Financial services versus development: "best practice" for development and gender empowerment in microfinance

Ryan, Michelle (2014) Financial services versus development: "best practice" for development and gender empowerment in microfinance. Masters thesis, Memorial University of Newfoundland.

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Abstract

The debate in microfinance, between “left and right” political economy approaches to development, can best be settled by examining the impact of microfinance as it is practiced. Microfinance began thirty years ago as a reputedly progressive development based approach to poverty alleviation. A development approach informed service delivery in the 1980s and early 1990s, focusing on using microfinance to help alleviate poverty and provide gender empowerment. Currently, microfinance practice is dominated by a neoliberal paradigm that is centred around provision of financial services, and a program delivery focused on the fiscal sustainability of the microfinance institutions. This transition has impacted program delivery. Despite a consensus that microfinance has the potential to improve the situation of impoverished women when paired with the interventionist and educational components of the original development conception (Greenspan, 2002, Sebstad and Cohen, 2003, Karlan and Valdivia, 2006, Karlan, Harigaya, and Nadal, 2006, Frisancho and Valdivia, 2006, Kessy and Temu, 2010), the industry no longer provides these services due to the shift from a development approach to the neoliberal financial services approach. Moreover, the current methods used to ensure high rates of repayment not only further entrench existing gender roles but actually run counter to the “development wisdom” which originally informed microfinance practice. The move away from a development approach has come under fire from feminists and economists. They contend that pre-existing inequalities are being further exacerbated by microfinance. It is now clear that a financial services approach to microfinance achieves neither development goals nor gender equality. This thesis will advance that microfinance needs to be paired with a broad range of objectives and initiatives, in line with a development approach, in order to achieve gender empowerment and development goals.

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