Microloans Are Not Enough to Lift Women Out of Poverty

By Barbara Crossette

A Congolese from Ituri knitting in front of her house. Martine Perret/UN Photo.

In a rural hamlet not far from Dili, the capital of Timor-Leste, a group of women talking about their dirt-poor lives had quick answers when asked what would improve their subsistence economy.

“Sewing machines,” one said.

“Seeds,” said another (and a reliable water supply to make them grow).

“Chickens,” said a third, so that families could add eggs to a mostly meatless diet and sell the surplus for cash.

The responses of these Timorese women, living on the edge of Southeast Asia in one of the newest and poorest countries in the world, were shrewdly practical yet sad in reflecting the limited hopes of what they could expect from a better life. If they were to get what they need – and they probably won’t – that should be just the first step to significant economic development.

As male unemployment rates in the poorest nations stagnate or continue to rise and new generations of young men join a labor pool already in crisis – the average age of a Timorese citizen is 13 – the financial hopes of many families increasingly rest with women. But many economic programs specifically directed at them, including microloans or food-for-work programs, fall dangerously short of adequate. The ability to buy a goat or two will not be enough at the macro level to meet the poverty reduction targets of the Millennium Development Goals or the basic needs of growing populations. Nearly all the children born in the world in this century will be living in the poorest nations.

A Crucial Assignment at the United Nations

Serious economic considerations must, therefore, go into the selection of a new United Nations under secretary-general for women’s issues, an appointment that is currently held up in political wrangling. It is essential that an appointee have tough new ideas that go beyond the threadbare make-nice promises to women. Whole economies in some of the least-developed nations depend on such a determination, as it is a matter of survival for many millions of people. Indeed, the new under secretary-general must possess the clout and the will to take on governments and politicians who can’t see beyond cronyism and “jobs for the boys.”

The field of economic development for women cannot be left to nongovernmental organizations, either, which is the preference of too many governments, although NGOs do remarkable work with often limited resources under very difficult conditions, often as partners of UN agencies. Both UN officials and NGO representatives say that dependence on outside support sends a subtle message that these projects are peripheral to national budgets, not priorities in government planning.

The World Bank, part of the UN family, has been a leader in calling attention to the dearth of real money for programs to improve economic growth among women. The bank has also supported projects to develop entrepreneurial and administrative skills among women who would be poised and eager to take a leap into bolder economic activity if that didn’t mean jumping off a cliff.

Stinting Women Is ‘Bad Economics’

Women in Daykundi Province in Afghanistan gathering kindling to heat their homes.
Muzafar Ali/UN Photo.

Over the last decade, the World Bank has adjusted programs to take women into account, though in total the money that appears likely to go directly to women’s work by 2012 barely reaches a billion dollars, a small amount for half the world’s 6.8 billion people. The bank reports that although there have been worldwide advances in women’s health and longevity and in girls’ education, the proportion of women in the work force in low-income countries actually shrank to 49 percent in 2005 from 53 percent in 1980. In Africa, only 10 percent of agricultural investment gets to women, despite the fact that they do most of the farming.

“This is unfair,” the bank says in its policy papers and on its Web site. “Life’s chances should not be preordained at birth. But it is also bad economics: Under-investing in women limits economic growth and slows down poverty reduction, which is one reason that countries with greater gender equality tend to have lower poverty rates.”

The bank’s International Finance Corporation, set up in 1956 to promote and fund private investment in developing nations, has joined forces with the Global Banking Alliance for Women, which was established in 2000 by financial institutions and private sector companies, with members as varied as the Royal Bank of Canada, UPS in the United States and banks in Africa and Asia. Together, the two groups will provide a research and training network to help entrepreneurial women in developing nations.

In Timor-Leste, the special representative of the UN secretary general, Ameerah Haq, says she sees obvious opportunities for women everywhere, especially in value-added agriculture. Fruit rots on the ground and corn withers on the stalk in small farm patches and home gardens while grocery stores sell imported juices and jams, along with vegetables and even eggs from abroad that could also be produced in sufficient quantities locally.

Since the majority of farmers in many developing countries are women, enhancing and modernizing crop production and marketing (including through cooperatives) should not be impossible if the amount of money that is provided is similar to that being invested in industrial or infrastructure projects that employ mostly men, and may in any case be limited in the number of jobs they can offer and take longer to show meaningful gains for local populations.

Demanding More From Lenders

Crash programs in education for illiterate women, coupled with new openings for them in other rural sectors, such as nascent ecotourism, and the development of alternative energy sources for villages and jobs in regional and local administration are necessary starting points if the entrepreneurial potential of women is to be released. Filling gaps in social services and supporting women in niche economic sectors -- elemental food processing and marketing, to begin with -- is largely the responsibility of governments. Only then can women hope to move up and tap into, if not demand, bigger investments from international lenders.

Barbara Crossette is the United Nations correspondent for The Nation and a former New York Times UN bureau chief.

[This article was updated on April 15, 2010.]

Keywords:

Timor-Leste, Ameerah Haq, World Bank, Millennium Development Goals, International Finance Corporation, Global Banking Alliance for Women, women and economics, women in developing world