Testing the tools of development: credit programmes, loan involvement, and women's empowerment.

Abstract

This study finds that income generation programs should not focus on women's labor as a means of empowerment. Empowerment should be directed to women's direct involvement in selling and accounting in the loan activity and in the techniques of lending agencies that promote empowerment. Borrowers are empowered through market activities and nonmarket strategies such as changing the institutional environment. Local women can be hired as group promoters. When payments are made to a collection post, local women promoters can be protected and travel to remote areas without fear for security. It is argued that goals are reached successfully, when tasks are clearly defined. Empowerment in this study means knowledge of accounting for the borrower's loan activity. It is argued that organizations that choose to make women's empowerment a goal can use this factor to measure program impact. Data for this study are obtained from the Bangladesh Rural Advancement Committee (BRAC), Grameen Bank (GB), and Save the Children, Bangladesh Field Office (SCF). The general model indicates that the borrower will be empowered in the process of taking out a loan and investing it in an activity. The likelihood that the credit process will lead to empowerment, given the multiple lending options, is tested in a probit model. Explanatory variables include location, borrower's direct contribution of labor to all or part of the activity, a borrower's direct involvement in buying supplies or selling or accounting for the loan, the lending organization (BRAC, GB, or SCF), loan amount, number of years of borrowing, and borrower position as a center or group chair. The results are based on the 826 loans of the 613 female borrowers. Significant features that contributed to borrower's knowledge included, in the order of significance, participation in accounting, selling, and labor. The key factor appeared to be market access. The impact of organization and involvement was maximized among individuals who had a 40-50% probability of being empowered. For example, a borrower, who had an initial propensity of being empowered of 20%, would have a 96.2% probability of being empowered as a result of accounting involvement.