A woman displays her wares        Photo courtesy

Since the genesis of the Grameen Bank in Bangladesh in 1976, microfinance has been championed across the world as one of the most effective means of improving the lives of the world’s poorest female entrepreneurs. But what happens when a microfinance organization combines their loan program with other services aimed at educating and empowering women to be greater participants in civil society?

In recent decades, success stories about microfinance empowering women to take a more active role in their local communities have received wide attention. Micro entrepreneurs, the stories go, are so empowered through their participation in microfinance projects, that they have gone ahead to run for public office, work to stop domestic violence, and open health clinics.

While stories of the success of microfinance in empowering women to be agents of change in communities in South East Asia, South America, and other parts of the world are abundant, there aren’t as many stories about microfinance and civil action coming from the Middle East. Curious, I travelled to Egypt in 2009 to learn more about the connections between microfinance and the participation of Egyptian women in civil society. What I found was both encouraging and disappointing. Microfinance organizations in Egypt have had some success linking social empowerment with economic empowerment.   

What  makes microfinance a viable vehicle for encouraging women to participate more widely in civil society? Part of the answer lies in the logistics of running a small loan program. Many microfinance organizations take advantage of the regular contact between staff and clients who serve as guarantors for each other in order to educate and train women on health issues, their legal rights and other areas of concern. The success of microfinance organizations working to empower women not just as business women but as civil agents is widespread. In Bangladesh, more than 3,000 Grameen Bank clients (or former clients) now hold public office after being empowered by services the bank offers. In Bolivia, Freedom from Hunger, an organization that integrates microcredit with education and other services, has found that its clients “were significantly more likely to have been candidates for public office or to have been members of the community's sindicato, or labor union, than non-clients.” At the Asociación General Para Asesorar Pequeñas Empresas in Latin America, clients helped raise funds to bring electricity to their barrio.

Catholic Relief Services (CRS) has proven that using the groundwork laid by microfinance projects can be a successful means to empowering women politically in Egypt. CRS’s project, Pioneering the Political Engagement of Women Micro-Entrepreneurs, focused on raising political awareness among female micro-entrepreneurs in rural Egypt. By relying on the networks and success of their microfinance program, CRS and their partners were able to hold “awareness sessions” for female micro-entrepreneurs on political participation. These awareness sessions educated approximately 11,000 women in rural Egypt on the importance of political and civil engagement. The project helped many women get a voting card for the first time and broke down the intimidating voting process. Perhaps the most remarkable indicator of the project are the 48 women who chose to run for office after attending a CRS’ training session. Of these 48 women, three were elected as the first female council members in their communities.

Yet, while the CRS project highlights what can be accomplished when combining microfinance with broader training, Egypt continues to lag behind other parts of the world in terms of non-economic benefits and results from microfinance clients. While women in South East Asia and South America have used microfinance as a launching pad for community action, community action by female microfinance clients in Egypt is not as common.

Egypt has approximately between 250 and 300 non-governmental organizations (NGOs) offering microfinance services, yet most of these NGOs offer only very limited services outside their loans programs. According to UNDP’s National Impact Survey of Microfinance in Egypt, only 6% of microfinance clients interviewed had received any sort of advice or training from their microfinance provider. Although clients indicated that they would like to receive more training on issues related to female empowerment, community participation, and nutrition, most NGO’s offering microfinance services in Egypt do not offer trainings related to these issues. Microfinance NGOs in other parts of the world frequently link trainings on political rights, health, and other subjects successfully to their microfinance services. What is holding microfinance organizations in Egypt, particularly in the NGO sector, back from providing broader services?

While it can be tempting to point to cultural barriers and the strong patriarchal tradition in the Middle East as sufficient explanation for the difference in outcomes of microfinance in Egypt and other parts of the world, this would be an oversimplification of the issue. Although Egypt and other parts of the Middle East undoubtedly have a strong patriarchal society, some of the most successful microfinance operations work in countries in South East Asia and Latin America – areas that deal with their own serious issues of chauvinism and patriarchy. So what is going on in Egypt that is limiting the end results of microfinance? To answer this question one must turn the Egyptian government and their policies limiting the NGOs. 

For decades now, the Egyptian government has backed the establishment of a variety of laws limiting “political” activity by NGOs. Law 32 of 1964 and Law 84 of 2002 (“the NGO Law”) make it extremely difficult for NGOs working in Egypt to engage in most political activity.  “Political activity” has been loosely defined in the laws, making it a term that can be easily manipulated by the government to limit the scope of non-profit groups.

Under Law No. 84, registration is mandatory for all non-profit groups or associations of more than ten people. As the International Journal for Not-for-Profit Law explains, the Ministry of Social Affairs can “deny registration if it determines that the association’s purposes constitute an activity prohibited under Article 11 of the Law”, including any political action. Perhaps as a reflection of the government’s policies towards NGOs and community organizing, many microfinance providers in Egypt have limited themselves to solely offering financial services.

In addition to making registration of a non-profit group difficult and limiting the scope of an organization, the NGO Laws also make it possible for the government to interfere with an organizations activities in a number of other ways. For instance, as the International Journal for Not-for-Profit Law points out the Ministry of Social Affairs can send a government representative to the meeting of an organization (Article 25(d)).

In a recent interview, the director of the Egyptian Center for Women’s Rights, Nehad Abu El-Komsan, explained that red tape and bureaucratic hoops created by the government result in a sense of paranoia in smaller organizations. For instance, the government requires NGOs to get permission 60 days in advance for any staff member to attend a conference or join a network. For organizations with limited organizational capacity the process of getting government approval for attending a conference, combined with the 60-day waiting period, deters them from participating in international networks. Even though the staff of microfinance organizations in Egypt are desperately in need of training and networking opportunities, their possibilities for doing so is severely limited by government policy.

However, government obstructionism is not the only factor playing against the use of microfinance as a tool to empower women socially and politically in Egypt. A general lack of attention to gender issues by NGOs in Egypt also causes many organizations offering microfinance loans to limit themselves solely to financial services. While the majority of microfinance clients worldwide are women, only about 47% of microfinance clients in Egypt are women.  With females as the minority of microfinance clients, projects aimed at building a sense of empowerment and group solidarity amongst women is not as high a priority as in other countries where the vast majority of microfinance clients are women.

The potential for microfinance in Egypt to play a role in expanding female political and community participation is significant. Yet microfinance organizations in Egypt face severe roadblocks: the percentage of female micro-entrepreneurs in Egypt with access to loans lags behind the rest of the world. As long as the Egyptian government restricts NGOs ability to organize, and as long as microfinance organizations limit their own missions to be solely financial in nature, we can expect microfinance to remain a peripheral player in advancing female activity in Egyptian civil society. 

By Arusha Gordon

Arusha Gordon arusha.gordon@gmail.com  is currently a Fulbright Fellow with UNESCO. In 2009 she studied microfinance and gender in Egypt on a Fulbright grant.