By Helen Moser
The assumption of many Microfinance Institutions (MFIs) is that providing microfinance to women is not only a social imperative – it is also one that may yield higher returns to capital, as women are typically more credit-constrained than men due to their limited access to formal financial services. Women in developing countries are 20 percent less likely than men to have access to formal credit. Additionally, women tend to be poorer than men on average and have less collateral to offer.
MFIs rose in popularity in the late 1990s and early 2000s, and many MFIs like the Grameen Bank began strategies of lending primarily to women that continue today. Over 80 percent of the poorest MFI clients worldwide (those who live on less than $1.25/day) are women. MFIs and their supporters often claim women make better use of loaned or granted funds than men do. But in actuality, microfinance may not be an effective solution to raise women’s business profits from microenterprise, nor their incomes. Continue reading