Theme: Microcredit and savings opportunities bring about a variety of changes.

A considerable amount has been written on the topic of credit and savings for women, but still more can be learned, particularly about impact. An IFAD study of the gender experience in two IFAD-financed projects in Pakistan provides some related learning about this topic in the context of a traditional society. Both projects promoted community credit schemes with the goal of making productive capital more affordable, including to women.

Prior to the projects, people in these project areas had relied on informal credit. The project in the Neelum and Jhelum Valleys found that the main sources of credit were as follows: (1) friends and relatives: 63% for men and 53.9% for women; (2) shopkeepers: 20.0% for men and 18.5% for women; and (3) money-lenders: 10.0% for men and 25.9% for women. At the pre-project stage, the majority of loans sought in both project areas by both men and women had been for consumption or ceremonial purposes or for construction. As a result of the project’s efforts, both the number of loans and the range and purposes for which loans were taken out increased. In most cases, project loans financed productive enterprise ventures, the most popular being livestock enterprises. Group-based savings were also successfully encouraged.

The study identified two key differences between credit and savings for men and women:

• Male community-based organizations were able to save more than the corresponding organizations among women. Two reasons were identified: (1) the men were able to earn more income than were the women even in comparable occupations, as when both men and women had been trained as village livestock workers and (2) women tended to contribute proportionally more of their earned income towards essential household expenses, so that their husbands could save and reinvest, with the result that the women were less able to save money themselves.
• Women were more conscientious about the repayment of loans (92% compared to 80%) in both projects. The reason given by women and men was that “women are more honest than men”. It was also explained that women were more likely to repay loans because they are concerned about their other group members. Women seemed to take pride in ensuring that no members defaulted on their loans.

Surprisingly, the study found that close to 90% of the women consulted said they were free to spend their own income as they wished, with the following results:

• Women’s income has benefited the household, as women primarily spend their additional income on household expenses, such as food, education, health care and small gifts or clothes for themselves or their families. For younger women and mothers of girls of marriageable age, income tended also to go for the building of dowries.

• Women’s additional income has had a beneficial impact on women’s personal relationships. The benefits have accrued in terms of both women’s relations with their husbands and women’s relations with other women, mainly those from their own groups¹.

• Women’s income has meant that men could take greater financial risks. That is, because women were contributing more to the daily expenses of the household, their husbands could invest more of their earnings in their own enterprises without so much concern about household survival. This underlines the often forgotten interrelationships between women’s and men’s incomes at the household level.

The study also noted two ways that the impact of credit for women could have been improved:

• The projects should have put their training focus where women put their money. Most women were not interested in taking out loans for anything other than livestock. Under one of the two projects, fully 97% of the loans by women were aimed at livestock enterprises. Very few loans were for crop production. However, much of the technical training in both projects focused on crop production (especially vegetable production) or handicrafts, and little on livestock. Women, of course, did have considerable traditional livestock knowledge that had been handed down from generation to generation and confirmed by their own experience. But the project introduced some changes, as in the case of the project programme that provided Fayumi chicks, which have special care and housing requirements. The fact that most died suggests a knowledge gap, although other factors may have been involved as well.

• More women should have been provided with credit management training. Fewer women than men were trained on this topic. But this pattern may now be changing.

Lesson: Where women obtain access to new credit and savings opportunities, this can have a wide-ranging impact, including on men’s enterprises. But projects must ensure that training and credit are synchronized in order to maximize the impact of both.

Endnotes:

1/ See also: “Pakistan: How new opportunities can affect women’s social relations”

Source:

Maria Protz, October 2001, Gender Impact Analysis of the Mansehra Village Support Project and the Neelum and Jhelum Valleys Community Development Project, Rome.

IFAD Projects in Pakistan