By Tricia Gideon, World YWCA Board Member from the YWCA of Belize.
“A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. […] True compassion is more than flinging a coin to a beggar; It comes to see that an edifice which produces beggars needs restructuring.”
-Dr. Martin Luther King, Jr.
Micro-finance is a development approach that offers financial and social services to low-income groups using social capital as collateral. Micro-finance institutions (MFIs) have helped to increase women’s income and nutritional intake and have all offered health and educational services in areas where they operate and have assisted women to eke out a survival in the informal economy, but none of them have encouraged women to rethink the way relations in society are constructed, let alone actively challenge those relations. Women are responding to micro-finance programmes out of distress to meet family needs and not because new opportunities have presented themselves.
Westley (2005, p.3) enumerates many factors threatening the financial viability of Caribbean MFIs: (1) low repayment rates (due to poor MFI enforcement), (2) high transaction costs due to small economies and populations sizes, making it difficult to take advantage of economies of scale, and (3) heavily subsidized loans which all contribute to a non-expansive micro-finance sector. Also, unemployment and under-employment rates and educational and income levels are higher in the Caribbean compared to Asia, Africa and Latin America; and social safety nets are relatively better than other low-income countries, presenting fewer possibilities for MFIs. With fewer possibilities for viable MFIs in Belize, the survival needs of poor Belizean women will not be met at an optimal level that will enable these women to overcome their poverty.
Micro-finance enterprises operate in the unregulated informal sector that lacks the social safety nets and better economic activities that single Belizean women need to maintain sustainable livelihoods. MFIs cannot use microenterprises as compensation for poor Belizean women’s limited access to a market economy nor can it offer these women the security they need in times of unexpected illnesses and expenses. In Belize, where female-headed households are a common feature, they need, even more than dual-headed households, to secure viable economic activities. More importantly, poor Belizean women cannot challenge their subordination if they are disconnected from the formal sector. Kabeer (1996, p.38-39, 44) contends the goal of MFIs should not be to draw women into a credit mechanism that locks them into a perpetual contract of small loans, but to empower them to gain access to bigger loans and better financial and non-financial services in the formal financial sector.
Of course pushing poor Belizean women into the formal sector will not automatically lead to their empowerment or reduce their domestic burden either, but it will address their survival needs far better than if they remain in the informal sector, for example, increasing their access to pensions, social security and unemployment benefits and other state benefits.
Micro-finance may further reduce government aid to low-income people and increase their reliance on external funding. With the introduction of microfinance and the desire to expand its coverage across the country, the Belizean state may find it easier to relinquish their social responsibilities for caring and providing for its citizens. Consequently, the burden to survive will rests upon poor Belizean women and men, instead of it becoming a social matter that involves the state and community. Also, Belizean microfinance projects receiving external funds run the risk of becoming more sensitive to their investors’ and donors’ needs than to the needs of poor Belizean women.
Micro-finance carries a short-term agenda that will insufficiently raise poor women’s income, bringing temporary relief to their economic situation without enacting structural change. Poor single women need viable and secure economic activities that connect them to the formal sector, so their basic needs are met at a level that will allow them to rise above their poverty and actively challenge the existing power imbalance that is the source of their poverty.