THEME: Marital and enterprise-related factors will affect women’s control over the enterprise for which they borrow.
These
days, many credit and savings activities, including those under
IFAD-supported projects, target rural women. A 2000 FAO/IFAD study
in Uganda highlights the role of microfinance in women’s empowerment.
Two questions asked were: (1) Is it appropriate and efficient to
provide credit lines exclusively for women? (2) Are women in Uganda
actually able to control the enterprises for which they borrow?
The study reviewed two IFAD-financed project components, both of which were targeted mainly but not exclusively to women. In the case of the Uganda Women’s Efforts to Save Orphans (UWESO) development project, both men and women can qualify for loans, but there can be no more than one man in each five-member group. Men are also barred from becoming the group Chairperson or Treasurer. There are even stricter restrictions on men under the Hoima/Kibaale project. The five-member solidarity groups can have only one male. He is barred from holding office or from accessing the IFAD Revolving Loan Fund, but he can borrow from the group’s own savings.
On the first point, the study concluded that women’s better performance made it appropriate for financial services to be targeted primarily or even exclusively to them. The evidence from UWESO in Mbarara, Lira and Kumi, from Uganda Women’s Finance Trust/Swedish International Development Authority (UWFT-SIDA) activities in Homa, and from Private Agencies Collaborating Together (United States) (PACT) in Masindi showed women to be more conscientious about saving, more cautious in borrowing and more disciplined in loan repayment than men.
In terms of women’s control over the enterprise for which loans are taken, the study found that it depends on the woman’s marital status, ethnic group and the nature and profitability of the enterprise.
- Women are more likely to control food-processing enterprises, those that sell prepared food, food crop trading and tailoring. Men are more likely to control those enterprises that have to do with hardware, cash crops, brick-making and retail shops.
- Married women are less likely than single women or women heads of households to control their enterprises, especially where the business is a household one, with both the husband, wife, and often the children, contributing labour.
- Women in polygamous households manage their enterprises separately from co-wives but still need to consult their husbands on the use of funds.
- In situations where the loan results in the woman’s enterprise becoming attractively large and profitable, it is common for husbands to take over control.
- Often women rely on husbands for keeping accounts, which can lead to the diversion of funds to the husband’s personal use
There were instances noted of husbands using their wives as fronts for obtaining credit, for instance in the Lira area. This may result in all or part of loan funds being diverted to men’s enterprises, with a resulting decline in repayment rates (70%). Sometimes there can also be a negative impact on household food security or women’s savings, as when women need to liquidate assets such as pigs or ducks in order to make loan repayments. The frequency with which this happens in Uganda is not known, but some rural finance experts believe that such diversion is common everywhere.
The experience argues that women may be good borrowers, and better than men, but they may not be able to control fully the enterprise for which they borrow, or the loan funds. This has many implications for rural financial services, including the need for understanding the borrower and the enterprise, and the need for close monitoring of credit for women.
Adapted from:
FAO. 2000. IFAD’s Gender Strengthening Programme for East and Southern Africa – Uganda Field Diagnostic Study (Draft). Rome
