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@ vom World Development, Vol. 24, No. 4, pp. 635-653, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain, All rights reserved (0305-750X/96 $15.00 + 0.00 (0305-750X(95)00159-X Rural Credit Programs and Women’s Empowerment in Bangladesh SYED M. H. |ASHEMI Jahangirnagar University, Dhaka, Bangladesh SIDNEY RUTH SCHULER and ANN P. RILEY* JSI Research and Training Institute, Arlington, Virginia, U.S.A. ‘Summary. — This paper presents findings from a st tudy of Grameen Bank and the Bangladesh Rural ‘Advancement Committee (BRAC), two programs that provide credit to poor rural women in Bangladesh. The programs were found to have significant effects on eight different dimensions of women’s empowerment, The authors use a combinati jon of sample survey and case study data to argue that the success of Grameen Bank, is particular, in empowering women is due both to its strong, central focus on credit, and its skillful use of rules and rituals to make the loan program function. Copyright © 1996 Elsevier Science Lid 1, INTRODUCTION Microenterprise credit for women has become increasingly common as a poverty alleviation inter- vention in developing countries worldwide. The rapid expansion of these programs has been accompanied by a growing emphasis on achieving high repayment rates and promoting efficiency and financial sustain- ability. Other components such as social and political consciousness-raising, literacy training and skill development have been increasingly downplayed. Many of the most prominent examples of “minimal- ist” microenterprise credit programs for women are in Bangladesh. A number of them have been remarkably successful in providing financial services to poor rural women on a large scale, with relatively low and diminishing levels of financial subsidy Critics of minimalist programs have argued that because of the patriarchal social structure in rural Bangladesh, programs that provide credit with mini mal training or other supplementary support services do not empower their female participants and may even worsen their situations. Advocating more holis- tic approaches, they maintain that strategies such as nonformal education, social and political conscious- ness-raising, or political organizing are needed to con- front patriarchal power structures, and that programs 63s organized around credit cannot achieve this goal They suggest that gender subordination can best be addressed by making confrontation of patriarchy, rather than credit, the focal point (e.g., Goetz. and Sen. Gupta, 1994; Hasan, 1985; Ahmed, 1982; Anisur Rahman, 1986; Nijera Kori, 1990; Casper, 1994). The authors gratefully acknowledge the support provided by Population Action International, The Summit Foundation, The Rockefeller Foundation, and International Development Research Centre, Canada for this research, We are grateful to Professor Muhammad Yunus and Muzammel Hg of Grameen Bank, and Dr. Mushtaque Chowdhury and M. Ghulam Sattar of BRAC for the valuable insights that ‘emerged through numerous discussions, and tothe field staff ‘of Grameen Bank and BRAC in Rangpur, Faridpur and Magura for their generous assistance. We are deeply indebted to our ethnographic field research team: Tofazzal Hossain Monju, Nurul Huda Chanchal, Rubina Ferdousi, Shamsul Huda Badal, Ashrafunnessa Tinni, Reaz Hossain, Dilruba Ahmed, Zakir Hossain, Laila Pervin, Shireen ‘Akhter, Sharif Shamsher, Ahsan Habib Rumi, and Shamima ‘Akhter. We thank the staffof Associates for Community and Population Research for carrying out the survey under the direction of Ghulam Mustafa Kamal, whom we miss and remember often, We are grateful to Amy Cullum for her assistance inthe statistical analysis. Final revision accepted: November 15, 1995, 636 Based on findings from a study of Grameen Bank and the Bangladesh Rural Advancement Committee (BRAC), two rural credit programs in Bangladesh, this paper argues that minimalist credit programs do empower women. The analysis uses a combination of ethnographic and sample survey data to describe and measure the effects of the two programs on eight dimensions and a composite indicator of empower- ment. It addresses issues of women’s control over credit and the relative magnitude of their economic contributions to their families’ support, and discusses differences in the approaches of the two programs. ‘The authors argue that credit programs empower women by strengthening their economic roles, increasing their ability to contribute to their families” support, and that they also empower women through other mechanisms. Its consistent central focus on credit explains Grameen Bank’s stronger effect on women’s. contribution to family support and on empowerment, The ritualistic, disciplined mode in which Grameen Bank, and to some extent BRAC, ‘operates strengthens the participants’ ability to control their assets and income, as well as helping them to establish an identity outside of the family, and giving them experience and self-confidence in the public sphere. 2. BACKGROUND. Among the poor in rural Bangladesh, systems of patrilineal descent, patriocal residence and purdah (the practice of secluding and protecting women to uphold social standards of modesty and morality) interact to isolate and subordinate women. Women are socially and economically dependent on men. Cultural norms are based on asymmetrical assump- tions regarding what is appropriate for each sex, what males versus females need, and what they are entitled to, Education is often considered irrelevant for girls, and at an early age they learn to accept deprivation rel- ative to male family members. Because of purdah many women are confined to the homestead and the area immediately surrounding it, and their contacts, with the world outside of the family are extremely Fimited.! These social norms curtail women’s involve- ment in market transactions and constrain their poten- tial to generate incomes, reinforcing their economic dependence. Grameen Bank and BRAC, through its Rural Development Program, with about two million and ‘over one-half million female members respectively, are the two largest and best known nongovernmental “organizations providing credit to the rural poor in Bangladesh.’ Grameen Bank now works in half of all villages in rural Bangladesh. Both organizations, started on a small scale in the early to mid-1970s. In their early years there was a distinct contrast in their WORLD DEVELOPMENT programmatic philosophies and strategies: Grameen Bank was first and foremost a bank for poor rural peo- ple, and BRAC took a more multifaceted approach to alleviating rural poverty, with a strong focus on con- sciousness-raising and nonformal literacy training. In recent years BRAC’s Rural Development Program hhas come to resemble Grameen Bank to alarge extent. Both organizations, as they have evolved, have focused their programs increasingly on women, and have attempted to draw women out of isolation mainly by providing them with economic opportunities. BRAC has continued to try to involve men as well as ‘women to some extent, by establishing separate men’s groups, while Grameen Bank’s current program focuses almost exclusively on women, Both programs are believed to be contributing to social change, empowering women by drawing them out of their homes and strengthening their economic roles. ‘At the community level, BRAC and Grameen Bank have similar ways of working. Both organiza- tions employ large numbers of field staff, mostly young men, who live in the areas where they work ‘When a new branch opens the field staff visit nearby villages and explain that the program will provide credit to poor, landless women to support income- earning activities. In order to participate, and to be eli- gible to receive credit, women are asked to organize themselves into small groups. There is a mandatory savings requirement, and each woman has her own savings account and passbook. Loans are repaid and savings deposited at weekly meetings. Loans are made to individuals, at commercial interest rates. There is no collateral but the group as a whole is responsible to ensure that each member makes the ‘weekly repayments. The participants themselves decide how to use the loans. In most cases the loans are used for self-employment activities such as paddy processing, poultry and livestock, traditional crafts and small trade. The average loan is about $75~100. Before receiving credit, new members must attend training sessions so that they understand the pro- ‘gram’s objectives and modes of operation, Grameen Bank has “Sixteen Decisions” having to do with self- improvement, social reform, and community develop- ‘ment, which members must memorize and recite.° Along the same lines, BRAC has “Seventeen Promises. 3, METHODOLOGY AND DATA (a) Six-village ethnographic study Ethnographic research was undertaken in six vi lages during 1991-94 to document processes of change both in women’s roles and status and in norms related to reproduction. The data were collected through participant observation and informal inter- RURAL CREDIT PROGRAMS views, supplemented with various structured instru- ments. The researchers observed and documented the ‘two credit programs in operation at the village level and interviewed program participants. Grameen Bank was operating in two of the villages, BRAC was in two villages, and two of the villages had no credit pro- grams. ‘The study sites were purposively selected to include one area where both BRAC and Grameen Bank had been in operation for over six years, and one area where the programs were just starting; areas where both programs were operating in close proxim- ity were avoided. The general areas were identified with guidance from the central offices of the two orga- nizations, after deciding thatthe six villages should be concentrated in two groups to facilitate frequent inter~ action with the local Principal Investigator.’ Once the two geographic areas had been identified, village selection was influenced by availability of living accommodations for the researchers. This component of the study was intended to provide insights into the social processes through which normative changes come about; the villages were not intended to be rep- resentative of the geographic areas in which they are located, nor of villages with credit programs. Although we had expected to find greater program impact in the older villages, it happened that they were located in an area of the country that is particularly poor and economically depressed; program perfor- mance (in terms of repayment of loans) and impact appears to be greater in the newer villages, where there are far more economic opportunities. ‘The ethnographic team consisted of six women and six men, The team received intensive training in qualitative research methods at the beginning of the project, and the principal investigators provided con- tinuing informal training throughout the study. One male-female team resided in each village for a period of about two years, and made occasional visits during the following year. Their observations and interviews focused in particular on a quasi-random subsample of 120 households (20 from each village), about half of whom were households of credit program partici- pants. The respondents were selected from poor fami- lies who were participating, or would have been elig- ible to participate, in BRAC or Grameen Bank's programs.> A structured form (“household survival matrix”) was developed to collect detailed information at sev- eral points in time about the economic activities and camings of members of the 120-household sample. The form also included information about children’s schooling and women’s participation in credit pro- grams, end households’ responses to crises and eco- nomic stress events such as weddings and other ritu- als, and major investments. Information was collected monthly for a period of one year. This information was supplemented with economic analyses of 67 women’s microenterprises and information about control over various aspects of family enterprises and income. (b) Sample survey of credit program participants ‘and comparison groups A survey of about 1,300 married women under age 50 was conducted in late 1992. Four separate samples were drawn, using a random multistage cluster design to include villages from all four geographic divisions of Bangladesh.* The four groups consisted of Grameen Bank members, BRAC members, nonmem- bers residing in the Grameen Bank villages (who ‘would have been eligible to join either BRAC or Grameen Bank), and a comparison group who lived in villages with no Grameen Bank or BRAC program but who would have qualified to join the credit programs.” In the credit program villages almost all the women had been members for at least 18 months prior to the survey. (See Schuler and Hashemi, 1994 for a more detailed discussion of the survey design.) The inter- viewers were all women who had previous experience in conducting demographic surveys. The survey included questions related to women’s roles and status, within the family and community, and fertility and contraceptive use. variables (©) Operational definitions of survey Developing valid and reliable measures of ‘women’s empowerment was one of the most difficult tasks of this study, Behaviors and attitudes that might be used to measure women’s empowerment in one society may have no relevance in another. Even though the population of rural Bangladesh is relatively homogenous in terms of its language and cultural tra- ditions, many of the specific details of women’s lives vary because of small differences in social norms and because the geography, the physical infrastructure, and the configuration of social and economic opportu- nities varies from place to place. Nevertheless it was important to ask very specific questions because of the potential ambiguity of general questions. In this study series of questions related to a variety of different aspects of empowerment were developed through extensive observation, personal interviews with respondents in the ethnographic study villages and with credit program staff, and from baseline survey data.* (For more details see Hashemi and Schuler, 1993.) The responses were consolidated into eight indicators. ‘The eight indicators were constructed as scale vari- ables. In two of these the components were given dif- ferent weights (the scores for making large purchases and involvement in family decisions): in the other six 638 WORLD DEVELOPMENT equal weights were assigned to all components. In most instances weights were not used in creating the scales because of the arbitrary judgements that this ‘would have entailed (e.g, deciding that buying hair oil is twice as meaningful as buying ice cream). In addi- tion, the layout of village paths and major roads, and ‘geographic variability in access to markets and facili- ties influences many of the behaviors that comprise the empowerment indicators, such as mobility and ‘making purchases in the market. Women living close to one particular market may have easy access to acer- tain set of goods and services while others might have to travel a considerable distance to get the same things; some villages have vendors who sell particular ‘goods door to door, making it easier for women to make purchases without violating purdah norms. In creating the empowerment indicators, therefore, we intentionally included a variety of specific actions or items in each one, and made minimal use of weights All of the operational measures of empowerment employed in this analysis reduce the empowerment data to dichotomous variables. The cutoff points for empowered versus unempowered were based on per- centage distributions for each dimension. Each mea- sure attempts to separate those women who stand out as being relatively more empowered than most other poor women, but does not single out highly unusual respondents. The cutoff point for empowerment was made at around the 25th to 30th percentile for most dimensions. The cutoff points were not difficult to decide on because in most cases a move down one space on the scale would classify more than half the respondents as empowered and a move up one space would exclude all but the top 10% or less.” We acknowledge that the concept of women’s ‘empowerment is elusive for a variety of reasons (see Mason, 1984, 1987), and that the potential for struc- tured surveys to contribute to our understanding of it is inherently limited, Although the measures devel- oped in this study are the result of a long process involving extensive preliminary data collection, pretesting, reflection and discussion, at best they can only partially capture the phenomenon of women’s; empowerment, The inherent shortcomings of the empowerment indicators, however, would. tend to diminish the chances of producing statistically sign icant findings; itis unlikely that the multivariate mod- els using these indicators would overstate the relation- ship of either credit programs to empowerment or empowerment to contraceptive use. The operational measures of the survey variables arc described below. ( Empowerment indicators ‘The eight indicators are: mobility, economic secu- rity, ability to make small purchases, ability to make larger purchases, involvernent in major household decisions, relative freedom from domination within the family, political and legal awareness, and involve- ‘ment in political campaigning and protests. — Mobility: The respondent was presented with a list of places (the market, 2 medical facility, the movies, outside the village) and asked if she had ever gone there. She was given one point for each place she had visited and an additional point if she had ever gone there alone. A respondent with a score of three or better was classified as “empow- ered” and coded as one. (In all of the empower- ment variables “not empowered” was coded as zero.) — Economic security: One point was given if the respondent owned her house or homestead land, ‘one point for any productive asset, one point for having cash savings, and an additional point if the savings were ever used for business or money- lending. A respondent with a score of two or better was classified as “empowered” and coded as one —Ability to make small purchases: One point was «given for purchasing small items used daily in food preparation for the family (kerosine oil, cooking oil, spices), one point was given for purchasing small items for oneself (hair oil, soap, glass ban- ‘les), and one point for purchasing ice cream or sweets for the children. For each of these types of purchases one additional point was given if the purchases normally were made without asking for the husband’s permission, and another additional point if the purchases were made at least in part with money eamed by the respondent herself, A respondent with a score of seven or better was con- sidered “empowered.” — Ability to make larger purchases: One point was given for purchasing pots and pans, two points for children’s clothing, three points for saris for ‘oneself, and four for buying the family's daily food, An additional point was given for each cate gory ifthe purchase was made, at least in part. with money eared by the respondent herself. A respon- dent with a score of five or better was considered “empowered. — Involvement in major decisions: One point was given for making a decision (individually or jointly ‘with the busband) within the past few years about house repair or renovation, one point for a decision to take in a goat to raise for profit, three points for deciding to lease land, and four points for deciding to buy land, a boat ora bicycle rickshaw. An addi- tional point was given for each category if money ceamed by the respondent was used. A respondent with a score of two or better was classified as “empowered” and coded as one. — Relative freedom from domination by the fam- ily: The respondent was asked if, within the past year, money had been taken from her against her will; land, jewelry or livestock had been taken from her against her will; she had been prevented from visiting her natal home; or she had been pre-

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