk&cd=200&lr=lang_en|lang_el Read More