Women empowerment still remains one of the main focal points for decades now in various regions considering historical disparities in economic opportunities. But today, with microfinance standing as a potent force, women are better integrated with economic system making. Guess what? In this blog, we are going to discuss how microfinance empowers women economically in the African region.
Though African women have been a bedrock of society since the beginning, yet in some places, they were not well integrated into the formal economic system. However, with microfinance and financial innovation, the African region is reshaping the destinies of women across the continent. MFIs have given better access to capital and removed the wider barriers that have long hindered women’s financial autonomy.
Throughout Africa and Asia, traditional banking often excludes the economically marginalized, and in that darkness, microfinance institutions became a beacon of hope. Through small loans, women are empowered to venture into entrepreneurial pursuits, from agriculture to small-scale enterprises, fundamentally altering the economic landscape of their communities.
Now, you might ask, does microfinance only empower women financially? No. It goes beyond financial transactions. Ask how?
The transformative role of microfinance in uplifting women in Africa is not just about economic transactions; it’s narrative of empowerment, resilience, and the gradual rebalancing of economic opportunities for the vibrant women of the continent. Let’s learn about that in detail.
The Landscape of Women’s Empowerment in Africa
Needless to say, in Africa, women have historically been the bedrock of their communities. They have been contributing significantly across various domains. However, despite their important roles, a substantial gender gap remains persistent, which is preventing women from full economic participation.
According to the World Bank, women in sub-Saharan Africa, on average, only represent 58% of the male participation rate in the labour force. Even the participation in the varieties of business is even lower.
But why?
Well. one major challenge is limited access to financial resources. According to the African Development Bank, approximately 70% of women in sub-Saharan Africa lack access to formal financial services. We might not see it with bare eyes, but this is a huge disparity.
This financial exclusion increases the challenges women face in starting or expanding businesses. Additionally, their cultural and societal norms put forward further challenges for women’s economic mobility. Furthermore, discriminatory practices and stereotypes have also contributed to limiting their access to education and employment opportunities.
At this moment, Africa needed something to eradicate the barriers and change the whole game – Microfinance organizations. These financial organizations are not only empowering women economically but also enhancing their individual well-being and contributing significantly to the continent’s overall economic growth and development. Still curious how Microfinance empowers women economically and beyond in the African region? Then let’s get there.
How Microfinance Empowers Women Economically and Beyond as a Catalyst for Change
Microfinance is a financial service that provides small loans to individuals, especially those in low-income communities. Since its inception, it has proven to be a game-changer in the quest for women’s economic empowerment and beyond. Today, it stands as a catalyst for change in the African region. Here’s how microfinance is making a difference;
Giving Women Access to Capital
Microfinance institutions (MFIs) play an important role in bridging the financial gap for women in Africa. It is no longer a secret. It provides a gateway to capital that traditional banking systems often deny them. Access to capital is one of the main ways how microfinance empowers women.
MFI is a newfound access that represents a transformative force – simply, it is empowering women to start their entrepreneurial journey that was once almost impossible.
We all know that conventional banks demand extensive collateral or credit histories. However, MFIs specialize in providing small loans that are designed to meet the unique needs of women entrepreneurs. These loans serve as a catalyst for business initiation or expansion, enabling women to get into diverse sectors such as agriculture, retail, and services.
Can you guess the impact? Or can think if women are integrated into all the sectors, what will be the impact?
Well, let us tell you, the impact is tangible as women entrepreneurs generate income, fostering economic self-sufficiency and bolstering their financial resilience. The impact can go beyond that, which will be discussed.
It is not only the financial empowerment on paper but also the dismantling of systemic barriers that prevent women from progressing for generations. As women gain control over capital, they assume community leadership roles. They are able to challenge preconceived notions about gender roles and contribute to a more inclusive and prosperous society.
Opening Doors Entrepreneurial Opportunities
The second reason microfinance empowers women financially and beyond is that it opens the door for entrepreneurial endeavours.
For decades, it has emerged as a catalyst for entrepreneurial empowerment, offering women financial resources and a gateway to transformative opportunities.
According to a study by the International Finance Corporation, microfinance has empowered millions of women entrepreneurs worldwide, with women representing a substantial portion of microfinance clients.
These microloans serve as the lifeline for women venturing into diverse sectors. From agriculture to artisanal crafts, women leverage these financial resources to start their small businesses and foster economic independence and sustainability.
The effect of this economic empowerment is profound, as these ventures contribute not only to individual success but also to the broader economic development of communities.
The Global Findex Database reports that in developing economies, 55% of women who save money through formal financial institutions are more likely to invest in businesses, and it conveys the role microfinance plays in entrepreneurial potential and driving communal prosperity.
Helping with Skill Development and Education
This blog is about how microfinance empowers women economically and beyond. Now, let’s talk about some of the financial roles of microfinance in women’s empowerment.
There is no way to deny that Microfinance programs extend beyond financial transactions. And we hope you already know so many of them. Anyway, let us make it clear.
MFIs are actively contributing to the holistic development of women through targeted skill enhancement and education initiatives. Since the beginning, MFIs recognized the significance of knowledge in financial empowerment. As part of their responsibility towards women’s empowerment, many microfinance programs integrate components designed to boost women’s financial literacy and business acumen.
Microfinance institutions offer training sessions covering topics such as budgeting, savings, and entrepreneurship. These educational initiatives provide essential tools to navigate the intricacies of managing finances and making informed business decisions.
According to the Consultative Group to Assist the Poor (CGAP), microfinance clients who receive financial education are more likely to improve their financial well-being and successfully run sustainable businesses.
I hope now you understand how the dual approach of providing financial resources along with educational support women empowerment beyond the economy.
Driving A Huge Impact on the Community
One of the most significant ways microfinance empowers women beyond finance is that it drives a huge impact in the community in multiple ways.
With the help of microfinance, the success that women have in entrepreneurial ventures creates a ripple effect. And that effect extends far beyond individual achievements. It leaves an impact on the fabric of entire communities.
As women thrive in their businesses, the positive impact radiates outward, contributing to the creation of resilient and economically vibrant societies. The empowerment of women through microfinance transforms them into leaders and change-makers within their communities.
A study published in the Journal of Development Economics found that women’s increased access to microfinance leads to positive changes in community well-being, including improvements in health and education. It also becomes a catalyst for broader societal changes.
Breaking Societal Norms
Since its inception, Microfinance has emerged as a powerful tool for breaking societal norms, particularly gender roles. Ask how. Simple, by empowering women economically.
According to a 2019 study by the World Bank, women constitute the majority of microfinance clients globally, with over 80 million women participating in microfinance programs. The MFI initiatives enable women to access capital through microloans. They can start businesses and generate income, challenging traditional expectations that confine them to domestic roles.
As women become financially independent, their involvement in decision-making processes increases significantly. You will be surprised to know that The International Labour Organization reported that
“Regions where microfinance is prevalent, there is a notable rise in women’s participation in leadership roles, reaching up to 60%.
This economic empowerment transforms individual lives. Besides, it also contributes to reshaping societal norms, fostering greater gender equality, and challenging deeply ingrained gender dynamics.
Furthermore, continuous research and evaluation of microfinance programs are essential to identify best practices and areas for improvement. Transparency, accountability, and a focus on long-term sustainability should guide the way forward. By fostering collaboration and addressing these challenges, microfinance can continue to be a powerful force for positive change, unlocking the full potential of women in Africa and contributing to broader economic development.
In short, Microfinance has emerged as a beacon of hope. And it has been a driving force for women’s empowerment in the African region. By providing access to capital, fostering entrepreneurship, and challenging societal norms, microfinance is not just a financial service; it has been working as a catalyst for positive change. As a change maker for MFIs around the world with technological solutions, we celebrate women’s empowerment. We hope we have covered everything about how microfinance empowers women economically and beyond.