Social and Cultural Effects of Microfinance

Social and Cultural Effects of Microfinance

Microfinancing offers opportunities to the substantial part of the Bangladeshi unemployed or underemployed population. Moreover, it gives unprecedented power to women, who have been thus far marginalized economically. It is generally understood that women in developing and/or agriculture-based nations are underrepresented in terms of labor. Women’s production and labor in most of these cases are still restricted to the domestic sphere, and therefore are not calculated into the country’s GDP. Hence, many women do not receive sufficient money or resources, and their labor (in the form of unpaid work or subsistence farming) is considered inconsequential in comparison to that of men (who are included in the workforce). In a broader sense, this means that third-world women are forced to consume in an economy from which they are essentially excluded. For example, they alone cannot make the money required to support their families, yet they are forced to pay the same taxes as men.

The inability for underprivileged Bangladeshi women to achieve an income rests on sociocultural assumptions that have been perpetuated over time. For instance, in the lower class, it was unnecessary to educate women beyond the grade-school level since her primary employment in life would be as wife and mother. Therefore, illiteracy contributed to the fact that women had less property registered in their names, and fewer opportunities to obtain paid work. In addition to this burden is the fact that many women are supporting families on their own, with very few financial assets to speak of. Therefore, without a suitable education to recommend them or collateral that would allow them to take out significant loans, women are left helpless in their abject poverty.

Social Effects of Grameen Bank

The Grameen Bank is an ideal solution that gently encourages poorer communities to make small business ventures without the fear of debt. Its flexible collateral-free lending technique is replaced by collective or group liability. That is, instead of possessing property to counterbalance the loan, the bank asks that the borrower form a group that collectively takes out a loan, which will then be repaid in weekly installments. If the borrower fails to do so, the entire group is held culpable. Therefore, this instills a system of “peer monitoring”. The money is paid back in 50 weekly installments, a system which is easy to monitor. Moreover, the bank goes from door-to-door to families, offering this proposition, which is a good way to enlighten women who are ignorant of the bank’s services. The bank also offers to fill out the paperwork for women who are illiterate, as well as keep track of their finances.

Women

The effects of microfinance on the lower-class society, and especially women, have been immense. The biggest impact seems to be the change in the attitude towards and expectations of rural women. Rural society is becoming accustomed to the idea of women owning and operating their own businesses, becoming the “breadwinner”. Women’s involvement in business has led to better education for their children, a better knowledge of reproductive health and family planning (fewer children), and an overall desire for a healthier life and egalitarian society. A higher family income leads to the access of better health care and enhanced nutrition for both women and children.

On a more general level, microfinance, specifically the services of the Grameen Bank has presented a viable approach to ameliorating the extensive socioeconomic gaps in Bangladeshi society. By creating programs that encourage individuals to help themselves through collective responsibility, Bangladeshi citizens are given a sense of hope and empowerment. Furthermore, it relieves the pressure on a perpetually unstable government to solve its poverty issues through social programs. In a country whose people depend heavily on NGOs and philanthropic institutions to sort out its economic setbacks, microfinance is an sound alternative that will provide a means for independence.

Microfinance in Asia and Africa