CONTRIBUTION OF MICROFINANCE IN WOMEN

EMPOWERMENT

A Case Study: Profemmes Twese hamwe through

DUTERIMBERE Institution Micro- Finance

BY Adeline

INTRODUCTION Globally, women disproportionately represent 70% of the world and 1.3

billion population who live on less than one dollar per day.

In Rwanda, women constituting 54% of the 11,3 million of entire population

However, most of these Rwandan women are illiterate and 70% of Rwandan

live below the poverty line yet a large proportion of these are women

The Rwandan women make up the majority of the lowery paid workforce

especially in unorganized informal sector of the country’s economic

The poor find it difficult to generate significant income from such loan

because interest rates are high

Rwandan women have always been facing unemployment problem compared

to men

Cont’s Normally, providing the poor women financial services increases their

income and productivity and reducing poverty

That is why microfinance services have been developed to fill these gaps,

with increasing assistance from the various financial institutions and other

donors.

Microfinance services is emerging as a powerful tool to reduce poverty

and improve access to financial services for the poor women in world wide

in general and in Rwanda especially

Economic power means access to income, assets, food, markets and

decision-making power in the economic activities.

Cont’s Social power means access to certain bases of individual production such

as financial resources, information, knowledge, skills and participation in

social organizations.

Psychological power means the individual's sense of potency, which is

demonstrated in self-confident behavior and self esteem.

According of the Lowlands (1995) describe it as “a process whereby

women become able to organize themselves to increase their own self-

reliance, to assert their independent right to make choices and to control

resources which will assist in challenging and eliminating their own

subordination

Concern of PTH Organization Pro-Femmes Twese Hamwe is an Umbrella Organization that promotes

gender, peace and development through advocacy, economic

empowerment, and equal participation of women and men in the

development process and fight gender based violence for a better

Rwandan society.

It formed on 18th October 1992, by 13 Rwandan Women Associations,

today Profemmes Twese Hamwe is composed of 58 member associations

including Rwanda Men’s Resource Center, a men’s Organization

(RWAMREC) .

PTH Objectives To combine efforts, work for change so as to eradicate all forms of

discrimination and violence towards women;

To be a consultation and a reflection framework on success strategies

on mission of member associations committed to the promotion of

peace, women’s social, economic, cultural and legal status;

To facilitate exchanges between various member organisations and to

promote partnership with organisations or institutions working for

women promotion.

Concern of Duterimbere MFI It is microfinance institution which receives the economies of usual customers

served by banking system and those who don’t have sufficient guaranties to offer

in order to ensure the refunding of the authorized credit.

It was created on June 15th 1997, the idea of creation of this institution come

from the non-profit making which in the achievement of its mission of promotion

of the female entrepreneurial in Rwanda

Another , Duterimbere MFI had initiated a program of saving and credit in

Rwanda.

The Managing Director of Duterimbere, Delphin Ngamije, said his institution will

provide credit worth Rwf4 billion by the end of this year, up from Rwf2.5 billion

last year that was loaned to a total of  53,500 customers, the women have 70% of

clients

Last year, Duterimbere made a net profit of Rwf116 million and is targeting a

total of Rwf200 million as proceeds this year, which signals the recovery of MFIs

after a period of poor business practices.

Duterimbere objectives To aim at the improvement of economic and social conditions of its

members, in particularly the women

To provide the financial services (Saving and credit) to the population with

low and to the women in particularly

To help the women to carry out the income activities via individual

projects and the groups of solidarity

To promote the agriculture of saving and economic, social education and

cooperatives of its members.

OBJECTIVES OF STUDYOBJECTIVES OF STUDY General objectives

To determine the contribution of microfinance in women empowerment in

Rwanda.

Specific objectives

To identify various determinants of women empowerment.

To find out the impact of microcredit in women development/promotion.

To analyze the role of microfinance in family empowerment by women.

HYPOTHESES OF THE STUDY

General hypothesis

The main hypothesis stipulates that the microfinance contributes in women

empowerment.

Specific hypotheses

Savings, credits and family self-sufficiency are among various

determinants of women empowerment.

Microcredit impacts the women development/promotion.

Women contribute in family empowerment through microfinance.

Cont’s Some see microfinance as a source of major social transformation; others see it

as the seed of a revolution in banking access. Is true believers push for both.

Microfinance is a type of banking service which provides access to financial and

non financial services to low income or unemployed people.

According to Kreditanstalt für Wiederaufbau (KfW) said “microfinance is a

significant instrument for poverty reduction and tool for women’s

empowerment”

Thus, the improvement of women’s empowerment has the potential to lead to

positive changes in social and political dimensions.

It has been well documented that an increase in women resources or better

approach for credit facilities results in increased well being of the family

especially children

REVIEW OF LITERATURE

The literature review on how microcredit impact women

empowerment will allow to assess and let women survive live a life

with dignity, humanity, respect, self esteem and self reliance.

The emphasis will assess the ability to exercise choice incorporates

three interrelated dimensions and the women will be empowered

when they will have full control over their own life.

The main objective of this initiative was to provide loans to poor

people without collateral, alleviating poverty and unleashing human

creativity and endeavor of the poor people especially women.

Cont’s Microfinance has proven its potential to generate results and in general,

studies suggested the poorest seldom benefit from microfinance, while the

middle and upper poor benefit the most

Women in particular face significant barriers to achieving sustained

increases in income and improving their status, and require

complementary support in other areas, such as training, marketing,

literacy, social mobilization, and other financial services

(e.g., Consumption loans, savings).

Various Credit Lending Models Associations: a target community forges together to form an association

through which a variety of microfinance activities are carried out

Community banking: This financing model considers the whole

community as one unit and facilitates the establishment of semi-formal and

formal institutes through which microfinance are administered

Co-operatives: A co-operative is an independent association of people

who come together voluntarily to meet their mutual economic, social and

cultural aspirations and needs through an egalitarian controlled enterprise

Credit Unions: A credit union is a member-driven unique self-help

financial institute comprising of members of a specific group like labor

unions or a social fraternity who assent to save money and make loans to

each other out of that fund at reasonable interest rates

Cont’s Group: This model is based on overcoming individual shortcomings by the

aggregated accountability and security engendered by the formation of a

group of these individuals.

Individual: This is the simplest and the oldest credit lending model where

small loans are given straight to the borrower

Intermediaries: As the name suggests this model is a ‘go-between’

organization operating between the lender and borrower

Non-Governmental Organizations: are very active in the field of micro-

credit, be it creating consciousness of the importance of micro-credit, or

developing tools and resources to monitor and identify righteous practices

Rotating Savings and Credit Associations: A group of people join together

and make periodic cyclical contributions to a common fund that is given to a

member in a lump sum

Cont’s

Village Banking: This is a 15-50 low income individuals who seek self-

employment come together to collect funds and give loans

Small Business Enterprises (SME): persons get loans from micro-credit

programs for creating employment, increasing income

CASE STUDYCASE STUDY

Profemmes Twese Hamwe through Duterimbere MFI Institution is the

oldest and one of the renowned Microfinance institution in Rwanda.

The research chose this organization because of its outstanding

performance in promoting of women economic development of poor in

Rwanda especially the marginalized women.

To this point it serves as an important source of content for the researcher

to achieve the objective of her research topic.

The bank helps the unemployed women to get microcredit loans to invest

in small income generating activities to ensure them with income self

sustenance result into economic empowerment of Rwanda women.

POPULATION AND SAMPLE SIZE OF THE STUDY

The target populations were all beneficiaries of PTH through Duterimbere

MEI in Kigali city specifically in Nyarugenge, Kicukiro and Gasabo District

The study of whole population was not possible due to limited time and as

result study used 200 clients as sample to represent the whole clients

population

Data collection methods: direct interview, telephone, and field visited

DATA ANALYSIS, PRESENTATION OF KEY FINDINGS AND

INTERPRETATION

Previously, the research mainly hypothesized that the microfinance

contributes in women empowerment, and specifics hypotheses were:

1) Savings, credits and family self-sufficiency are among various

determinants of women empowerment,

2) The microcredit impacts the women development/promotion,

3) Women contribute in family empowerment through microfinance.

IDENTIFICATION OF PARTICIPANTS

Participants to our research were identified according to some socio-

demographics variables.

These are the age, marital status, education level, and employment status,

which are synthesized in the one table .

These variables affect the use of savings and credit operations.

PRESENTATION OF RESULTS FROM QUESTIONNAIRES

Results from questionnaires are presented in different tables.

The questions have been formulated regarding the objectives and

hypotheses of the research.

For each question, respondents had to choose their position regarding

the statement, and depending on the following elements: strongly

agree, agree, neutral, disagree and strongly disagree.

According to the variable age, most of respondents are ranged between

18-25 years, representing 37, 5%. This meets the fact that the above

category represents the active population in general; while below 18 years

of respondents have 11%, which means that this group have not yet begin

the income generating activities.

Cont’s

regarding to the marital status, the married group showed 68%, and became

higher involved in savings and credit operations rather than the single groups of

the 32%

The results show that people with primary level constitutes 56% of the

respondents. Thus, 2.5% of respondents represents category of others. The others

group includes those who didn’t finish their primary school or never attended, we

explain these findings as a result of the microfinance’s institutions deal with low

income projects.

Reference made to employment status, the high number of respondents (45.5%)

is self-employed, whereas the students represent the small group with 7,5%,

these results match with the Rwandan government initiatives which encourage

people not to look at States employment, but to set up their own business

(entrepreneurship)

Cont’s

About the women use savings and credit in economic activity for their empowerment

issue, the most of respondents (49%) agreed with the statement that women use saving

and credit for economic activity, while a small group of them (5%) were disagreed

According to the economic contribution may increase women role in economic decision-

making in the household and leading to greater well-being for women children as well

as men, the number of 14.5% of respondents are strongly agree while the greater

respondents of 85.8% are agreed that area , none of the respondents disagree with the

statement

A big number of respondents 57% confirms that the women economically-developed

change gender role and status within household and community

41% of respondents agree that: Microcredit provided by Duterimbere MFI is enough to

women empowering while 59% of respondents strongly disagree with the statement,

it’s means that the majority confirmed microcredit provided by Duterimbere is not

enough in case of the women empowerment.

Cont’s

63.5% of respondents confirmed that Business held by women is competitive with

others and reproductive tasks, 44% disagreed with the statement while 14.5% of

respondents did not comment about the subject

18% 0f the women interviewed strongly agreed to Women empowerment involves the

family and community development have highest the important in the family

promotion and the number of the 82% of respondents agreed with the statement

The number of 80.5% of the women respondents were particularly proud of the

financial contribution of the loan received to their empowerment especially in their

family.

The results from our research have confirmed the contribution of microfinance in

women empowerment in Rwanda.

Different questionnaires answered by respondents have underlain the above

assumption.

Some of these questions have evaluated the use of savings and credits in economical

activity for women empowerment, and this met the agreement of most of respondents

Cont’s

regarding to the socio-demographic variables, the majority of respondents are

married, self-employed, achieved only the primary level, and are aged between 18-

25 years

On the other hand, the women appreciation towards the microcredit provided by

Duterimbere IMF in their empowerment has been analyzed, and most of respondent

have expressed their wish to increase the amount of credit offered by Duterimbere

Based on the results of the present research, we intend to emphasize on the

strengthening of women empowerment through microfinance for the following

major achievements: firstly, as women constitute the high rations among all

Rwandan, they empowerment will become a key point in sustainable development of

the country. Secondly, the promotion of women through microfinance enhances

them to become more self-employed, and encourage gender promotion which leads

them to competitiveness with men

Challenges

Women have limited knowledge for business transaction and general

business knowledge; this affects clients’ business performance in term of

price negotiations and dealing with customers Few women clients still lack self confidence to try other business

opportunities; Limited educational background as it is big problem in the improvement

for women’s business; Excess household responsibilities that inhibit their business concentration The loan they receive is not enough to satisfy their business needs; Lack of tangible assets or properties to be used for larger loan guarantee

or caution in the case an individual women encounters loan repayment problem has been one of the challenges

Recommendations/Suggestions

From the study, the following suggestions are devised to make microfinance

more effective as a tool for poverty reduction.

MFIs should have broader target group including the ones in the extreme

poverty.

Moreover, according to Rwanda Microfinance Policy, microfinance services

should be available to all sections of the community, particularly to the

poorest and most vulnerable members of society.

The design of products and services should also be made flexible to reflect

the needs of the poor.

It’s thus important to mention that there is need to improve the design and

outreach and to see MFI as part of the package for targeting the poor.

Cont’s To sum it up, microfinance is not a ‘magic’’ bullet for poverty

reduction and the increasing government’s and aid agencies’

emphasis on microfinance as a panacea to poverty

This excludes a large majority of the poor people who would need the

products and services and cannot afford this collateral. It’s thus

important to mention that there is need to improve the design and

outreach and to see MFI as part of the package for targeting the poor.

MFIs should adapt existing training programs and set up new ones in

response to clients’ needs. With respect to introductory training, as

previously mentioned, transparency and full understanding of loan

modalities must be ensured.

Cont’s

The study findings indicate that MFI alone cannot meet the needs and resolve a

wide range of difficulties of the all poor women. There is need for infrastructure

developments for remote areas and need to improve market potentials.

We recommend pursuing a double bottom-line strategy using a socially oriented

approach to foster empowerment, while at the same time stimulating financial

sustainability and additionally, provisions for monitoring must be made and

MFIs should be involved and eventually assisted in developing empowerment

indicators.

Incentive systems should be set up on all levels to encourage MFIs and

Profemmes Twese Hamwe to incorporate strategies and activities supporting

women’s empowerment into their work. The key here is not to provide more

funds in general, but rather to specifically reward promising and/or effective

approaches.

Cont’s Profemmes Twese Hamwe needs to assist MFIs in adapting their financial

products and loan modalities to clients’ needs. This process includes obtaining

information on which needs different client groups have either through research

or feedback from loan officers and clients themselves and subsequently adapting

the loan modalities. This can be done with the participation of clients.

An internal communication and decision-making structure between Profemmes

Twese Hamwe actors at all levels should be put in place. These structures

should be participatory and provide ample space for all actors, especially the

MFIs and the Technical service Provider, to include their ideas and practical

experiences and discuss what assistance they need to successfully support

women’s empowerment.

Despite increasing competition between MFIs to disburse loans, both

Profemmes Twese Hamwe and its member MFIs must ensure that loans are

given responsibly to clients who can afford them