Gender, Microfinance and Empowerment: A Case Study of Women Borrowers from Rural Chakwal

Abstract

This case study demonstrates how social exchange plays a crucial role in the connection between microfinance and empowerment. The research spanned a year in Nara Mughlan, situated in the Chakwal district of Pakistan, and involved conducting in-depth interviews with women and men borrowers, as well as participant observation at various levels. To understand the dynamics of women’s empowerment, the theoretical framework for this research is based on Kabeer's (1999) concept of resources, agency, and achievements and Mayoux (2002) three-paradigm model. The study’s findings reveal that patriarchal norms hinder a woman's ability to transform resources into agency and agency into achievements, when viewed through the lens of feminist empowerment frameworks. The findings also suggest that microfinance by itself is insufficient to increase women’s empowerment due to their limited involvement in household decision-making and the conditions necessary for social transformation. Additionally, the research highlights decisions are not always favourable to women. With a few exceptions, the study suggests that women who receive microfinance struggle to acquire productive assets. Instead, microfinance amplifies women's economic vulnerabilities by enabling them to utilise funds for non-productive purposes and obliging them to repay debts. Consequently, they must seek multiple loans from microfinance providers (MFPs) since they lack a stable source of income to pay off the debt. The findings of the study also indicate that proxy lending has a different perspective that MFPs do not perceive as a positive aspect but instead consider a factor for loan default. The MFPs’ primary focus is on borrowers’ full and timely repayment of the loan amount, while women borrowers use proxy lending as a means to facilitate social exchange based on tradition of social connections and reciprocity. In this exchange and engagement with one another, women sub-lend loans to other women and forego their own turn on Rotating Savings and Credit Association (ROSCA) committees, which boosts their self-esteem. While the MFPs have assimilated microfinance intervention into the cultural paradigm, where women were targeted to maximise returns, they use coercion and the debt of honour to retrieve the amounts owed. Thus, the study questions the binary categorization of women's empowerment and disempowerment in this context.