This study has benefited immensely from quite a number of sources materially, financially, academically and morally. My deepest gratitude should first go to my advisor Dr. Vijaya Subramaniyam for her remarkable comments, suggestions and refinements. Any remaining flaws are entirely mine. I would like to thank the Organization for Women In-Self Employment and its entire staff for all the support. Last but not least, I would like to give my appreciation for the beneficiaries of WISE who were willing to sacrifice their valuable time and respond to my questions.

Abstract

It is believed that economical independence would empower resource-poor women. Microfinance has been considered as means of providing women with credit facilities that could not be obtained from other formal sources and hence empowers them through economic independence. This study attempted to find out the role of microfinance on the decision making power of women through economic empowerment. Using a structured questionnaire on beneficiaries of the organization for Women In-Self Employment (WISE), the study found out a strong direct relationship between access to credit and economic independence of the women. Women through microfinance were able to acquire more assets than before, improved well being, and an improved role in decision making in the household. Incidents of violence against the respondents have been reported to decline and almost all have responded that they can survive without the help of their partners after the loan which was not the case before. However, their income generating activities have added more burden on them since responsibilities on household chores have stayed the same.

CHAPTER I: INTRODUCTION

1.1 Background

More than one billion people in the world, the great majority of whom are women, live in unacceptable conditions of poverty, mostly in the developing countries (Beijing Platform for Action, 1995). In Ethiopia women constitute almost half, 49.8 percent, of the total population and 40.9 percent of the labor force in 2002 (World Bank, 2004)[1]. Women in Ethiopia face various multifaceted problems. The feminization of poverty and employment, lack of adequate financial resources, lack of equal opportunity and limited access to education and choices of professions, the multiple burden of domestic tasks, professional obligation and the community socialization, the traditional harmful practices and violence against women are prevailing socio-economic obstacles affecting women’s lives.

The belief that men are superior to women in most cultures in the country consider men to be senior in hierarchy, hence, men and women do not hold equal status socially, economically and politically. This creates dependency of women on men at every level depriving women of their right to make decisions concerning their own rights. Hence, empowerment of women (social, economical, and political) is vital for meaningful involvement of women in the development process and to benefit equally from the results as their male counterparts.

According to the Beijing Platform for Action women’s equal participation in decision making is not only a demand for simple justice or democracy, but can also be seen as a necessary condition for women’s interest to be taken into account. Without the active participation of women and the incorporation of women’s perspective at all levels of decision making, the goal of equality, development and peace cannot be achieved (Beijing Platform for Action, 1995).

Various literatures state that microfinance is one of the means to women’s empowerment. There are various microfinance organizations in Ethiopia that operate in the area of women and microfinance and; Women In-Self Employment (WISE) is one among them. This paper deals with the role of microfinance on the decision-making power of women in the household, taking beneficiaries of this particular organization in focus.

1.2 Statement of the problem

In Ethiopia, women form the core of the family and household, they work longer hours than men and do more of the total work than men, and they contribute more to the development of society at large. Despite their contribution, women have not been enjoying the fruits of development equally with their male counterparts due to the multi-faceted, gender based problems they face (Genene, 2005).

Empowerment of women is crucial for their emancipation and meaningful participation in the decision making process at every level. Women continue to remain under-represented at all levels of decision making and their achievements all too often remain invisible and unacknowledged, and their voices unheard. It is in realization of this fact that the theme of the international women’s day for the year 2006 is termed as “women in decision making: meeting challenges and creating change”. [2] Hence, to bring about this change women’s social, economical and political empowerment is crucial. Ethiopian women are no exception from the existing deprivation of rights of decision making and therefore, need empowerment at every level.

It is believed that increasing women’s access to microfinance will in itself increase household income which will then translate into improved well-being for women and enable women to bring about wider changes in gender inequality. In economic empowerment women’s access to savings and credit through microfinance programs gives them a greater economic role in decision making through their decision about savings and credit, which in turn would optimize their own and the household welfare (Mayoux, 2001).

This paper attempts to examine the relationship of economical independence of women through microfinance, and changes in gender inequalities in the household especially decision making power of women, taking the case of organization for Women In-Self Employment. The organization has never made a study on the relation of the service it provides (microfinance) for women empowerment and its effects on the beneficiaries decision making power in the household. In addition, there are very limited literatures in Ethiopia that made such kind of analysis. Hence this paper attempts to fill this gap.

1.3 Objective of the Study

General objective: The general objective of the study is to find out the effect of empowerment of women through microfinance programs on their decision making power in the household.

Specific objectives: The specific objectives of the study are to find out the effects of economic independence of women through microfinance on: -

· Their decision making power on income expenditure/purchases of the household

· Decisions regarding contraceptive use and sexual behavior

· Changes in recognizing of male-female sharing of household/ domestic work

· Gender based violence in the household.

CHAPTER II: LITERATURE REVIEW

2.1. Classical Feminist Theories about Economic Independence and Women Empowerment

According to Engle’s famous analysis of women’s situation in the history of different economic modes of production, women are originally equal to, if not more powerful than, men in communal forms of production with matrilineal family organizations. When private property comes into existence as a mode of production, women lose power. Men’s control of private property and the ability to generate a surplus, changes the family to a patriarchal one where women, and often slaves, become the property of the father and husband. The rise of capitalism in separating the family household from commodity production further solidifies this control of men over women in the family when the latter become economic dependents of the former in the male breadwinner-female housewife nuclear family form (Engles, 1942).

Full women’s liberation, according to Engles, can only be achieved with the development of socialism and the socialization of housework and childrearing in social services provided by the state. Marxists have argued that women’s liberation requires feminists to join the working class struggle against capitalism (Cliff 1984). While Engles argue for abolition of private property as key to women’s liberation, the liberal feminists favor involvement of women in the public sphere without interfering with the existing class (Friedan, 1963).

Various Marxist feminist thinkers have done cross-cultural and historical studies of earlier forms of kinship and economy and the role of the sexual or gender division of labour in supporting or undermining women’s social power (Reed 1973 and, Rosaldo and Lamphere 1974).

As a solution to equality of women various theories suggested economic independence of women. The second wave movement, such as liberal feminists critique housework because it is unpaid. This makes women dependent on men and devalued, since their work is outside the meaningful sphere of public economic production (Friedan 1963). The feminist oriented interventions use accessing economic resources like micro credit as entry points to promote the empowerment of women whether economic, social and political (Solomon, 1999).

2.2. Empowerment of Women

Women are becoming a more visible part of the poor because feminization of poverty (a concept used to explain that there are more poor women than poor men in the world) is actually taking place (Scott, 1984). It is generally accepted that women are disproportionately represented among the world’s poorest people as a result of which, high dependency of women on men is created. In order to alleviate this dependency, empowerment of women at various levels (social, economical and political) is vital.

Empowerment could be defined as a process that enhances the ability of disadvantaged (powerless) individual or groups to challenge and change (in their favor) existing power relationships that place them in subordinate economic, social and political positions (Tadesse et al., 2002). In a narrower term in relation to women, Solomon (1999) explains economic empowerment as economic independence of women, organizing to challenge gender based discrimination in terms of access to and control of productive resources.

Although the process of empowerment varies from culture to culture, several types of changes are considered to be relevant in a wide range of cultures. Some of these changes include increased participation in decision making, more equitable status of women in the family and community, increased political power and rights, and increased self-esteem. Women’s ability to influence or make decisions that affect their lives and their futures is considered to be one of the principal components of empowerment by most scholars (Cheston and Kuhu, 2002).

The feminist empowerment paradigm’s underlying concerns are gender equality (in the sense of equality of choice and opportunity) and women’s human rights. For women’s economic and socio-political empowerment, microfinance is promoted as an entry point, the focus being gender awareness and feminist organization (Mayoux, 2001).

2.3. Microfinance and Its Role on Women Empowerment

2.3.1. Definition of Microfinance

“Microfinance is a term used to refer to the activity of provision of financial services to clients who are excluded from the traditional financial system on account of their lower economic status. These financial services will most commonly take the form of loans and savings, though some microfinance institutions will offer other services such as insurance and payment services.”[3]

In other words, microfinance is the provision of savings, credit and/or other financial products in small amounts to primarily poor customers conventionally believed not to have the capacity to save as well as considered unwilling and unable to pay the high interest rate required to cover credit transaction costs (Biss, 1998).

Microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their very small business. Many poor people need and use financial services all the time. They save and borrow, invest in home repairs and improvements and meet occasional and domestic expenses such as food and school fees. Indeed, the financial services available to the poor often have serious limitation in terms of cost, risk and convenience. As a result, overtime, microfinance has come to include a broader range of services (credit, savings, insurance, etc.) as the industry has come to realize that the poor and the very poor who lack access to traditional formal financial institutions require a variety of financial products.[4]

Poor women, to an even greater extent than poor men, are heavily reliant on microfinance and on special credit programs. Women may rely on husbands for access to credit, in a variety of forms. Evidence suggests that women tend to rely more heavily on microfinance and family and friends than men, and, specifically borrowing from male partners. In addition there are a number of gender issues which further constrain women’s access to formal financial services. Some of these affect women’s ability to access financial institutions and others arise from institutional requirements, i.e., there is a distinction between borrower (saver) and lender (depositor) transactions costs or constraints and there may be conflicts of interest between the two. Such factors related to risk and uncertainty could be lack of collateral, due to limited assets and property rights and lack of track record in borrowing (Haile, 1998).

2.3.2. Role of Microfinance in Women Empowerment

One of the often articulated rationales for supporting microfinance and the targeting of women by microfinance programs is that microfinance is an effective means or entry point for empowering women (Cheston and Kuhu, 2002). Microfinance is seen as contributing to the process of empowerment through enhancing women’s productive role and enabling them to challenge inequalities within the household, and as a useful entry point for wider mobilization. This is not only in access but explicitly addressing economic empowerment, increasing incomes and challenging gender issues (Mayoux 1998).

Various writers have indicated microfinance as means of women’s empowerment. Bengtson states that micro-financing for women aims to make their micro-enterprises more financially rewarding, this should contribute to a measure of economic empowerment within the family and in social and political spheres (Bengtson, 1997).

However, other literature suggests that some women are worse off with loans. In some cases as a result of loans and/or activities in which they are invested women face increased tension and violence in the home, male economic withdrawal and even abandonment. Although a study in Bangladesh concludes that violence against women is pervasive and that it is unclear if overall credit makes matters better or worse (Schluter et al, draft 1997). Although there have been a few studies that have asserted that women’s participation in microfinance leads to an increase in domestic violence, most practitioners have reported the opposite experience (Cheston and Kuhun, 2002)

Notwithstanding the fact that there are many good reasons for micro finance institutions to be watchful for potential rises in domestic violence, the bulk of the evidence and experience thus far seems to point to the conclusion that participation in microfinance strengthens and improves family relationships rather than destroying them. Poverty, scarcity, and feelings of helplessness take an undeniable toll on personal relationships. Many practitioners have found that family relationships can be strengthened when the home becomes a more comfortable place to be, and when each member of the family feels secure in his or her ability to contribute productively to the family (Cheston and Kuhun, 2002).

Heshemi et al. (1996) found fewer incidences of violence against women, among women who were members of credit organizations than they found among the general population. Although fear of public exposure clearly played a role in the reduction of violence, there is considerable anecdotal evidence of women attributing the reduction of abuse directly to their access to credit and their economic contribution to the household. Another study by Schuler et al. (1996) suggests that the level of women’s economic contribution to the family may also be significant.

Access to financial services and the resultant transfer of financial resources to poor women can lead women to become, over time, more confident, more assertive, and better able to confront systemic gender inequities. Microfinance enables poor women to become economic agents of change by increasing their income and productivity, accessing markets and information, and decision-making power.[5]

2.4. Review of Empirical Studies on the Role of Microfinance in Women Empowerment

Various studies have revealed that microfinance programs have been the means of women’s empowerment. In Indonesia, female clients of Bank Rakyat Indonesia (BRI) were more likely than non-clients to make joint decisions with their husbands regarding allocation of household money, children’s education, use of contraceptives and family size, and participation in community events (Mayoux, 2001).

The Women’s Empowerment Program in Nepal, conducted a study that showed an average of 89,000 out of 130,000 (68 percent) women in its program experienced an increase in their decision-making roles in the areas of family planning, children’s marriage, buying and selling property, and sending their daughters to school – all areas of decision making traditionally dominated by men (Ashe and Parrott, 2001).

The Center for Self-Help Development (CSD) in Nepal also reported that women were able to make small purchases of necessary items like groceries independently. But larger purchases and personal purchases, like jewelry, always required the consent of the husband, representing incomplete progress toward empowerment in this area (Shrestha, 1998).

A study done in Rwanda also supports the above findings. Through in-depth interviews with 13 clients, a World Relief partner in Rwanda, found that 54 percent of the clients experienced an increase in their ability to control or influence business decisions, 38 percent experienced an increase in decision making in their families, 38 percent in their communities and 54 percent in their churches (World Relief Rwanda, 1999).

Evidence of changes in gender roles within the household, however, is limited. World Education reported that although husbands, in-laws, and children help out at home while the women attend program meetings, women’s workload increases as they start utilizing their loans more. Also working in Nepal, CSD found that the economic role of women remained restricted to managing the loans and supplementing household income to meet household expenses but did not lead to a substantial change in gender relations in the home in the majority of household (Cheston and Kuhun, 2002).

Evidence suggests that participation in microfinance programs may give women the means to escape from abusive relationships or limit abuse in their relationships. Working women’s Forum found that 40.9 percent of its members who had experienced domestic violence stopped it because of their personal empowerment, while 28.7 percent were able to stop it through group action (Working women’s Forum, 2000). CSD in Nepal also noticed a greater resistance to wife beatings and alcoholism among its clients (Shrestha, 1998).

Mayoux argue that micro finance institutions cannot have more than a limited impact on women’s empowerment unless there are changes in wider gender inequalities in the broader social and economic contexts in which they operate. In light of these limitations, she recommends that micro finance institutions intentionally address women’s empowerment as part of their goals, objectives, operations, and products design (Mayoux, 2001).

Cheston and Kuhn (2002) explain that microfinance can affect women’s use of their time through two main channels: meeting time and expanded enterprise activity. Time is precious and scarce for many poor women; however, it is one resource that most women can utilize to gain access to financial services. It is a key factor in facilitating cost-efficient delivery of services. There are concerns, however, that micro finance institutions are increasing women’s work burden by involving them in time-consuming meetings and income generating activities without taking any action to reduce their traditional responsibilities.

Many women reported an increased workload and responsibilities as a result of their loans. Several cases of women suffering ill health and exhaustion as a result of overwork have been reported. In other cases, though, women report that they are more than happy to assume the extra burden because of the respect, personal satisfaction and improved standard of living they experienced as a result of their income generating activities (Cheston and Kuhn, 2002).

Kabeer (1988), in her study of Small Enterprise Development Program in Bangladesh, found that the majority of women who experienced an increased workload were happy and felt that the benefits out weighed the costs of participation. In a similar study, interview conducted with several women affirmed that in spite of their increased workload and responsibilities, they felt a great deal of pride and personal satisfaction in being able to make a substantial economic contribution to their household (Cheston and Kuhn, 2002).

In the case of Ethiopia, a study was conducted by International Labour Organization in 1997 to examine whether access to credit and its productive use lead to the empowerment of resource poor women. The study utilized structured questionnaires, project site records and group discussions as a methodology and found out that in the case of married targets, decision making in the families/households is equally shared with husbands. It was also found out that husbands might directly influence the selection and establishment of small businesses. A more indirect influence emerges from the time a women fuel wood carriers can, and is allowed, to devote to her income generating activity, particularly when it is carried outside the home. However, the study have also come across several cases of young girls, sometimes single mothers, who improve considerably their marriage prospects from earning a regular salary by means of a credit initiated micro-business, which might be one dimension of empowerment (Bengtson, 1997).

Ethiopian Women Lawyers Association conducted a study in 2002 that seeks to examine and access the concept of micro credit as the key to women’s economic empowerment. The study covered six microfinance institution and five NGOs that provide micro credit as one component of their activities. The study employed focus group discussion and case studies with the beneficiaries of the microfinance institution and interviews of major stakeholders. The ability of women to pay house rent, meet basic needs (mainly food and clothing), become member of equb[6] and saving clubs, cover health expenses, send children to school and to negotiate conflicts in the household and make positive changes in their livelihood were major changes beneficiaries reported after the credit schemes (Tadesse et al., 2002). The findings of the case studies confined on how the women improved their lives using the credit they got from the microfinance, highlighting that microfinance empowers resource-poor women economically.

CHAPTER III: ORGANIZATIONAL BACKGROUND

NGO sponsored credit programs were initiated in Ethiopia following the 1984/1985 draught that happened in the country. The main objectives for initiating these credit and saving schemes were to link relief and development through the promotion of micro-enterprises operated by the poor. Within NGO programs, provision of credit is one activity among a number of other programs focused on urban development or integrated rural development. Until some time, most of these broad programs included the provision of agricultural inputs, extension, physical and social infrastructure such as school, health services and /or grain generation through the provision of credit was one component of these programs and one that encouraged the participation of women (Tadesse et al., 2002). Organization for Women In-Self Employment (WISE) is among the microfinance organization that works on the empowerment of women.

Organization for Women In-Self Employment (WISE) is a secular, indigenous, non governmental organization established in 1997 and legally registered with the Ministry of Justice. The organization is dedicated to the elimination of the facets of urban poverty and the realization of sustainable livelihoods among poor urban women. Having started its operation in 1998, the organization is currently working with poor self-employed women in Addis Ababa in their efforts to achieve self reliance, exercise rights and improve the quality of their lives. The major focus area is the economic, social and political empowerment of women and the attainment of gender equality.

WISE’s area of intervention includes building the capacity of women micro entrepreneurs through institution building, training, education and provision of financial services. The organization’s core objectives are promotion of income, creation and security of employment, promotion and protection of rights and promotion of empowerment. The target groups are poor, self – employed women in Addis Ababa mainly engaged in home based production and small scale trading activities and unemployed women who wish to engage in micro-enterprise operation. The organization has got a total of 4,235 active beneficiaries as at April 30, 2006.

Due to limited capacity of the organization, its focus on program interventions is currently limited to Addis Ababa in three sub cities, namely Nefas Silk-Lafto, Kirkos and Akaki-Kality. Action Aid