In most developing countries, women are the mainstay of African economies. The benefits of promoting women’s economic empowerment thus spreads beyond the individual woman to her children, family, community and the nation subsequently. Empowerment refers to increased well being, community development, self sufficiency and expansion of individual choice.

Empowering women economically boosts both gender equality and wealth of the nations. This entails enabling the women to have the capacity to control income and other key economic resources like land and animals.

An African woman driving her car Photo:Courtesy

Why women in Africa are not economically empowered

In traditional Africa, women were involved in the economy since they were defacto managers of income generating activities on farms as husbands were involved on non-farm business. Then came the colonial economy which created title deeds, making men the sole owners of land, thereby  rendering women economically weak.  The colonial regime also uprooted men from villages to work in urban areas and plantations like rubber plantations in Congo, Cocoa plantations in Ghana and Coffee plantations in Kenya, amongst others. Women consequently were overburdened with running homes, making them  economically unstable.

Other reasons why Women in Africa are not empowered are poverty and negative cultural practices. Accessing credit is the major constraint on women’s ability to earn income. The Microfinance sector is now taking the African women back to their role of being involved in the economy as they were in dire need of other income generating activities to supplement their small farms which barely fed them. It is estimated that women comprise 74% of the 19.3 million of the world's poorest people now being served by microfinance institutions.

Defining Microfinance Institutions (MFIs)

MFIs  is a term commonly used to define financial institutions dedicated to assisting small enterprises, the poor, and households who have no access to the more institutionalized financial system, in mobilizing savings, and obtaining access to financial services. Through microfinance, women have been able to run small businesses which constitute a significant share of economic activity in developed and transitioning economies.

To meet the unsatisfied demand for financial services to women, a variety of MFIs have emerged over time in Africa. Some of these institutions concentrate only on providing credit, others are engaged in providing both deposit and credit facilities, and some are involved only in deposit collection. They range from non governmental organizations, savings and credit cooperatives, commercial banks and regulated specialized providers.

Examples of largest MFIs in Africa are Equity Bank in Kenya, Kenya Women Finance Trust (KWFT), Kenya Post Office Savings Bank (KPOSB, in Uganda we have Centenary Rural Development Bank, Uganda Women Finance and Credit Trust (UWFT), Nigeria’s Integrated Microfinance Bank (IMFB), Country Women Association of Nigeria (COWAN), Morocco’s Al Amana, Capitec Bank of South Africa, Amhara Credit and Savings Institution (ACSI) of Ethiopia,  Union des Banques Populaires du Rwanda (UBPR) and  Réseau des caisses populaires du Burkina (RCPB) of Burkina Faso.
  
Empowering Women

In Africa MFIs have recorded notable gains. The sector has transformed from an insignificant player in the national psyche to a recognized sector with potential to equitably offer financial services to the active poor women in viable micro-enterprises, empower enterprising women through financial access and skills and drastically reduce poverty.  

Access to savings and credit facilities strengthens women  in economic decisions. It also improves their skills, knowledge and support networks as well as enhancing their status in the community. Increasing women’s access to microfinance has led to social and political empowerment. Poverty alleviation and women empowerment are seen as two sides of the same coin and it is the only way to bring wider changes in gender inequality. Evidence of Women empowered economically through micro finance are Pankop Women Farmers Forum in Mpumalanga, South Africa, Jamii Bora Housing Project in Kaputei, Kenya amongst others.

Women have proven to be excellent clients notably in paying back loans in a time and they are key drivers to development, investing in women has proven effective way to increase individual family expenditure on health, education, improved nutrition and food security.

Challenges

Among challenges facing microfinance industry in Africa are: High cost of service delivery with poor infrastructure, regulatory policy issues and the need to develop institutional leadership. Because infrastructure and communication technology remain largely underdeveloped in Africa, it is significantly more expensive for MFIs in Africa to operate compared to their peers in developing countries. 

Another challenge in Africa is policy making and government regulations, which vary by country. In many countries, the supervisory capacity of central banks, which holds the ultimate responsibility of financial sector needs an adjustment. The countries which are able to close the microfinance demand gap most successfully will be those that improve their policy frameworks and adapt their legal and regulatory systems in line with rapidly changing industries.

Government regulations faced by MFIs are usually ambiguous and opaque. For instance in 2008, Kenya Women Finance Trust fought for increased transparency in regulatory policy by urging the government to approve and publish regulations which guide MFIs in formalization process. The microfinance Act of 2006 became operational in May 2, 2008 and allows MFIs to register under it to take deposits.

A low population density area where the number of women to form a viable group is inadequate also poses as challenge. The situation is exacerbated by the unequal distribution of the family resources, which makes it difficult for women to raise the necessary savings and participate in a group.

Some women access credit, but only to pass it onto others who are not directly accountable, leaving them with the loan repayment burden. The one year repayment period is one of the reasons for the default in repayments. Examples of such failure make other women reluctant to borrow. Because of  the society’s perception of a woman’s place in the home, some women are not aware of the existence of sources of finance.

Future of Microfinance and Empowering African Women

Developing women’s leadership is important to deliver the promise of microfinance in alleviating poverty in the continent. Increasing women representation in microfinance and helping women develop the leadership skills to become innovators in their sector is key to moving microfinance to a new level. Strategies should be put in place targeting women flexible microfinance delivery; services that complement gender; structures for participation; mechanisms for representation; inter-organisational links and  institutionalised gender guidelines gendering all policy; gender equality within institutions; incentives for equity.

The high illiteracy rate among women in Africa requires  governments and microfinance institutions to be proactive in organizing forums for educating women about their rights.To get fully empowered economically, women need to do more than just access  finance. They need gender parity, insurance, education, healthcare and housing to help them spiral upwards.

Although micro-finance can make a contribution to empowerment of women, this cannot be assumed to be an automatic outcome. There underlies the course of a good approach to solving the incapacitation of the poor women in rural and disadvantaged areas of Africa to move out of poverty. For this to materialize, the women must develop the capacity to generate and maintain their means of livelihood and produce excess that will eventually lead to savings.

Akinyi Janet,

The African Executive Magazine