Literature Review
The effect of microcredit on poverty reduction and women empowerment
By
Imane Abdel Fattah Helmy
Research Methodology Paper
Submitted to the Management Department
Faculty of Management Technology
The German University in Cairo
Student registration number: 10-4543
Group number: T11
Name of Supervisor: Ms. Raghda El-Ebrashi
Date: Thursday January 22nd , 2009
Table of Contents:
1. Introduction…………………………………………………………………………..1
2. Literature Review.........................................................................................................2
2.1. Overview on poverty…………………………………………………………….2 2.1.1. Background and definitions. 2.1.2. Types of poverty. 2.1.3. Case studies of poverty in developing countries.
2.2. Overview on microcredit………………………………………………………...8 2.2.1. Characteristics of the microcredit programs. 2.2.2. The effect of gender differences on the effectiveness of the microcredit programs. 2.2.3. A successful model of the microcredit programs: The Grameen bank. 2.3. The effect of microcredit on poverty reduction and women empowerment………………...………………………………………………....14 2.3.1. The effect of microcredit on poverty reduction. 2.3.2. The effect of microcredit on women empowerment. 2.3.3.Criticism about the microcredit programs.
3. Methodology……………………………………………………………………...…20
4. Conclusion…………………………………………………………………………..23
5. References…………………………………………………………………………...24
6. Appendix……………………………………………………………………….……27 6.1. Appendix 1: The Grameen Bank versus the commercial banks. 6.2. Appendix 2: The questionnaire.
Table of Figures:
Figure 1: Grameen Bank memebership…………………………………..13
Figure 2: Distribution of Grameen Bank members………………………14
1. Introduction:
The developing countries all over the world suffer from a complex multidimensional problem which is poverty. Poverty can not be simply described as the low level of income or low standard of living because it results in other difficulties like illiteracy, vulnerability to health problems, powerlessness and low productivity (Adjasi and Osei 2007: 449). After decades of economic development, the roots of poverty still exist and the income gap between rich and poor is critically increasing. For instance, 80 percent of the world population are living in the developing countries and contribute only by 20 percent to the world income (Hossain 2000: 185). Also, about 1.2 billion persons live on less than $ 1 a day and more than 2.8 billion people live on less than $ 2 per day (Todaro and Smith 2006: 193). Consequently, poverty alleviation instruments are gaining more interest among developing countries and many questions arise regarding the impact of microcredit on the poverty reduction of its beneficiaries, who account for 10 million households all over the world (Chowdhury el al. 2005: 298-299, Adjasi and Osei 2007: 449).
This study is exploring the effect of microcredit on poverty reduction and women empowerment by investigating whether lending the poor collateral-free loans to run income-generating activities helps in poverty alleviation and increases the bargaining power of the women. Recently, the microcredit is perceived as a magic tool for poverty eradication, especially after its great success in Bangladesh that was replicated by several nations including the developed countries like The United States of America (Chowdhury el al. 2005: 298-299). Since its first Summit in 1997, the microcredit became the most popular approach used to eradicate the worldwide poverty and it is argued that the microcredit empowers women both economically and socially by increasing their contribution to the income of their family (Elahi and Danopoulos 2004: 643, Schultz et al. 2006: 51). Therefore, the impact of microcredit on poverty eradication and women empowerment needs further examination.
The remainder of this paper is organized as follows. The next section gives an overview on poverty measures and types then discusses three case studies of poverty in the developing countries. This section is followed by describing the features of the microcredit programs and discussing the effect of gender differences on the effectiveness of microcredit then we will represent a successful model of the microcredit programs which is the Grameen Bank. Afterward, the effect of microcredit on poverty reduction and women empowerment will be examined before highlighting some criticism about the microcredit programs. Finally, in the last two sections, the methodology of the study will be described followed by the conclusion. 2. Literature Review:
2.1 Overview on poverty:
The definition of poverty is multidimensional, and there are various definitions for the term. This following chapter will provide a background about poverty, the various types of poverty and how it is measured, and will also explore poverty rates in various countries through case studies.
2.1.1 Background and definitions:
"Don 't ask me what poverty is because you met it outside my house. Look at the house and count the number of holes. Look at the utensils and the clothes I am wearing. Look at everything and write what you see. What you see is poverty."
-Poor man in Kenya
(Quoted in: Todaro and Smith 2006: 7)
According to Todaro and Smith (2006: 54), absolute poverty is the inability to satisfy the basic needs (such as food, cloths and shelter) due to the lack of the minimum level of income required by a person to be able to survive. Ullah and Routray (2007: 237-238) agreed with Todaro and Smith (2006) by defining poverty as the inability to reach a certain level of income because of the lack of adequate ownership and control over resources.
Consistent with the previous definitions, the poor are individuals with mean per capita income below the minimum level required for meeting the basic subsistence (Adjasi and Osei 2007:450, Ullah and Routray 2007: 238). This minimum level of income is usually measured by $1a day and it is known as the international poverty line (Todaro and Smith 2006: 202-203). As indicated by Perkins et al. (2006: 207-208), the poverty line is the possession of a specific amount of taka or pesos or dollars to spend daily. This poverty line varies from one country to another based on the per capita cost of its basket of good.
Siddique (1998:1095) mentioned that the headcount ratio, calculated based on the number of people below the poverty line, is the most commonly used poverty measure. In addition, another study by Ullah and Routray (2007: 239-240) revealed that the poverty gap is one of the best measures of poverty as it shows the distance between the consumption level and the poverty line. For instance, the greater the distance between the consumption level of the poor and the poverty line the higher the poverty gap. On the other hand, Adjasi and Osei (2007: 449-450) argued that poverty has a complex nature and it can be analyzed from quantitative and qualitative perspectives. Thus, to reach a fair assessment of the poverty status, multiple factors such as food consumption, health, education and housing should be examined. Moreover, they described poverty as the vulnerability to minor shock in the society such as weather shocks, the availability of limited choices, the lack of power and the deprivation from social rights like the freedom of speech.
Sadeq (2006: 136) indicated that poverty is a multidimensional phenomenon that should not be restricted to the low level of income as it involves other non-income factors like poor health, illiteracy rate and lack of access to physical facilities. Perkins et al. (2006: 207-208 ) agreed with Sadeq (2006) by defining poverty as a multidimensional phenomenon that goes beyond the GDP per capita and encompass basic health, education, access to safe drinking water and the ability to resist to natural disasters and economic downturns.
Sen (1997) developed an approach to measure poverty called "The Capability approach". This approach is used to measure the well being of the human functionings. Functionings were defined as the various things that an individual can do or can be. These functions vary from elementary functions such as adequate education and nourishment to complex functions like being happy and having self-respect. The set of functionings is known as capability and it reveals what a person can do while reflecting his freedom to choose. Hence, this approach defines poverty as the absence of the capability to function at the minimum level required within the society. Also, it is worthy to say that Sen 's capability approach played a critical role in shaping the concept of the human development used nowadays to define poverty (Selim and Mabughi 2006: 190-192).
2.1.2 Types of poverty:
It has been pointed out by Dao (2004: 500) that 63 percent of the poverty all over the world is concentrated in rural areas. For instance, Mwenda and Muuka (2004: 144) stated that 70 percent of the total African population and 80 percent of the poor in the African continent live in rural areas. In addition, Ghosh (2002: 87) indicated that poverty affects 22 percent of the rural population versus 12 percent of the urban population in India. Moreover, Ullah and Routary (2007: 238-239) mentioned that the total population in Bangladesh was 129.2 million in 2001, of whom 80 percent lives in rural areas and suffers from poverty and unequal access to land.
One of the main aspects of the rural poverty, as described by Ullah and Routary (2007: 238), is the unemployment and the underemployment due to the limited job opportunities available outside the agriculture sector. Also, these opportunities are growing slowly compared to the growth rate of the demand for them. For instance, Dao (2004:500) mentioned that two-thirds of the rural poor are employed by the owners of the lands as small farmers and low paid workers. Dao (2004: 501-502) stated that the major causes of rural poverty are the low level of productivity as measured by the value added per worker, the unequal income distribution due to the concentration of lands ownership in few hands, the discrimination based on race or gender and the large family size that results in high dependency rate. Another reason for rural poverty, mentioned by Ghosh (2002: 89), is neglecting the rural areas and excluding them from the reform plans. For instance, the basic needs of the rural sector like access to electricity, clean water and communication are not considered as priorities in the planning process that is usually class biased. Hossain (2000:189) indicated that rural poverty is caused by limited access to the land as well as high illiteracy rate and the large dependence on agriculture activities.
It has been pointed out by Dao (2004: 500-503) that 55 percent of the total population living below the poverty line in rural areas are women. In addition, the number of women living in the rural sector had increased by 50 percent compared to 30 percent for men since the mid-1970s. Even though the critical role women play in the production of subsistence food and crop harvesting especially in Africa and Asia, their earning potential is still restricted by legislation and they have limited access to the resources required for generating a stable income like access to credit and training.
As Siddique (1998: 1096) indicated, women poverty exists as a result of the fewer resources women receive for food, education, health and cloth compared to men. For instance, women receive 20 percent less calories per day than men and that is why they are more likely to be malnourished. Another potential reason for women poverty is performing some duties that are not generating income such as cooking, cleaning and looking after children. Moreover, men have more control over the household income which results in high dependency on men for the basic survival. A study by Zhibin (2008: 28-29) conducted in China identified three reasons for women poverty: (1) Income Poverty, (2) Time Poverty and (3) Asset Poverty. Income poverty was defined as the unequal income distribution between men and women that was clearly revealed in China as there was about 19.3 percent of women who earned lower income than men. Time poverty is the large amount of time women spent daily doing unpaid work such as the housework. Since the housework is the main responsibility of women, the time women spent a day on housework is 4.01 hours which is greater than the average number of hours men spent by 2.7hours. Finally, the third reason is the asset poverty which is the lack of adequate health, education, inheritance rights, access to property such as land and the absence of wide social networks.
The huge gap between the level of education of men and women is one of the main reasons of women poverty. It has been revealed that three-quarters of the illiterate persons all over the world are women which deepen the problem of women poverty. Also, it has been proved that educated women are more likely to get out of poverty, earn their own income and send their children to school. That is why if any country can not ensure the right of education, freedom and equality for its women, it is more likely than other countries to suffer from underdevelopment (Zhibin 2008: 29-30).
As Siddique (1998:1097-1099) mentioned, Bangladesh had introduced some measures in order to fight women poverty and improve the status of women. For instance, they introduced some measures to encourage the enrolment of girls in schools and launched quotas to ensure the participation of women in political issues. Also, they set up legal measures to protect women from violence. In addition, a lot of non-governmental organizations in Bangladesh applied an integrated development system that carries out different types of activities regarding women development such as health, family planning, education and vocational training. 2.1.3 Case studies of poverty in developing countries:
2.1.3.1 Poverty in Bangladesh:
It has been pointed out by Hossain (2000: 189-190) that almost the half of the population in Bangladesh fall below the poverty line. Moreover, in 1992 the statistics revealed that 68.3 percent of children under the age of six years suffer from malnutrition. Also, a major problem in Bangladesh is the rapid population growth despite the implementation of successful family planning services. Another common problem in Bangladesh is the inequality of landholding which worsens the problem of poverty since lands are concentrated among few people while the majority of rural poor suffer from low wages and low purchasing power.
Zapalska et al. (2007: 85) stated that the per capita income in Bangladesh is $350 which makes Bangladesh one of the poorest nations in this world. Also, the poor in Bangladesh are characterized by the lack of food and the poor medical services. In addition, Siddique (1998: 1095) added that the rural poor in Bangladesh suffer from low income and unemployment while urban poor suffer from malnutrition and diseases. Consequently, poverty in Bangladesh is a heritage that passes from one generation to another (Zapalska et al. 2007: 85).
2.1.3.2 Poverty in Malaysia:
A study by Siwar and Kasim (1997: 1526-1533) showed that the poor in Malaysia are characterized by a large family size, low education level, low per capita income and low employment status due to the lack of necessary skills. The study identified some causes of this poverty like the migration of the rural poor to the urban areas in order to find better job opportunities and the migration of foreigners, who represent the half of the poor residing in the urban areas of Sabah.
The solutions implemented by the government of Malaysia in order to fight poverty were divided into four components: (1) Employment creation, (2) Provision of housing, (3) Development of growth centers and (4) NADI programs. The government encouraged the growth of the industrial and service sectors through incentives to create more job opportunities in these areas. Also, they implemented some projects that aimed at providing low cost houses with physical facilities to the poor. As for the growth centers, the government created centers to improve the standard of living of the poor. Finally, the NADI program intended to provide access to electricity, water and health care in the poor houses (Siwar and Kasim1997: 1528-1529). 2.1.3.3 Poverty in Ghana:
According to Adjasi and Osei (2007: 450-461), Ghana has been a victim of poverty and debt problems for a long time. A survey conducted in 1999 revealed that five out of ten regions in Ghana had more than 40 percent of its population living in poverty. Even though the decrease in poverty incidence from 51.7 percent between 1991 and 1992 to 39.5 percent in 1998-1999, the level of poverty in Ghana is still high especially in the rural areas. Moreover, the study showed that the level of poverty is higher in households where the head is illiterate compared to the households headed by parents who are educated. Illiteracy was indentified to be one of the main consequences of poverty in Ghana. For instance, the results of the study by Adjasi and Osei (2007: 454) showed that 87 percent of the mothers and 70 percent of the fathers are illiterate. As for housing, only 14 percent of the households live in apartments while the remaining percentage live in rooms and huts. Moreover, one third of the population relies on the water of rivers and lakes as their main source of water and 60 percent depends on kerosene as their lighting source instead of electricity.
While the poverty problem seems to be chronic and affecting many countries around the world, various strategies have been adopted to eradicate poverty. Among the successful strategies introduced was the idea of micro-credit, which did not only deal with the economic dimension of poverty, but also took into consideration the quality of life and other dimensions in poverty. The following chapter is exploring the concept of micro-credit.
2.2. Overview on microcredit:
The following chapter explores the concept of microcredit as a poverty alleviation strategy. This chapters introduces the characteristics of microcredit programs, how gender differences affect the effectiveness of micro-credit programs, and also will introduce Grameen Bank as a successful case for the implementation of micro-credit in Bangladesh and the world.
2.2.1. Characteristics of the microcredit programs:
In the "Microcredit Summit" held in February 1997 in Washington, DC, the microcredit programs had been defined as programs that lend the poor, mainly women, small loans in order to enhance self-employment and income generating activities (Elahi and Danopoulos 2004: 643-645, Zapalska et al. 2007: 86). Furthermore, Chowdhury el al. (2005: 298) defined microcredit as small collateral-free loans given to a jointly liable group of borrowers in order to reduce poverty through self-employment. They added that the loans are usually given to the poor through institutions or non-profit organizations.
There are some common features shared among the microcredit programs. For instance, the size of the loan is usually small (about US $ 100) and the repayment period is short (about a year). In addition, the borrowers of money are poor households, mostly women, who are called micro-entrepreneurs. Also, a common purpose of the loans is to create self-employment and income-generating activities in the informal sector (Elahi and Danopoulos 2004: 645, Zapalska et al. 2007: 86).
Elahi and Danopoulos (2004: 646) mentioned that the theory of microcredit is described as "social consciousness-driven capitalism". This means that the microcredit programs create capitalist enterprises aiming at maximizing the profit while taking into consideration the welfare of its customers. This description clearly contradicts with the Neo-classical production theory that was based on the assumption that individuals run business while being motivated only by profit-maximization which excluded those who care about the welfare of human beings. For instance, Hassan and Guerrero (1997: 1494) indicated that the revenue generated by the Grameen Bank is used to raise more loanable funds as well as training employees and group borrowers to improve their skills. This clearly indicates that the microcredit programs generate profit then use it for the welfare of its stakeholders.
2.2.2 The effect of gender differences on the effectiveness of microcredit programs:
It has been pointed out by Pitt and Khandker (1998: 959) that many organizations in low-income countries have recently introduced the microcredit programs that target the poor in general and focus particularly on women. They mentioned that the reasons of focusing on women lending more than men are the unequal share women have in the household decision making and their limited access to credit. Zapalska et al. (2007: 89) argued that women are the main target of the microcredit programs due to their positional vulnerability in the society. For instance, Hassan and Guerrero (1997: 1509) mentioned that traditionally the women in Bangladesh and other developing countries were excluded from the development process and they were exposed to social injustices like early marriage, illiteracy and unemployment.
Another reason identified by Hassan and Guerrero (1997: 1510) was the sense of responsibility that women have by nature so they pay the installments more regularly. In addition, women are usually in charge of the family budget and they assess the value of money so most probably they will not spend the money in night clubs or gambling places like men. Mwenda and Muuka (2004: 146-147) agreed with Hassan and Guerrero (1997) by mentioning that targeting women improves the welfare of the whole family since women are the main responsible for the well-being of the household. Also, it is an effective way to ensure that the loans are invested in constructive activities not unproductive uses such as beer drinking. For instance, Hassan and Guerrero (1997: 1512) mentioned that the Grameen Bank concentrates its lending on women as they use the money only for generating income which ensures the repayment of loans.
Pitt and Khandker (1998: 958-986) conducted a quasi-experimental survey to determine the effect of participation, by gender, in the microcredit programs on some households ' behaviors such as labor supply, children schooling, household expenditure and assets ownership. The results of the study revealed that the credit provided to women affect these behaviors more significantly than the credit provided to men. For example, a 1 percent increase in the credit provided to women increase the probability of the enrollment of girl in school by 1.86 percent and the enrollment of boy by 2.4 percent. Hence, the study concluded that the microcredit programs are more effective when the borrowers are women.
Hassan and Guerrero (1997: 1509-1510) supported the results of Pitt and Khandker (1998) when he indicated that the annual reports of the Grameen Bank showed that the projects run by women are more successful than the projects run by men. Also, in 1992 the recovery rate of the loans was 89 percent for men and 97 percent for women. Moreover, Zhibin (2008: 32) noted from a study of ten Chinese microcredit projects that the rate of paying back the loans is higher when all the borrowers are women than the pay-back rate when borrowers are composed of men and women. Finally, Zapalska et al. (2007: 86-87) added that women are more successful as borrowers than men because they have better attitudes toward microcredit and self-employment. 2.2.3 A successful model of the microcredit programs: The Grameen Bank:
Elahi and Danopoulos (2004: 650) indicated that Yunus was inspired to found the Grameen Bank when he met a widow mother of two children, Sufiya Khatun, who symbolized all the injustices that a society could commit against its women. Hussain el al. (2001: 26) added that Sufiya was weaving bamboo stools that she sells and earns two cents a day. When Yunus was surprised because of the low income she earns, she informed him that her moneylender was the buyer of the final products so he is the one who set the prices that hardy cover the cost of raw materials. At this moment, Yunus decided to give Sufiya and other 42 villagers small loans to be repaid from the profits they earn and two years later, in 1976, he established the Grameen Bank. In 1983, the Grameen Bank was charged to operate as a national bank. It had 75 branches in five districts in Bangladesh and in 1994 it expanded its operation to cover 30000 villages (Hassan and Guerrero 1997: 1489, Mwenda and Muuka 2004: 147). Recently, the Grameen Bank model is implemented in 50 countries like Asia, Australia and Europe. It lent two million people in Bangladesh more than $1 billion and employed about 14000 staff (Hussain el al. 2001: 27, Hossain 2000: 192, Zapalska et al. 2007:86).
The fundamental belief of the Grameen Bank is that people do not create poverty but the institutions and the policies surrounding them result in their poverty. It is not the lack of skills, ideas and innovations that make the poor people poor because they may possess some skills that are underutilized (Elahi and Danopoulos 2004: 645, Hussain el al. 2001: 31). A common notion shared at the Grameen Bank is that the main problem of poor lies behind the lack of capital given their productive capacity (Hassan and Guerrero 1997: 1489, Hossain 2000: 192).
The Grameen Bank has rejected the basic methodology of the conventional banks and developed its own methodology by giving loans to the poor without collateral as loan security which contradicts with all conventional banks (Hassan and Guerrero 1997: 1489, Elahi and Danopoulos 2004: 645, Hossain 2000: 192). Hassan and Guerrero (1997: 1504) mentioned that the maximum limit of a loan is US $ 125 to be repaid in 50 equal installments. Also, the interest rate charged by the bank is 20 percent which could be higher than the market rate yet it is lower than the rate charged in the informal markets. Hussain el al. (2001: 29) pointed out that the poor who meet the screening criteria of the bank like being landless, not having cash or property can borrow money in forms of groups of five people. Each member in the group receives his own loan, yet they are jointly liable for the five loans invested in income generated activities (Hassan and Guerrero 1997: 1503, Pitt and Khandker 1998: 959, Chowdhury el al. 2005: 300). Usually, the members of the group come from the same village, know each other and have similar needs; however, they can not be from one family in order to avoid family bias (Hassan and Guerrero 1997: 1503, Hussain el al. 2001: 27).
One of the distinctive features of the Grameen Bank is the accumulation of savings since the borrowers are required to save one Taka per week in order to constitute the group fund that can be borrowed by any member in case of illness, emergencies or social commitment. Moreover, the group fund enable the members to buy a share of the stock of the bank at the cost of 100 Taka (US $ 2.5) which make the poor become owners of the bank and take part of the board of directors (Hassan and Guerrero 1997: 1500, Hussain el al. 2001: 27-31, Hossain 2000: 193).
It has been pointed out by Hussain el al. (2001: 27) that the Grameen Bank is different from the traditional banks that give loans and wait for the return. The Grameen Bank offers the borrowers business expertise beside money and its vision is broader than finance as it is the only bank in this world that promotes birth control and clean environment in its lending policy. Hassan and Guerrero (1997: 1512) agreed with Hussain el al. (2001) as they mentioned that the original purpose of the Grameen Bank was to offer credit and reduce poverty; however, their founders realized that credit is not sufficient so they established a welfare program that helps poor in education, health, housing, family planning and environment protection. Hassan and Guerrero (1997: 1490-1492) indicated that the charismatic leadership of Dr Yunus could be one of the critical success factors of the Grameen Bank. Also, the decentralized administration system of the bank, organized into four independent levels: head office, zone office, area offices and field branches that coordinate with each other, has been a key factor in attaining its success. Moreover, the employees of the Grameen Bank possess the necessary skills since the bank offers them training sessions and they are highly motivated because their salaries depend on their performance. Furthermore, Hussain el al. (2001: 27) mentioned that the trust shared among the members of the Grameen Bank due to their regular interaction is the secret of its visionary success.
Hossain (2000: 194) mentioned that one of the Grameen Bank employees stated three reasons that are considered as the secret of the Grameen Bank success. First, the payment of installments is scheduled on a weekly basis which facilitates the pay back of the loans. Second, the bank ensures that loans are used for the purpose they were borrowed for. For example, the employees physically check if a loan borrowed for the purpose of building a house resulted in building this house or not. Third, the commitment of the employees and their punctuality in distributing the loans is reflected on the borrowers so they paid the installments regularly. The model of the Grameen Bank is considered as one of the most successful attempts to increase the involvement of poor women in productive activities (Hassan and Guerrero 1997: 1509). Consequently, women represent the major customers of the Grameen Bank (Hassan and Guerrero 1997: 1509, Hussain el al. 2001: 29). As Figure 1 shows, in 1994 the total number of the Grameen Bank members was about two million members of whom women represented the majority. Also, figure 2 indicates that the participation of men in the Grameen Bank has been decreasing over the years while women participation had steadily increased. For illustration, women membership had increased from 65 percent in 1985 to 94 percent in 1994 (Hassan and Guerrero 1997: 1489-1510). In addition, recent figures show that 95 percent of the Grameen Bank customers are women (Hussain el al. 2001: 27).
Figure 1: Grameen Bank membership
Source: (Hassan and Guerrero 1997: 1490)
Source: (Hassan and Guerrero 1997: 1490) Figure 2: Distribution of the Grameen Bank members
Source: (Hassan and Guerrero 1997: 1490)
While micro-credit was traditionally thought to be a poverty alleviation tool, it was found that it is also a tool for women empowerment. As mentioned before, women borrowers constitute most of the customers of Grameen Bank and micro-credit programs in general, which gave them space to have a voice in their community. The next chapter explores the impact of microcredit on poverty reduction and women empowerment.
2.3 The effect of microcredit on poverty reduction and women empowerment:
This chapter provides insights about how micro-credit is used as a tool for poverty reduction and women empowerment. While it was mentioned before many times that micro-credit is powerful tool for community’s empowerment, this chapter provides the other face of micro-credit and discusses its negative impact.
2.3.1 The effect of microcredit on poverty reduction:
The Report of the Task Forces on Bangladesh Development Strategies mentioned three approaches for poverty eradication. The first approach is investing in social sectors like health and education to improve the standard of living and enhance the human capabilities. The second one is encouraging growth oriented programs that have a strong effect on the rural poverty. The third approach is promoting the targeted income and the employment generating programs to support the vulnerable poor who were previously excluded from the market based development process (Hossain 2000:190, Siddique 1998: 1098).
The microcredit programs are considered as growth oriented programs that aim at reducing poverty by empowering the poor and giving them the opportunity to contribute to the growth of their society through self-employment (Hossain 2000:190-191). The microcredit programs are recognized all over the world as a key instrument to alleviate poverty and to create a sustainable human development process. Consequently, the international donor community and the non-governmental organizations were encouraged in the general assembly of the United Nations passed in 1997 to integrate the microcredit programs in their strategies and to adopt policies that support its development (Hossain 2000:191, Elahi and Danopoulos 2004: 647).
As pointed out by Chowdhury el al. (2005: 299), there are more than 1000 non-governmental organizations in Bangladesh that run microcredit programs. Moreover, Zapalska et al. (2007: 89) indicated that the innovative approach of Bangladesh, which introduced the microcredit programs, has significantly eradicated the poverty of several families and helped hem get out of the poverty trap. For instance, a study conducted by Chowdhury el al. ( 2005: 298-303) on a sample of 954 participants of the microcredit programs in Bangladesh revealed that microcredit is associated with a reduction in the poverty of the participants especially with the long run participation in the programs. Hossain (2000: 191-194) stated that the Grameen Bank, which is the biggest micro-lender in Bangladesh, reduced poverty from 59 percent in 1991-1992 to 53 percent in 1995-1996. Also, more than 160,000 families who borrowed money from the Grameen Bank were able to built new houses, sent their children to school and improve their standard of living. Hussain el al. (2001: 32) agreed with Hossain (2000) by mentioning that the Grameen Bank represents a successful example of a poverty alleviation initiative that is appreciated by several international organizations. Moreover, it has been pointed out by Hassan and Guerrero (1997: 1510) that the Grameen Bank had improved the social life and the self-esteem of the poor beside the enhancement of their economic conditions.
Siwar and Kasim (1997: 1534) mentioned that the achievements of the Grameen Bank in Bangladesh and its branches in many countries like Asia and Malaysia indicate that microcredit is a powerful tool for poverty reduction and the improvement of the socio-economic conditions of the poor. Consequently, one of the main aims of their study was to come up with some policy options for an entrepreneurship program that will be implemented in Malaysia to fight poverty. This program will give interest free loans to the poor in order to start their own small enterprises. Also, training courses to the participants such as project management, marketing and accounting will be organized. The researchers conducted an empirical study on a sample of 510 persons in Malaysia and the results showed that 63 percent of the sample will be interested in this program as a way to reduce their poverty. Schultz et al. (2006: 62) gave an example of a woman who received microcredit and invested the loan in income-earning activity so she was able to pull her family out of poverty. Bakhita, a mother of seven children, got her first credit in 1997 followed by two other credits and started selling cloths and utensils to women. Before receiving these loans, she was not able to afford the fees of her children schools so they stopped going to school and they started to sell water. However, after getting the three loans and starting her project, Bakhita was able to build a new house and pay the fees of her children education who were all enrolled again in schools.
2.3.2. The effect of microcredit on women empowerment:
According to Mahmud (2003: 580-581), women empowerment is a multi-dimensional notion that can be defined from different perspectives. In the development process, women empowerment has been viewed as the improvement of women well-being. This well-being can be absolute like improving the welfare of women with respect to education, health, nutrition and ownership of assets or relative like improving the position of women in the household compared to men. In addition, Ackerly (1995: 56) developed an idea about women empowerment. He said that women empowerment takes place when the woman invests money in a successful business, her husband stop hitting her, she takes part in family decisions and she sends her kids to school (Osmani 2007: 697).
Kabeer (1999: 436f) refers to empowerment as the different processes that enable women to be able to choose after being denied from this ability (Mahmud 2003: 584-585, Schultz el al. 2006: 53). On the other hand, Chen and Mahmud (1995) identified four dimensions of empowerment: material, cognitive, perceptual and relational. While material empowerment occurs when women acquire material resources such as land and assets, cognitive empowerment occurs when women recognize their own skills which increase their self-esteem. Also, perceptual empowerment takes place when the perception of the society toward women changes and this lead to increasing their social prestige and values. Finally, relational empowerment occurs when the gender inequality in relationships within the family and the whole society disappears (Mahmud 2003: 585).
Schultz el al. (2006: 53-54) mentioned that women participation in the microcredit programs improve their material welfare and give them more rights within the household. Also, microcredit helps women gain some degree of independence by participating in group meetings and discussions. In addition, Osmani (2007: 698) has clearly shown that several studies conducted with the aim of measuring the effect of microcredit on women empowerment found out that microcredit reduced domestic violence against women, increased women involvement in the decision making process, improved women self-worth and increased the education of daughters. Likewise, Mwenda and Muuka (2004: 146) indicated that access to microcredit increases women empowerment and children education.
Osmani (2007: 696-697) pointed out that microcredit was originally designed to improve the income earning power of women; however, it was also able to empower women in a broader sense. For instance, when women contribute to the cash income of the family, their power within the household increases and their self-esteem raises. Furthermore, borrowing the loan and running an income-generating activity enable women to enlarge their social networks and come out of the narrow limits of their household to the broad society and this increases their self confidence.
Mahmud (2003: 579) mentioned that one of the most noticeable transformations in the life of women in Bangladesh is the increase in their access to microcredit as a part of several programs designed by non-governmental organizations to fight poverty. He added that the effect of these programs was not limited to poverty eradication but it was expanded to include women empowerment. For instance, Hossain (2000: 196) stated that the Grameen Bank was able to empower its women borrowers and many of them become economically independent from their husband. Moreover, Hassan and Guerrero (1997: 1510) indicated that the Grameen Bank has a positive and a noteworthy impact on improving women decision making within the household.
Osmani (2007: 695-702) had empirically tested, using a sample of the Grameen Bank borrowers, whether women access to microcredit improves their bargaining power within the household. The study reported that microcredit has a positive effect on women bargaining power as measured by the value of assets (land and non-land) that women own as well as their judgment about their ability to support themselves if left alone. Another study by Mahmud (2003: 589-602) revealed that women participation in microcredit programs encourages women 's self-employment, improves their welfare and increases their active role in the decision making process.
2.3.3 Criticism about the microcredit programs: Zhibin (2008: 32) indicated that some critics argued that microcredit negatively affects women by increasing their workload and mental stress. Similarly, Mahmud (2003: 582) mentioned that some opponents of the microcredit claimed that the microcredit programs increase the pressure on women by the family and the financial organizations to pay the loan installments on time which create a new form of social burden upon women.
It has been argued that poor are not able to run an activity and generate income as they lack the necessary business skills. This means that access to credit is not the only constraint on increasing the income of the poor because still the lack of human capital and labor productivity can affect the increase in income. Moreover, microcredit has been accused by replicating an old credit theory developed by Adam Smith (1937) who said that individuals can self- employ their skills to their best interests if they are given access to credit. Hence, microcredit did not bring out any innovative theory (Elahi and Danopoulos 2004: 645-648). The Grameen Bank has been criticized by charging high interest rate (20 percent) which is greater than the interest rate charged by the conventional banks (10-15 percent) (Hussain el al. 2001: 32, Hossain 2000: 196). In addition, Hassan and Guerrero (1997: 1515-1516) indicated that the Grameen Bank takes funds from donors then puts them in commercial banks that pay higher interest rates and by this way it is making profit from granted donations.
A study conducted by Hoque (2004: 22-30), to assess the effect of microcredit on poverty alleviation using data from one of the biggest microcredit provider in Bangladesh, which is Bangladesh Rural Advancement Committee, concluded that the microcredit has a minimal effect on the improvement of the economic conditions of its participants as well as the eradication of their poverty because the loans are not usually used in productive activities. In other words, the microcredit programs are criticized by having an insignificant effect on poverty since the microcredit policies do not ensure that loans are invested in income earning activities.
Research Gap
From exploring the previous literature review, we found a huge gap in investigating the impact of combining microcredit with non-financial services, e.g. education, health care, vocational training, technical courses, on poverty reduction and women empowerment in Egypt. The credit by itself may be an insufficient tool to reduce poverty if it is not associated with other social services because poverty is a multidimensional problem that is not restricted to the level of income but it encompasses food, shelter, health and education. Consequently, the research question that this study seeks to answer is: "What is the effect of combining microcredit with other social services on poverty alleviation and women empowerment in Egypt?" Hypothesis 1: Combining the microcredit with other social services has a positive effect on poverty reduction in Egypt.
Hypothesis 2: Combining the microcredit with other social services empowers the Egyptian women.
In order to obtain a multifaceted view of poverty, we measure poverty reduction by the raise in the level of income, the reduction in health expenditures, the improvement of the literacy rate and the housing conditions. As for women empowerment, it is measured by the increase in the ownership of material assets, self-esteem, social network and the reduction in the domestic violence against women. The social services provided with the microcredit include illiteracy eradication programs, health care, technical and business training like marketing courses, vocational training and project management.
.
References:
Adjasi, C.K.D., Osei, K.A. (2007), Poverty profile and correlates of poverty in Ghana. In: International Journal of Social Economics, vol. 34, No 7, pp. 449-471
Chowdhury, M.J.A., Ghosh, D., Wright, R.E. (2005), The impact of micro-credit on poverty: evidence from Bangladesh. In: Progress in Development Studies, vol. 5, No 4, pp. 298-309
Dao, M.Q. (2004), Rural poverty in developing countries: an empirical analysis. In: Journal of Economics Studies, vol. 31, No 6, pp. 500-508
Elahi, K.Q., Danopoulos, C.P. (2004), Microcredit and the Third World: Perspectives from moral and political philosophy. In: International Journal of Social Economics, vol. 31, No 7, pp. 643-654
Gosh, B.N. (2002), Allocative inefficiency and rural poverty in India. In: International Journal of Social Economics, vol. 29, No. 1/2, pp. 87-96
Hassan, M.K., Guerrero, L.R. (1997), The experience of the Grameen Bank of Bangladesh in community development. In: International Journal of Social Economics, vol. 24, No 12, pp. 1488-1523
Hoque, S. (2004), Micro-credit and the Reduction of Poverty in Bangladesh. In: Journal of Contemporary Asia, vol. 34, No 1, pp. 21-32
Hossain, I. (2000), Micro-Credit and Good Governance: Models of Poverty Alleviation. In: Southeast Asian Journal of Social Science, vol. 28, No 1, pp. 185-208
Hussain, M.M., Maskooki, K., Gunasekaran, A. (2001), Implications of Grameen banking system in Europe: prospects and prosperity. In: European Business Review, vol. 13, No 1, pp. 26-41
Mabughi, N., Selim, T. (2006), Poverty as Social Deprivation: A Survey. In: Review Of Social Economy, vol. LXIV, No 2, pp. 181-204
Mahmud, S. (2003), Actually how Empowering is Microcredit? In: Development and Change, vol. 34, No 4, pp. 577-605
Mwenda, K.K., Muuka, G.N. (2004), Towards best practices for micro finance institutional engagement in African rural areas. In: International Journal of Social Economics, vol. 31, No 1/2, pp. 143-158
Osmani, L.N.K. (2007), A BREAKTHROUGH IN WOMEN’S BARGAINING POWER: THE IMPACT OF MICROCREDIT. In: Journal of International Development, vol. 19, pp. 695-761
Perkins, D.H., Radelet, S., Lindauer, D.L. (2006). Economics of Development, W.W. Norton & Company, New York
Pitt, M.M., Khandker, S.R. (1998), The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter? In: Journal of Political Economy, vol. 106, No 5, pp. 958-996
Sadeq, A.M. (2002), Waqf, perpetual charity and poverty alleviation. In: International Journal of Social Economics, vol. 29, No 1/2, pp. 135-151
Schultz, U., Maccawi, A., El-Fatih, T. (2006), The Credit Helps me to Improve my Business: The Experiences of Two Microcredit Programs in Greater Khartoum. In: The Ahfad Journal, vol. 23, No 1, pp. 50-65
Siddique, M.A.B. (1998), Gender issues in poverty alleviation: a case study of Bangladesh. In: International Journal of Social Economics, vol. 25, No 6/7/8, pp. 1095-1111
Siwar, C., kasim, M.Y. (1997), Urban development and urban poverty in Malaysia. In: International Journal of Social Economics, vol. 24, No 12, pp. 1524-1535
Todaro, M.P., Smith, S.C. (2006). Economic Development, Pearson Education Limited, the United States of America
Ullah, A.K.M.A., Routray, J.K. (2007), Rural poverty alleviation through NGO interventions in Bangladesh: how far is the achievement? In: International Journal of Social Economics, vol. 34, No 4, pp. 237-248
Zapalska, A.M., Brozik, D., Rudd, D. (2007), The success of micro-financing. In: Problems and Perspectives in Management, vol. 5, No 4, pp. 84-90
Zhibin, L. (2008), Chinese Women and Poverty Alleviation: Reflections and Prospects for the Future. In: Chinese Sociology and Anthropology, vol. 40, No 4, pp. 27-37
References: Adjasi, C.K.D., Osei, K.A. (2007), Poverty profile and correlates of poverty in Ghana. In: International Journal of Social Economics, vol. 34, No 7, pp. 449-471 Chowdhury, M.J.A., Ghosh, D., Wright, R.E Dao, M.Q. (2004), Rural poverty in developing countries: an empirical analysis. In: Journal of Economics Studies, vol. 31, No 6, pp. 500-508 Elahi, K.Q., Danopoulos, C.P Gosh, B.N. (2002), Allocative inefficiency and rural poverty in India. In: International Journal of Social Economics, vol. 29, No. 1/2, pp. 87-96 Hassan, M.K., Guerrero, L.R Hoque, S. (2004), Micro-credit and the Reduction of Poverty in Bangladesh. In: Journal of Contemporary Asia, vol. 34, No 1, pp. 21-32 Hossain, I Hussain, M.M., Maskooki, K., Gunasekaran, A. (2001), Implications of Grameen banking system in Europe: prospects and prosperity. In: European Business Review, vol. 13, No 1, pp. 26-41 Mabughi, N., Selim, T Mahmud, S. (2003), Actually how Empowering is Microcredit? In: Development and Change, vol. 34, No 4, pp. 577-605 Mwenda, K.K., Muuka, G.N Osmani, L.N.K. (2007), A BREAKTHROUGH IN WOMEN’S BARGAINING POWER: THE IMPACT OF MICROCREDIT. In: Journal of International Development, vol. 19, pp. 695-761 Perkins, D.H., Radelet, S., Lindauer, D.L Pitt, M.M., Khandker, S.R. (1998), The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter? In: Journal of Political Economy, vol. 106, No 5, pp. 958-996 Sadeq, A.M Schultz, U., Maccawi, A., El-Fatih, T. (2006), The Credit Helps me to Improve my Business: The Experiences of Two Microcredit Programs in Greater Khartoum. In: The Ahfad Journal, vol. 23, No 1, pp. 50-65 Siddique, M.A.B Siwar, C., kasim, M.Y. (1997), Urban development and urban poverty in Malaysia. In: International Journal of Social Economics, vol. 24, No 12, pp. 1524-1535 Todaro, M.P., Smith, S.C Ullah, A.K.M.A., Routray, J.K. (2007), Rural poverty alleviation through NGO interventions in Bangladesh: how far is the achievement? In: International Journal of Social Economics, vol. 34, No 4, pp. 237-248 Zapalska, A.M., Brozik, D., Rudd, D Zhibin, L. (2008), Chinese Women and Poverty Alleviation: Reflections and Prospects for the Future. In: Chinese Sociology and Anthropology, vol. 40, No 4, pp. 27-37
By
Imane Abdel Fattah Helmy
Research Methodology Paper
Submitted to the Management Department
Faculty of Management Technology
The German University in Cairo
Student registration number: 10-4543
Group number: T11
Name of Supervisor: Ms. Raghda El-Ebrashi
Date: Thursday January 22nd , 2009
Table of Contents:
1. Introduction…………………………………………………………………………..1
2. Literature Review.........................................................................................................2
2.1. Overview on poverty…………………………………………………………….2 2.1.1. Background and definitions. 2.1.2. Types of poverty. 2.1.3. Case studies of poverty in developing countries.
2.2. Overview on microcredit………………………………………………………...8 2.2.1. Characteristics of the microcredit programs. 2.2.2. The effect of gender differences on the effectiveness of the microcredit programs. 2.2.3. A successful model of the microcredit programs: The Grameen bank. 2.3. The effect of microcredit on poverty reduction and women empowerment………………...………………………………………………....14 2.3.1. The effect of microcredit on poverty reduction. 2.3.2. The effect of microcredit on women empowerment. 2.3.3.Criticism about the microcredit programs.
3. Methodology……………………………………………………………………...…20
4. Conclusion…………………………………………………………………………..23
5. References…………………………………………………………………………...24
6. Appendix……………………………………………………………………….……27 6.1. Appendix 1: The Grameen Bank versus the commercial banks. 6.2. Appendix 2: The questionnaire.
Table of Figures:
Figure 1: Grameen Bank memebership…………………………………..13
Figure 2: Distribution of Grameen Bank members………………………14
1. Introduction:
The developing countries all over the world suffer from a complex multidimensional problem which is poverty. Poverty can not be simply described as the low level of income or low standard of living because it results in other difficulties like illiteracy, vulnerability to health problems, powerlessness and low productivity (Adjasi and Osei 2007: 449). After decades of economic development, the roots of poverty still exist and the income gap between rich and poor is critically increasing. For instance, 80 percent of the world population are living in the developing countries and contribute only by 20 percent to the world income (Hossain 2000: 185). Also, about 1.2 billion persons live on less than $ 1 a day and more than 2.8 billion people live on less than $ 2 per day (Todaro and Smith 2006: 193). Consequently, poverty alleviation instruments are gaining more interest among developing countries and many questions arise regarding the impact of microcredit on the poverty reduction of its beneficiaries, who account for 10 million households all over the world (Chowdhury el al. 2005: 298-299, Adjasi and Osei 2007: 449).
This study is exploring the effect of microcredit on poverty reduction and women empowerment by investigating whether lending the poor collateral-free loans to run income-generating activities helps in poverty alleviation and increases the bargaining power of the women. Recently, the microcredit is perceived as a magic tool for poverty eradication, especially after its great success in Bangladesh that was replicated by several nations including the developed countries like The United States of America (Chowdhury el al. 2005: 298-299). Since its first Summit in 1997, the microcredit became the most popular approach used to eradicate the worldwide poverty and it is argued that the microcredit empowers women both economically and socially by increasing their contribution to the income of their family (Elahi and Danopoulos 2004: 643, Schultz et al. 2006: 51). Therefore, the impact of microcredit on poverty eradication and women empowerment needs further examination.
The remainder of this paper is organized as follows. The next section gives an overview on poverty measures and types then discusses three case studies of poverty in the developing countries. This section is followed by describing the features of the microcredit programs and discussing the effect of gender differences on the effectiveness of microcredit then we will represent a successful model of the microcredit programs which is the Grameen Bank. Afterward, the effect of microcredit on poverty reduction and women empowerment will be examined before highlighting some criticism about the microcredit programs. Finally, in the last two sections, the methodology of the study will be described followed by the conclusion. 2. Literature Review:
2.1 Overview on poverty:
The definition of poverty is multidimensional, and there are various definitions for the term. This following chapter will provide a background about poverty, the various types of poverty and how it is measured, and will also explore poverty rates in various countries through case studies.
2.1.1 Background and definitions:
"Don 't ask me what poverty is because you met it outside my house. Look at the house and count the number of holes. Look at the utensils and the clothes I am wearing. Look at everything and write what you see. What you see is poverty."
-Poor man in Kenya
(Quoted in: Todaro and Smith 2006: 7)
According to Todaro and Smith (2006: 54), absolute poverty is the inability to satisfy the basic needs (such as food, cloths and shelter) due to the lack of the minimum level of income required by a person to be able to survive. Ullah and Routray (2007: 237-238) agreed with Todaro and Smith (2006) by defining poverty as the inability to reach a certain level of income because of the lack of adequate ownership and control over resources.
Consistent with the previous definitions, the poor are individuals with mean per capita income below the minimum level required for meeting the basic subsistence (Adjasi and Osei 2007:450, Ullah and Routray 2007: 238). This minimum level of income is usually measured by $1a day and it is known as the international poverty line (Todaro and Smith 2006: 202-203). As indicated by Perkins et al. (2006: 207-208), the poverty line is the possession of a specific amount of taka or pesos or dollars to spend daily. This poverty line varies from one country to another based on the per capita cost of its basket of good.
Siddique (1998:1095) mentioned that the headcount ratio, calculated based on the number of people below the poverty line, is the most commonly used poverty measure. In addition, another study by Ullah and Routray (2007: 239-240) revealed that the poverty gap is one of the best measures of poverty as it shows the distance between the consumption level and the poverty line. For instance, the greater the distance between the consumption level of the poor and the poverty line the higher the poverty gap. On the other hand, Adjasi and Osei (2007: 449-450) argued that poverty has a complex nature and it can be analyzed from quantitative and qualitative perspectives. Thus, to reach a fair assessment of the poverty status, multiple factors such as food consumption, health, education and housing should be examined. Moreover, they described poverty as the vulnerability to minor shock in the society such as weather shocks, the availability of limited choices, the lack of power and the deprivation from social rights like the freedom of speech.
Sadeq (2006: 136) indicated that poverty is a multidimensional phenomenon that should not be restricted to the low level of income as it involves other non-income factors like poor health, illiteracy rate and lack of access to physical facilities. Perkins et al. (2006: 207-208 ) agreed with Sadeq (2006) by defining poverty as a multidimensional phenomenon that goes beyond the GDP per capita and encompass basic health, education, access to safe drinking water and the ability to resist to natural disasters and economic downturns.
Sen (1997) developed an approach to measure poverty called "The Capability approach". This approach is used to measure the well being of the human functionings. Functionings were defined as the various things that an individual can do or can be. These functions vary from elementary functions such as adequate education and nourishment to complex functions like being happy and having self-respect. The set of functionings is known as capability and it reveals what a person can do while reflecting his freedom to choose. Hence, this approach defines poverty as the absence of the capability to function at the minimum level required within the society. Also, it is worthy to say that Sen 's capability approach played a critical role in shaping the concept of the human development used nowadays to define poverty (Selim and Mabughi 2006: 190-192).
2.1.2 Types of poverty:
It has been pointed out by Dao (2004: 500) that 63 percent of the poverty all over the world is concentrated in rural areas. For instance, Mwenda and Muuka (2004: 144) stated that 70 percent of the total African population and 80 percent of the poor in the African continent live in rural areas. In addition, Ghosh (2002: 87) indicated that poverty affects 22 percent of the rural population versus 12 percent of the urban population in India. Moreover, Ullah and Routary (2007: 238-239) mentioned that the total population in Bangladesh was 129.2 million in 2001, of whom 80 percent lives in rural areas and suffers from poverty and unequal access to land.
One of the main aspects of the rural poverty, as described by Ullah and Routary (2007: 238), is the unemployment and the underemployment due to the limited job opportunities available outside the agriculture sector. Also, these opportunities are growing slowly compared to the growth rate of the demand for them. For instance, Dao (2004:500) mentioned that two-thirds of the rural poor are employed by the owners of the lands as small farmers and low paid workers. Dao (2004: 501-502) stated that the major causes of rural poverty are the low level of productivity as measured by the value added per worker, the unequal income distribution due to the concentration of lands ownership in few hands, the discrimination based on race or gender and the large family size that results in high dependency rate. Another reason for rural poverty, mentioned by Ghosh (2002: 89), is neglecting the rural areas and excluding them from the reform plans. For instance, the basic needs of the rural sector like access to electricity, clean water and communication are not considered as priorities in the planning process that is usually class biased. Hossain (2000:189) indicated that rural poverty is caused by limited access to the land as well as high illiteracy rate and the large dependence on agriculture activities.
It has been pointed out by Dao (2004: 500-503) that 55 percent of the total population living below the poverty line in rural areas are women. In addition, the number of women living in the rural sector had increased by 50 percent compared to 30 percent for men since the mid-1970s. Even though the critical role women play in the production of subsistence food and crop harvesting especially in Africa and Asia, their earning potential is still restricted by legislation and they have limited access to the resources required for generating a stable income like access to credit and training.
As Siddique (1998: 1096) indicated, women poverty exists as a result of the fewer resources women receive for food, education, health and cloth compared to men. For instance, women receive 20 percent less calories per day than men and that is why they are more likely to be malnourished. Another potential reason for women poverty is performing some duties that are not generating income such as cooking, cleaning and looking after children. Moreover, men have more control over the household income which results in high dependency on men for the basic survival. A study by Zhibin (2008: 28-29) conducted in China identified three reasons for women poverty: (1) Income Poverty, (2) Time Poverty and (3) Asset Poverty. Income poverty was defined as the unequal income distribution between men and women that was clearly revealed in China as there was about 19.3 percent of women who earned lower income than men. Time poverty is the large amount of time women spent daily doing unpaid work such as the housework. Since the housework is the main responsibility of women, the time women spent a day on housework is 4.01 hours which is greater than the average number of hours men spent by 2.7hours. Finally, the third reason is the asset poverty which is the lack of adequate health, education, inheritance rights, access to property such as land and the absence of wide social networks.
The huge gap between the level of education of men and women is one of the main reasons of women poverty. It has been revealed that three-quarters of the illiterate persons all over the world are women which deepen the problem of women poverty. Also, it has been proved that educated women are more likely to get out of poverty, earn their own income and send their children to school. That is why if any country can not ensure the right of education, freedom and equality for its women, it is more likely than other countries to suffer from underdevelopment (Zhibin 2008: 29-30).
As Siddique (1998:1097-1099) mentioned, Bangladesh had introduced some measures in order to fight women poverty and improve the status of women. For instance, they introduced some measures to encourage the enrolment of girls in schools and launched quotas to ensure the participation of women in political issues. Also, they set up legal measures to protect women from violence. In addition, a lot of non-governmental organizations in Bangladesh applied an integrated development system that carries out different types of activities regarding women development such as health, family planning, education and vocational training. 2.1.3 Case studies of poverty in developing countries:
2.1.3.1 Poverty in Bangladesh:
It has been pointed out by Hossain (2000: 189-190) that almost the half of the population in Bangladesh fall below the poverty line. Moreover, in 1992 the statistics revealed that 68.3 percent of children under the age of six years suffer from malnutrition. Also, a major problem in Bangladesh is the rapid population growth despite the implementation of successful family planning services. Another common problem in Bangladesh is the inequality of landholding which worsens the problem of poverty since lands are concentrated among few people while the majority of rural poor suffer from low wages and low purchasing power.
Zapalska et al. (2007: 85) stated that the per capita income in Bangladesh is $350 which makes Bangladesh one of the poorest nations in this world. Also, the poor in Bangladesh are characterized by the lack of food and the poor medical services. In addition, Siddique (1998: 1095) added that the rural poor in Bangladesh suffer from low income and unemployment while urban poor suffer from malnutrition and diseases. Consequently, poverty in Bangladesh is a heritage that passes from one generation to another (Zapalska et al. 2007: 85).
2.1.3.2 Poverty in Malaysia:
A study by Siwar and Kasim (1997: 1526-1533) showed that the poor in Malaysia are characterized by a large family size, low education level, low per capita income and low employment status due to the lack of necessary skills. The study identified some causes of this poverty like the migration of the rural poor to the urban areas in order to find better job opportunities and the migration of foreigners, who represent the half of the poor residing in the urban areas of Sabah.
The solutions implemented by the government of Malaysia in order to fight poverty were divided into four components: (1) Employment creation, (2) Provision of housing, (3) Development of growth centers and (4) NADI programs. The government encouraged the growth of the industrial and service sectors through incentives to create more job opportunities in these areas. Also, they implemented some projects that aimed at providing low cost houses with physical facilities to the poor. As for the growth centers, the government created centers to improve the standard of living of the poor. Finally, the NADI program intended to provide access to electricity, water and health care in the poor houses (Siwar and Kasim1997: 1528-1529). 2.1.3.3 Poverty in Ghana:
According to Adjasi and Osei (2007: 450-461), Ghana has been a victim of poverty and debt problems for a long time. A survey conducted in 1999 revealed that five out of ten regions in Ghana had more than 40 percent of its population living in poverty. Even though the decrease in poverty incidence from 51.7 percent between 1991 and 1992 to 39.5 percent in 1998-1999, the level of poverty in Ghana is still high especially in the rural areas. Moreover, the study showed that the level of poverty is higher in households where the head is illiterate compared to the households headed by parents who are educated. Illiteracy was indentified to be one of the main consequences of poverty in Ghana. For instance, the results of the study by Adjasi and Osei (2007: 454) showed that 87 percent of the mothers and 70 percent of the fathers are illiterate. As for housing, only 14 percent of the households live in apartments while the remaining percentage live in rooms and huts. Moreover, one third of the population relies on the water of rivers and lakes as their main source of water and 60 percent depends on kerosene as their lighting source instead of electricity.
While the poverty problem seems to be chronic and affecting many countries around the world, various strategies have been adopted to eradicate poverty. Among the successful strategies introduced was the idea of micro-credit, which did not only deal with the economic dimension of poverty, but also took into consideration the quality of life and other dimensions in poverty. The following chapter is exploring the concept of micro-credit.
2.2. Overview on microcredit:
The following chapter explores the concept of microcredit as a poverty alleviation strategy. This chapters introduces the characteristics of microcredit programs, how gender differences affect the effectiveness of micro-credit programs, and also will introduce Grameen Bank as a successful case for the implementation of micro-credit in Bangladesh and the world.
2.2.1. Characteristics of the microcredit programs:
In the "Microcredit Summit" held in February 1997 in Washington, DC, the microcredit programs had been defined as programs that lend the poor, mainly women, small loans in order to enhance self-employment and income generating activities (Elahi and Danopoulos 2004: 643-645, Zapalska et al. 2007: 86). Furthermore, Chowdhury el al. (2005: 298) defined microcredit as small collateral-free loans given to a jointly liable group of borrowers in order to reduce poverty through self-employment. They added that the loans are usually given to the poor through institutions or non-profit organizations.
There are some common features shared among the microcredit programs. For instance, the size of the loan is usually small (about US $ 100) and the repayment period is short (about a year). In addition, the borrowers of money are poor households, mostly women, who are called micro-entrepreneurs. Also, a common purpose of the loans is to create self-employment and income-generating activities in the informal sector (Elahi and Danopoulos 2004: 645, Zapalska et al. 2007: 86).
Elahi and Danopoulos (2004: 646) mentioned that the theory of microcredit is described as "social consciousness-driven capitalism". This means that the microcredit programs create capitalist enterprises aiming at maximizing the profit while taking into consideration the welfare of its customers. This description clearly contradicts with the Neo-classical production theory that was based on the assumption that individuals run business while being motivated only by profit-maximization which excluded those who care about the welfare of human beings. For instance, Hassan and Guerrero (1997: 1494) indicated that the revenue generated by the Grameen Bank is used to raise more loanable funds as well as training employees and group borrowers to improve their skills. This clearly indicates that the microcredit programs generate profit then use it for the welfare of its stakeholders.
2.2.2 The effect of gender differences on the effectiveness of microcredit programs:
It has been pointed out by Pitt and Khandker (1998: 959) that many organizations in low-income countries have recently introduced the microcredit programs that target the poor in general and focus particularly on women. They mentioned that the reasons of focusing on women lending more than men are the unequal share women have in the household decision making and their limited access to credit. Zapalska et al. (2007: 89) argued that women are the main target of the microcredit programs due to their positional vulnerability in the society. For instance, Hassan and Guerrero (1997: 1509) mentioned that traditionally the women in Bangladesh and other developing countries were excluded from the development process and they were exposed to social injustices like early marriage, illiteracy and unemployment.
Another reason identified by Hassan and Guerrero (1997: 1510) was the sense of responsibility that women have by nature so they pay the installments more regularly. In addition, women are usually in charge of the family budget and they assess the value of money so most probably they will not spend the money in night clubs or gambling places like men. Mwenda and Muuka (2004: 146-147) agreed with Hassan and Guerrero (1997) by mentioning that targeting women improves the welfare of the whole family since women are the main responsible for the well-being of the household. Also, it is an effective way to ensure that the loans are invested in constructive activities not unproductive uses such as beer drinking. For instance, Hassan and Guerrero (1997: 1512) mentioned that the Grameen Bank concentrates its lending on women as they use the money only for generating income which ensures the repayment of loans.
Pitt and Khandker (1998: 958-986) conducted a quasi-experimental survey to determine the effect of participation, by gender, in the microcredit programs on some households ' behaviors such as labor supply, children schooling, household expenditure and assets ownership. The results of the study revealed that the credit provided to women affect these behaviors more significantly than the credit provided to men. For example, a 1 percent increase in the credit provided to women increase the probability of the enrollment of girl in school by 1.86 percent and the enrollment of boy by 2.4 percent. Hence, the study concluded that the microcredit programs are more effective when the borrowers are women.
Hassan and Guerrero (1997: 1509-1510) supported the results of Pitt and Khandker (1998) when he indicated that the annual reports of the Grameen Bank showed that the projects run by women are more successful than the projects run by men. Also, in 1992 the recovery rate of the loans was 89 percent for men and 97 percent for women. Moreover, Zhibin (2008: 32) noted from a study of ten Chinese microcredit projects that the rate of paying back the loans is higher when all the borrowers are women than the pay-back rate when borrowers are composed of men and women. Finally, Zapalska et al. (2007: 86-87) added that women are more successful as borrowers than men because they have better attitudes toward microcredit and self-employment. 2.2.3 A successful model of the microcredit programs: The Grameen Bank:
Elahi and Danopoulos (2004: 650) indicated that Yunus was inspired to found the Grameen Bank when he met a widow mother of two children, Sufiya Khatun, who symbolized all the injustices that a society could commit against its women. Hussain el al. (2001: 26) added that Sufiya was weaving bamboo stools that she sells and earns two cents a day. When Yunus was surprised because of the low income she earns, she informed him that her moneylender was the buyer of the final products so he is the one who set the prices that hardy cover the cost of raw materials. At this moment, Yunus decided to give Sufiya and other 42 villagers small loans to be repaid from the profits they earn and two years later, in 1976, he established the Grameen Bank. In 1983, the Grameen Bank was charged to operate as a national bank. It had 75 branches in five districts in Bangladesh and in 1994 it expanded its operation to cover 30000 villages (Hassan and Guerrero 1997: 1489, Mwenda and Muuka 2004: 147). Recently, the Grameen Bank model is implemented in 50 countries like Asia, Australia and Europe. It lent two million people in Bangladesh more than $1 billion and employed about 14000 staff (Hussain el al. 2001: 27, Hossain 2000: 192, Zapalska et al. 2007:86).
The fundamental belief of the Grameen Bank is that people do not create poverty but the institutions and the policies surrounding them result in their poverty. It is not the lack of skills, ideas and innovations that make the poor people poor because they may possess some skills that are underutilized (Elahi and Danopoulos 2004: 645, Hussain el al. 2001: 31). A common notion shared at the Grameen Bank is that the main problem of poor lies behind the lack of capital given their productive capacity (Hassan and Guerrero 1997: 1489, Hossain 2000: 192).
The Grameen Bank has rejected the basic methodology of the conventional banks and developed its own methodology by giving loans to the poor without collateral as loan security which contradicts with all conventional banks (Hassan and Guerrero 1997: 1489, Elahi and Danopoulos 2004: 645, Hossain 2000: 192). Hassan and Guerrero (1997: 1504) mentioned that the maximum limit of a loan is US $ 125 to be repaid in 50 equal installments. Also, the interest rate charged by the bank is 20 percent which could be higher than the market rate yet it is lower than the rate charged in the informal markets. Hussain el al. (2001: 29) pointed out that the poor who meet the screening criteria of the bank like being landless, not having cash or property can borrow money in forms of groups of five people. Each member in the group receives his own loan, yet they are jointly liable for the five loans invested in income generated activities (Hassan and Guerrero 1997: 1503, Pitt and Khandker 1998: 959, Chowdhury el al. 2005: 300). Usually, the members of the group come from the same village, know each other and have similar needs; however, they can not be from one family in order to avoid family bias (Hassan and Guerrero 1997: 1503, Hussain el al. 2001: 27).
One of the distinctive features of the Grameen Bank is the accumulation of savings since the borrowers are required to save one Taka per week in order to constitute the group fund that can be borrowed by any member in case of illness, emergencies or social commitment. Moreover, the group fund enable the members to buy a share of the stock of the bank at the cost of 100 Taka (US $ 2.5) which make the poor become owners of the bank and take part of the board of directors (Hassan and Guerrero 1997: 1500, Hussain el al. 2001: 27-31, Hossain 2000: 193).
It has been pointed out by Hussain el al. (2001: 27) that the Grameen Bank is different from the traditional banks that give loans and wait for the return. The Grameen Bank offers the borrowers business expertise beside money and its vision is broader than finance as it is the only bank in this world that promotes birth control and clean environment in its lending policy. Hassan and Guerrero (1997: 1512) agreed with Hussain el al. (2001) as they mentioned that the original purpose of the Grameen Bank was to offer credit and reduce poverty; however, their founders realized that credit is not sufficient so they established a welfare program that helps poor in education, health, housing, family planning and environment protection. Hassan and Guerrero (1997: 1490-1492) indicated that the charismatic leadership of Dr Yunus could be one of the critical success factors of the Grameen Bank. Also, the decentralized administration system of the bank, organized into four independent levels: head office, zone office, area offices and field branches that coordinate with each other, has been a key factor in attaining its success. Moreover, the employees of the Grameen Bank possess the necessary skills since the bank offers them training sessions and they are highly motivated because their salaries depend on their performance. Furthermore, Hussain el al. (2001: 27) mentioned that the trust shared among the members of the Grameen Bank due to their regular interaction is the secret of its visionary success.
Hossain (2000: 194) mentioned that one of the Grameen Bank employees stated three reasons that are considered as the secret of the Grameen Bank success. First, the payment of installments is scheduled on a weekly basis which facilitates the pay back of the loans. Second, the bank ensures that loans are used for the purpose they were borrowed for. For example, the employees physically check if a loan borrowed for the purpose of building a house resulted in building this house or not. Third, the commitment of the employees and their punctuality in distributing the loans is reflected on the borrowers so they paid the installments regularly. The model of the Grameen Bank is considered as one of the most successful attempts to increase the involvement of poor women in productive activities (Hassan and Guerrero 1997: 1509). Consequently, women represent the major customers of the Grameen Bank (Hassan and Guerrero 1997: 1509, Hussain el al. 2001: 29). As Figure 1 shows, in 1994 the total number of the Grameen Bank members was about two million members of whom women represented the majority. Also, figure 2 indicates that the participation of men in the Grameen Bank has been decreasing over the years while women participation had steadily increased. For illustration, women membership had increased from 65 percent in 1985 to 94 percent in 1994 (Hassan and Guerrero 1997: 1489-1510). In addition, recent figures show that 95 percent of the Grameen Bank customers are women (Hussain el al. 2001: 27).
Figure 1: Grameen Bank membership
Source: (Hassan and Guerrero 1997: 1490)
Source: (Hassan and Guerrero 1997: 1490) Figure 2: Distribution of the Grameen Bank members
Source: (Hassan and Guerrero 1997: 1490)
While micro-credit was traditionally thought to be a poverty alleviation tool, it was found that it is also a tool for women empowerment. As mentioned before, women borrowers constitute most of the customers of Grameen Bank and micro-credit programs in general, which gave them space to have a voice in their community. The next chapter explores the impact of microcredit on poverty reduction and women empowerment.
2.3 The effect of microcredit on poverty reduction and women empowerment:
This chapter provides insights about how micro-credit is used as a tool for poverty reduction and women empowerment. While it was mentioned before many times that micro-credit is powerful tool for community’s empowerment, this chapter provides the other face of micro-credit and discusses its negative impact.
2.3.1 The effect of microcredit on poverty reduction:
The Report of the Task Forces on Bangladesh Development Strategies mentioned three approaches for poverty eradication. The first approach is investing in social sectors like health and education to improve the standard of living and enhance the human capabilities. The second one is encouraging growth oriented programs that have a strong effect on the rural poverty. The third approach is promoting the targeted income and the employment generating programs to support the vulnerable poor who were previously excluded from the market based development process (Hossain 2000:190, Siddique 1998: 1098).
The microcredit programs are considered as growth oriented programs that aim at reducing poverty by empowering the poor and giving them the opportunity to contribute to the growth of their society through self-employment (Hossain 2000:190-191). The microcredit programs are recognized all over the world as a key instrument to alleviate poverty and to create a sustainable human development process. Consequently, the international donor community and the non-governmental organizations were encouraged in the general assembly of the United Nations passed in 1997 to integrate the microcredit programs in their strategies and to adopt policies that support its development (Hossain 2000:191, Elahi and Danopoulos 2004: 647).
As pointed out by Chowdhury el al. (2005: 299), there are more than 1000 non-governmental organizations in Bangladesh that run microcredit programs. Moreover, Zapalska et al. (2007: 89) indicated that the innovative approach of Bangladesh, which introduced the microcredit programs, has significantly eradicated the poverty of several families and helped hem get out of the poverty trap. For instance, a study conducted by Chowdhury el al. ( 2005: 298-303) on a sample of 954 participants of the microcredit programs in Bangladesh revealed that microcredit is associated with a reduction in the poverty of the participants especially with the long run participation in the programs. Hossain (2000: 191-194) stated that the Grameen Bank, which is the biggest micro-lender in Bangladesh, reduced poverty from 59 percent in 1991-1992 to 53 percent in 1995-1996. Also, more than 160,000 families who borrowed money from the Grameen Bank were able to built new houses, sent their children to school and improve their standard of living. Hussain el al. (2001: 32) agreed with Hossain (2000) by mentioning that the Grameen Bank represents a successful example of a poverty alleviation initiative that is appreciated by several international organizations. Moreover, it has been pointed out by Hassan and Guerrero (1997: 1510) that the Grameen Bank had improved the social life and the self-esteem of the poor beside the enhancement of their economic conditions.
Siwar and Kasim (1997: 1534) mentioned that the achievements of the Grameen Bank in Bangladesh and its branches in many countries like Asia and Malaysia indicate that microcredit is a powerful tool for poverty reduction and the improvement of the socio-economic conditions of the poor. Consequently, one of the main aims of their study was to come up with some policy options for an entrepreneurship program that will be implemented in Malaysia to fight poverty. This program will give interest free loans to the poor in order to start their own small enterprises. Also, training courses to the participants such as project management, marketing and accounting will be organized. The researchers conducted an empirical study on a sample of 510 persons in Malaysia and the results showed that 63 percent of the sample will be interested in this program as a way to reduce their poverty. Schultz et al. (2006: 62) gave an example of a woman who received microcredit and invested the loan in income-earning activity so she was able to pull her family out of poverty. Bakhita, a mother of seven children, got her first credit in 1997 followed by two other credits and started selling cloths and utensils to women. Before receiving these loans, she was not able to afford the fees of her children schools so they stopped going to school and they started to sell water. However, after getting the three loans and starting her project, Bakhita was able to build a new house and pay the fees of her children education who were all enrolled again in schools.
2.3.2. The effect of microcredit on women empowerment:
According to Mahmud (2003: 580-581), women empowerment is a multi-dimensional notion that can be defined from different perspectives. In the development process, women empowerment has been viewed as the improvement of women well-being. This well-being can be absolute like improving the welfare of women with respect to education, health, nutrition and ownership of assets or relative like improving the position of women in the household compared to men. In addition, Ackerly (1995: 56) developed an idea about women empowerment. He said that women empowerment takes place when the woman invests money in a successful business, her husband stop hitting her, she takes part in family decisions and she sends her kids to school (Osmani 2007: 697).
Kabeer (1999: 436f) refers to empowerment as the different processes that enable women to be able to choose after being denied from this ability (Mahmud 2003: 584-585, Schultz el al. 2006: 53). On the other hand, Chen and Mahmud (1995) identified four dimensions of empowerment: material, cognitive, perceptual and relational. While material empowerment occurs when women acquire material resources such as land and assets, cognitive empowerment occurs when women recognize their own skills which increase their self-esteem. Also, perceptual empowerment takes place when the perception of the society toward women changes and this lead to increasing their social prestige and values. Finally, relational empowerment occurs when the gender inequality in relationships within the family and the whole society disappears (Mahmud 2003: 585).
Schultz el al. (2006: 53-54) mentioned that women participation in the microcredit programs improve their material welfare and give them more rights within the household. Also, microcredit helps women gain some degree of independence by participating in group meetings and discussions. In addition, Osmani (2007: 698) has clearly shown that several studies conducted with the aim of measuring the effect of microcredit on women empowerment found out that microcredit reduced domestic violence against women, increased women involvement in the decision making process, improved women self-worth and increased the education of daughters. Likewise, Mwenda and Muuka (2004: 146) indicated that access to microcredit increases women empowerment and children education.
Osmani (2007: 696-697) pointed out that microcredit was originally designed to improve the income earning power of women; however, it was also able to empower women in a broader sense. For instance, when women contribute to the cash income of the family, their power within the household increases and their self-esteem raises. Furthermore, borrowing the loan and running an income-generating activity enable women to enlarge their social networks and come out of the narrow limits of their household to the broad society and this increases their self confidence.
Mahmud (2003: 579) mentioned that one of the most noticeable transformations in the life of women in Bangladesh is the increase in their access to microcredit as a part of several programs designed by non-governmental organizations to fight poverty. He added that the effect of these programs was not limited to poverty eradication but it was expanded to include women empowerment. For instance, Hossain (2000: 196) stated that the Grameen Bank was able to empower its women borrowers and many of them become economically independent from their husband. Moreover, Hassan and Guerrero (1997: 1510) indicated that the Grameen Bank has a positive and a noteworthy impact on improving women decision making within the household.
Osmani (2007: 695-702) had empirically tested, using a sample of the Grameen Bank borrowers, whether women access to microcredit improves their bargaining power within the household. The study reported that microcredit has a positive effect on women bargaining power as measured by the value of assets (land and non-land) that women own as well as their judgment about their ability to support themselves if left alone. Another study by Mahmud (2003: 589-602) revealed that women participation in microcredit programs encourages women 's self-employment, improves their welfare and increases their active role in the decision making process.
2.3.3 Criticism about the microcredit programs: Zhibin (2008: 32) indicated that some critics argued that microcredit negatively affects women by increasing their workload and mental stress. Similarly, Mahmud (2003: 582) mentioned that some opponents of the microcredit claimed that the microcredit programs increase the pressure on women by the family and the financial organizations to pay the loan installments on time which create a new form of social burden upon women.
It has been argued that poor are not able to run an activity and generate income as they lack the necessary business skills. This means that access to credit is not the only constraint on increasing the income of the poor because still the lack of human capital and labor productivity can affect the increase in income. Moreover, microcredit has been accused by replicating an old credit theory developed by Adam Smith (1937) who said that individuals can self- employ their skills to their best interests if they are given access to credit. Hence, microcredit did not bring out any innovative theory (Elahi and Danopoulos 2004: 645-648). The Grameen Bank has been criticized by charging high interest rate (20 percent) which is greater than the interest rate charged by the conventional banks (10-15 percent) (Hussain el al. 2001: 32, Hossain 2000: 196). In addition, Hassan and Guerrero (1997: 1515-1516) indicated that the Grameen Bank takes funds from donors then puts them in commercial banks that pay higher interest rates and by this way it is making profit from granted donations.
A study conducted by Hoque (2004: 22-30), to assess the effect of microcredit on poverty alleviation using data from one of the biggest microcredit provider in Bangladesh, which is Bangladesh Rural Advancement Committee, concluded that the microcredit has a minimal effect on the improvement of the economic conditions of its participants as well as the eradication of their poverty because the loans are not usually used in productive activities. In other words, the microcredit programs are criticized by having an insignificant effect on poverty since the microcredit policies do not ensure that loans are invested in income earning activities.
Research Gap
From exploring the previous literature review, we found a huge gap in investigating the impact of combining microcredit with non-financial services, e.g. education, health care, vocational training, technical courses, on poverty reduction and women empowerment in Egypt. The credit by itself may be an insufficient tool to reduce poverty if it is not associated with other social services because poverty is a multidimensional problem that is not restricted to the level of income but it encompasses food, shelter, health and education. Consequently, the research question that this study seeks to answer is: "What is the effect of combining microcredit with other social services on poverty alleviation and women empowerment in Egypt?" Hypothesis 1: Combining the microcredit with other social services has a positive effect on poverty reduction in Egypt.
Hypothesis 2: Combining the microcredit with other social services empowers the Egyptian women.
In order to obtain a multifaceted view of poverty, we measure poverty reduction by the raise in the level of income, the reduction in health expenditures, the improvement of the literacy rate and the housing conditions. As for women empowerment, it is measured by the increase in the ownership of material assets, self-esteem, social network and the reduction in the domestic violence against women. The social services provided with the microcredit include illiteracy eradication programs, health care, technical and business training like marketing courses, vocational training and project management.
.
References:
Adjasi, C.K.D., Osei, K.A. (2007), Poverty profile and correlates of poverty in Ghana. In: International Journal of Social Economics, vol. 34, No 7, pp. 449-471
Chowdhury, M.J.A., Ghosh, D., Wright, R.E. (2005), The impact of micro-credit on poverty: evidence from Bangladesh. In: Progress in Development Studies, vol. 5, No 4, pp. 298-309
Dao, M.Q. (2004), Rural poverty in developing countries: an empirical analysis. In: Journal of Economics Studies, vol. 31, No 6, pp. 500-508
Elahi, K.Q., Danopoulos, C.P. (2004), Microcredit and the Third World: Perspectives from moral and political philosophy. In: International Journal of Social Economics, vol. 31, No 7, pp. 643-654
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References: Adjasi, C.K.D., Osei, K.A. (2007), Poverty profile and correlates of poverty in Ghana. In: International Journal of Social Economics, vol. 34, No 7, pp. 449-471 Chowdhury, M.J.A., Ghosh, D., Wright, R.E Dao, M.Q. (2004), Rural poverty in developing countries: an empirical analysis. In: Journal of Economics Studies, vol. 31, No 6, pp. 500-508 Elahi, K.Q., Danopoulos, C.P Gosh, B.N. (2002), Allocative inefficiency and rural poverty in India. In: International Journal of Social Economics, vol. 29, No. 1/2, pp. 87-96 Hassan, M.K., Guerrero, L.R Hoque, S. (2004), Micro-credit and the Reduction of Poverty in Bangladesh. In: Journal of Contemporary Asia, vol. 34, No 1, pp. 21-32 Hossain, I Hussain, M.M., Maskooki, K., Gunasekaran, A. (2001), Implications of Grameen banking system in Europe: prospects and prosperity. In: European Business Review, vol. 13, No 1, pp. 26-41 Mabughi, N., Selim, T Mahmud, S. (2003), Actually how Empowering is Microcredit? In: Development and Change, vol. 34, No 4, pp. 577-605 Mwenda, K.K., Muuka, G.N Osmani, L.N.K. (2007), A BREAKTHROUGH IN WOMEN’S BARGAINING POWER: THE IMPACT OF MICROCREDIT. In: Journal of International Development, vol. 19, pp. 695-761 Perkins, D.H., Radelet, S., Lindauer, D.L Pitt, M.M., Khandker, S.R. (1998), The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter? In: Journal of Political Economy, vol. 106, No 5, pp. 958-996 Sadeq, A.M Schultz, U., Maccawi, A., El-Fatih, T. (2006), The Credit Helps me to Improve my Business: The Experiences of Two Microcredit Programs in Greater Khartoum. In: The Ahfad Journal, vol. 23, No 1, pp. 50-65 Siddique, M.A.B Siwar, C., kasim, M.Y. (1997), Urban development and urban poverty in Malaysia. In: International Journal of Social Economics, vol. 24, No 12, pp. 1524-1535 Todaro, M.P., Smith, S.C Ullah, A.K.M.A., Routray, J.K. (2007), Rural poverty alleviation through NGO interventions in Bangladesh: how far is the achievement? In: International Journal of Social Economics, vol. 34, No 4, pp. 237-248 Zapalska, A.M., Brozik, D., Rudd, D Zhibin, L. (2008), Chinese Women and Poverty Alleviation: Reflections and Prospects for the Future. In: Chinese Sociology and Anthropology, vol. 40, No 4, pp. 27-37
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Introduction Poverty economic condition in which one is unable to enjoy a minimum standard of living. It is a state of existing in amounts that are too small to buy the basic necessities of life. The visible effects of poverty are malnutrition, ill health, poor housing conditions, and illiteracy. The impoverished people suffer from unemployment, underemployment and lack of access to resources that restrict their opportunities to earn living. The causes of poverty are rooted in the complex web of cultural arbitrariness and demographic, economic, social, and political and various other natural factors such as floods, cyclones and droughts. Geographically, Bangladesh is a small country with ethnically much more homogenous population than many other countries in South Asia. Nonetheless, historically it is marked with considerable regional differences in dialect, custom, agrarian relations and social development. Although the presence and persistence of differences in human development indicators in the country are often discussed, regional differences in income and other economic indicators are less known and talked about. Bangladesh now has one of the fastest rates of poverty reduction in South Asia. In 1991, 57 percent of Bangladesh’s population was living below the poverty line. By 2000 this figure came down to 49 percent. Over the period 2000 to 2005, the poverty rate further declined to 40 percent with around six million people lifted out of poverty (GOB, 2011). Poverty Poverty, as normally defined, means that the consumption or income level of a person falls below a certain threshold necessary to meet basic needs. The most frequently-used measure of poverty is based on income or consumption proxies. Poverty is a condition in which a person or community is deprived of, and or…
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Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.…
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References: Minh, Q. D. (2004). Rural poverty in developing countries: an empirical analysis. Journal of Economic Studies. 31(6).…
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Lakdawala, D.T.(1988). Planning for Minimum Needs. In T.N. Srinivasan and P.K. Bardhan (eds.) Rural Poverty in South Asia. Delhi: Oxford University Press.…
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Brockerhoff, M. & Brennan, E. (1998). The poverty of cities in developing countries. Population and Development Review, 24, (1), 75-114.…
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