Is microfinance a ‘magic bullet’ for women’s empowerment? This article published in the Economic and Political Weekly, India, examines the empirical evidence of the impact of microfinance on poverty reduction and the empowerment of poor women. Focusing on experiences in South Asia, it argues that while access to financial services can and does make important contributions to the economic productivity and social well-being of poor women and their households, it does not automatically empower women.
Microfinance organisations (MFOs) address the institutional exclusion of the poor from formal financial provision, and protect them against adverse informal services, for example those with unfavourable interest rates. MFOs vary considerably in their philosophy, vision and strategies, ranging from those concerned with a narrow financial agenda (the financial systems approach) to those concerned with social transformation. In the South Asian context, most deal primarily with women and take a group-based approach. They aim to help poor women address their practical daily needs as well as their strategic gender interests. Views on the impact of such organisations are polarized, and there is a need to clarify what they have achieved, or not, in the lives of poor women.