Contribution of microfinance on women empowerment case study of Vision Finance company ltd Nyaruguru

LIST OF FIGURE

FIGURE 1. CONCEPTUAL FRAMEWORK 1

LIST OF APPENDICES

COVER LETTER TO RESPONDENTS I

QUESTIONNAIRE ( ENGLISH VERSION) I

INTERVIEW QUESTIONS I

IBIBAZO BY'UBUSHAKASHATSI( IGICE CY'IKINYARWANDA) I

CHAPTER ONE: GENERAL INTRODUCTION

Since 2000, Rwanda has made tremendous progress in achieving a number of development objectives including building strong institutions, maintaining macroeconomic stability, and decreasing poverty through increasing access to basic services. The Rwandan Government aspires to build on this trajectory and increase financial penetration and inclusion as a key vehicle to sustained economic growth. Insufficient access to finance, particularly with SMEs has been a challenge. Rwanda's financial inclusion is still shallow with 11% of adults in Rwanda (around 0.7 million individuals) do not use any financial products or lacking access to formal financial services (FinScope Survey 2016), a large portion are covered by women compared to men. To encourage Microfinance institutions and The «Women and Youth Access to Finance Program» have been prepared with an objective to contribute in addressing this challenge.

About 11% of adults in Rwanda (around 0.7 million individuals) do not use any financial products or services (neither formal nor informal) to manage their financial lives, i.e. they are financially excluded. Levels of exclusion vary considerably across the country from 22% to 3% in all districts. Traditionally vulnerable groups such as the poor, those residing in remote rural areas, women, and the youth are more likely to be financially excluded (FinScope Survey 2016).

At the same time, microfinance is being promoted as a key poverty alleviation strategy to enable poor women and men to cope with the adverse economic and social impacts of structural adjustment policies and globalization, Mayoux (2001).

According to S.Sarumathi1 and Dr.K.Mohan (2011), the main aim of microfinance is to empower women. Women make up a large proportion of microfinance beneficiaries. Traditionally, women (especially those in underdeveloped countries) have been unable to readily participate in economic activity. Microfinance provides women with the financial banking they need to start business ventures and actively participate in the economy. It gives them confidence, improves their status and makes them more active in decision-making, thus encouraging gender equality. According to CGAP, long-standing MFIs even report a decline in violence towards women since the inception of microfinance.

The limitation of access to finance for women is largely skewed towards non-financial barriers. These include conditions in the broader business environment like limited management capacity, lack of collaterals, perception of lending institutions towards women and limited incentives to reach out to more women. Significant attention and resources will be drawn towards capacity building and empowering more women.

1.1. BACKGROUND OF THE STUDY

Rwanda is among the African developing countries still characterized by over dependence on agricultural activities in rural areas, low savings and low investments, low income groups and the economy highly depending on agricultural (Source IMF web: Regional Economic Outlook(2014). Where the populations dependent on subsistence agriculture cover 70% on entire population, (Finescope report Rwanda (2016).

In Rwanda, women comprise (57%) of 11,533,446of the entire population. However, most of these Rwandan women are illiterate and this limits their employment opportunities and financial ability to take care of their families of which 25.5% of households were reported to be headed by females while 6.4% of households were headed by females in the absence of a male head in 2013/14.Considering poverty status, it was observed that female-headed households are slightly more likely to be poor than male-headed households, with 44% of female-headed households being poor compared to 37% of poor male-headed households in 2013/14. De facto female-headed households had a higher poverty rate (47%) than other households. ((EICV4 Thematic Report - Gender (2014).

According to FAO report 2014, Women living in rural areas face many obstacles, mainly in their access to education and schooling, employment opportunities, land ownership and access to other productive resources such as all forms of financing. In view of these unequal opportunities, rural women are limited to modest and lower yielding activities, and work mainly in the informal economy. This limits their production capacity and impacts negatively on them, as well as on their families and rural areas communities in general. It is increasingly recognized that the effective empowerment of rural women implies comprehensive strategies to overcome the persistent obstacles they face. The lack of gender-specific analysis, of awareness about socio-economic issues and of political will result in policies and programs that only replicate the systemic obstacles and hamper women empowerment and their involvement as fully fledged economic players.

Kabeer, quoted in Mosedale (2003) states that women need empowerment as they are constrained by «the norms, beliefs, customs and values through which societies differentiate between women and men». She also states that empowerment refers to the «process by which those who have been denied the ability to make strategic life choices acquire such an ability», where strategic choices are «critical for people to live the lives they want (such as choice of livelihood, whether and who to marry, whether to have children, etc)» (Kabeer, 1999). Therefore MFIs cannot empower women directly but can help them through training and awareness-raising to challenge the existing norms, cultures and values which place them at a disadvantage in relation to men, and to help them have greater control over resources and their lives.

Littlefield, Murduch and Hashemi (2003) state that access to MFIs can empower women to become more confident, more assertive, more likely to take part in family and community decisions and better able to confront gender inequities. However, they also state that just because women are clients of MFIs does not mean they will automatically become empowered.

Hulme and Mosley (1996) also make this point when they refer to the «naivety of the belief that every loan made to a woman contributes to the strengthening of the economic and social position of women». However, with careful planning and design women's position in the household and community can indeed be improved.

According to Littlefield, Murduch and Hashemi (2003), the Women's Empowerment Program in Nepal confirmed that women were making decisions on buying and selling property, sending their daughters to school and planning their family, all decisions that in the past were made by husbands. They refer to studies in Ghana and Bolivia, which indicated that women involved in microfinance projects, had increased self-confidence and had an improved status in the community.

Women have been the most neglected and discriminated strata of the society not only in Rwanda but all over the world. Inspire of all Government and Non-Governments' efforts, they have been highly inactive clients of the financial sector. In the recent times, microfinance has been developed as a powerful tool for empowering women particularly; the women that have little financial ability. Apart from the informal sector of finance, the formal and semi-formal sectors like commercial banks, NGOs are taking much interest in providing microfinance services to women in order to promote them. Women are also participating in the microfinance movement by availing the microfinance services being provided by the various financial networks (Adeline K., (2013)

Women empowerment is one of the most important issues that have been in the focus of various policies and programs introduced by the Government. Microfinance is one such effort that has been emerging as a powerful tool of women empowerment. It has been observed through the available literature, that most of the studies related to microfinance have been carried out in the all province regions of the country (Rwanda) particularly and worldwide in general. The present study aims to fill in the gap in the available literature. It is uncertain attempt to analyze the contribution of microfinance on women empowerment and the satisfaction level of the women towards microfinance services.