Introduction
The paper discusses the role of women in micro-finance emphasising on the importance of education as well as effects of gender gaps in accessibility of microcredit. In addition, the paper examines various challenges women face in accessing microcredit. About 70% of poor women globally are accessible to microcredit.
Essentially, women play a critical role in the upbringing and sustenance of families as well as improving the social welfare of the society. As such, enhancing the economic status of women will translate into improving the social and economic welfare of both the family and society.
Education and other factors influencing microcredit
Saiz-Álvarez and Gutiérrez 2012 argued that microcredit opens new economic frontiers when properly utilised by women particularly in rural poor and isolated regions. However, the impact of microcredit is not the same in all regions. In other words, many factors influence how microcredit affects women.
Factors such as marital status, education, government policies, societal values, availability and accessibility of micro-finance institutions as well as information communication technologies have greater influence on how microcredit affects the women livelihood. Further, Saiz-Álvarez and Gutiérrez 2012 noted that access to microcredit increases the bargaining power of women particularly where the capital is invested in profitable ventures as well as inexistence of cultural influences.
Education is one of the major factors that determine the success of microcredit in improving economic status of women. Education increases the capability of managing risks. In addition, education enhances the understanding of market transactions while increasing productivity.
As such, educational programs need to be established in order to enable women exploit the available opportunities. Saiz-Álvarez and Gutiérrez 2012 noted that education and Information Communication Technology (ICT) have a direct link to reduced poverty levels through accessibility to micro-finance.
In order to be successful, women borrowers must attain minimum education level. Minimum education level is critical in understanding the contractual terms and accessibility to transparent information for appropriate decisions. From the perspective of micro-financiers, the development of ICT has boosted access as well as possibility of offering loans to the poor women all over the globe. In fact, the development of ICT has enabled lenders to offer credit to people at extremely low-cost.
However, women’s access to internet continue to decrease globally particularly in developing countries. As such, effective educational policies, technology use, economic resilience and change of social norm remain critical for the success of microcredit in poverty reduction and enhancement of women’s economic status (Saiz-Álvarez & Gutiérrez, 2012).
Women and microcredit
As indicated, the reason why microcredit targets women is derived from the females’ roles in family support and sustenance as well as overall contribution to the economy (Saiz-Álvarez & Gutiérrez, 2012). Besides, women are found to be more responsible and have decreased levels of repayment problems.
Challenges facing microcredit
However, there are various challenges facing micro-finance. The major problem is how to choose the right people to lend. In other words, screening people with reduced default rates remains a big challenge to micro-financiers. Second, the high interest rates applicable to micro-finance discourage the poor from accessing microcredit facilities.
Third, extremely poor people are excluded within the precincts of microcredit. The other challenge is the vicious spirals of credits particularly where new loans are provided to pay the previously taken credit. The solutions to the challenges include the provision of basic education especially to women, support by governments in situations where there is likely default, both national and international regulatory policies, increased information and transparency.
Reference
Saiz-Álvarez, JM & Gutiérrez, JAG 2012, “Microcredits for women entrepreneurship: are they an effective tool to avoid family impoverishment?”, in MA En Galindo & D Ribeiro (eds), Women’s entrepreneur-ship and economics: new perspectives, practices and policies, Springer, Nueva York, pp. 167-177.