In this study, the impact of micro-credit as a poverty alleviation strategy in Mauritius is analyzed. A close link is made between microcredit and empowerment of women through different chapters and how it helps to empower Mauritian women. Women are empowered when they are able to take decisions, have their own roles and responsibilities, are independent, educated and are ready to face discriminations which exists due to deep norms and values of society. Income is the main concept of this study because data collected have proved that microcredit helped to increase income generated through these women business. This study has raised many questions because it is observed that microcredit tend to empower economically but very less in social terms. Findings have showed that women situation have changed but not that far compared to other countries where microcredit is very popular. Still, microcredit has encouraged women be follow trainings and develop their skills, and promoted participation in activities of society mainly economic activities. On the other side microcredit is also a vicious circle of debts for women who face difficulties to repay their loans which shows how microcredit create impoverishment of women which very is far from reducing poverty.
CHAPTER 1.0: INTRODUCTION
Poverty is usually defined as the lack of opportunities, lack of education and skills, and also in terms of standard of living. Poverty in Mauritius is not similar like other countries, whether someone lives in urban or rural areas is not valid to categorize him as poor. Poor people in Mauritius (mainly women) are often denied access to resources, to opportunities, education and training for development of skills. This is often the main reason why these people cannot cope with changes occurring in our Mauritians society, in terms of social and economical transitions (IFAD).
There is a real concern to alleviate poverty a ministry of social security and social welfare has even been set up to tackle this problem. It is clear cut that poverty is not just an economic problem but also a social problem affecting life of Mauritians. The government work closely with NGO’s and other institution, a National action plan has even been set up to promote economic growth. This includes improving educational system, providing financial support for investment ad micro-enterprises and micro-finance institutions (IFAD 2011).
1.2 Micro credit in Mauritius
Microcredit started in July 2001; it was a project by the IFAD to promote Mauritian women through microenterprises. The aim of this project was to provide financial facilities and support to needy women and promote income-generating activities. Micro-credit is known as the key tool to poverty alleviation (Grameen bank). Micro-credit scheme in Mauritius has brought progress and attracted women there are more than 3,500 women registered as entrepreneurs (Nwec 2010). They are even given financial facilities like Microcredit loans for their business. The Development Bank of Mauritius (DBM) and cooperative bank provides with loans at lower interest rates Trade fairs are organized to these women to expose their product and even Awards ceremony are organized every year to reward the best women entrepreneurs.
The ministry of Gender Equality and child welfare set up micro credit programmes to target women in poverty. Together with other institution like NGO’s and banks, which provide further contributions to assist needy women. In Mauritius, the National Women Entrepreneur Council is responsible for women entrepreneurs, providing trainings in their incubators found at Phoenix. Empowerment of women is very important for economic growth, that is why an empowerment programme has been set up in 2006 and the National empowerment Foundation (NEF) in 2008 to ensure the good purpose of the empowerment programme (NEF 2009). There are very few reports that
1.3 Problem statement
It is a fact that micro-credit is very important to fight poverty and many studies have shown its positive impact in terms of standard of living, income, education, and health. However despite these strategies, poverty still remains (Mosley 2002).
The main question is that has it really empowered women? By empowerment we mean women being emancipated, taking and participating in decision making access to employment and trainings. But statistics show a different result because women in the active economy represent only 43.7 % compared to men 75.5%, only 35.5 % of women in Mauritius work (CSO 2011).
Microcredit was supposed to help in creating job opportunities for women, Statistics show that there is a population of 645 875 women, and the number of female-headed household in Mauritius and this wage gap which exist between men and women make them less economically active compared to men. Only 30% of women work in government services in Mauritius, it has been observed that 61% of women are unemployed and the rest that is 33% receive an income of Rs 4,000 compared to the 8% of men. Women income is around Rs 8,350 compared to men Rs 12,560, we are very far from reaching gender equality. How far has microcredit helped in poverty alleviation, are these strategies enough to combat poverty, how did it change or not image that society set on women and their role, responsibilities and economic activities are the questions this study will try to answer.
Aim of study
To assess the impact of micro-credit programme in poverty alleviation among women in Mauritius.
Objectives of the study
To evaluate the benefits of microcredit as poverty alleviation tool in Mauritius.
To determine how microcredit promoted socio-economic development in Mauritius.
To describe how micro-credit alleviate poverty through income-generated activities.
To analyze how women empowerment through micro-credit helps to alleviate poverty in Mauritius.
1.4 Layout of study
This study is organized as follows: Chapter 2 give deep explanations about main concepts used in this study and how they are linked. Another part of this chapter describes studies conducted on the impact of micro-credit on women and how it helps to alleviate poverty in other countries and how different authors view it, its effect on these countries and also problems they faced.
Chapter 3 describes methods used to collect data for this study and why it is appropriate. Different parts of this chapter define the problems faced during data collection, how data will be analyzed and ethical considerations to be respected for this study.
Chapter 4 provides an in-depth explanation of all findings during data collection and is followed by the discussion part where findings will be linked with other authors’ explanations from chapter 2.Chapter 5 is the conclusion, a summary of this study followed by recommendation which might help to bring better improvements to this field or encourage other research.
CHAPTER 2.0: LITERATURE REVIEW
This chapter provides an in depth analysis of concepts used in this study and how different authors assessed microcredit effectiveness on women and poverty, how government and Ngos help to promote women. There are also various studies conducted across the world showing its impact on socio-economic development in many countries in contrast with Mauritius.
2.1 Concept of Poverty
Poverty is defined in different terms and it is difficult to have an exact definition of it. The UN (United Nations) defines poverty as a denial of choices and opportunities, a violation of human dignity (Langmore 2000: 37). It means lack willingness and opportunity to participate effectively in society. UN also relate poverty to lack of income to enable survival, social discriminations that the poor face, and by denial of opportunities, it means that they are denied to participate in decisions in society (UN, 1995: Para. 19). In the Beijing declaration it was mentioned how poverty is characterized: lack of participation in social and cultural life, this occurs in many developing countries forming pockets of poverty: regions where poor lives. A poor is not poor because of lack of participation in civil society but also due to economic problems such as recession which prevent people below the poverty line from having a decent life.
Sen. (1981), who is a famous researcher on the subject of poverty, explains poverty as the lack of basic needs essential for survival and fails to participate in social and economic activities. Poverty can be categorized into two that is absolute poverty and relative poverty. Absolute poverty refers to a situation where an individual is unable to satisfy his basic needs that are food, shelter and clothing and health. Peter Townsend (1979) defines relative poverty as a situation where an individual standard of living is below the level that they are unable to enjoy normal way of life (Reporting poverty in the UK p 15). It is more about standard of living where there is an individual possess a big villa, new brand car, high income whereas another one is at medium level and can at least satisfy his basic needs and stay healthy.
2.2 Women and poverty
More than 1.3 billion of people live in poverty in the world and most of them are located in developing countries like Asia and Africa (UNDP 1996). Women are the one who bear all the burden, they have to manage their household which means work and cater for their family at the same time which is not an easy task. A woman is described as a human being of female sex who can be distinguished through her gender roles and responsibilities in society (Wikimedia 2005). 70 % of women are poor and they mostly come from female-headed households (UNIFEM 2010). Poverty among women keep on increasing, that is why it was conceptualized as Feminization of poverty; an increase in female-headed household (Buduwski 2002). There are various reasons which explain why women, one because there are gender based values like gender roles (housewife/nest builder) which prevent women to emancipate, the increase of divorce increases female-headed families (GAP 2008). There are gender-based inequalities which restrict women to have access to resources and opportunities; which failed to empower them. There were more than 22 millions of unemployed women in the world in 2008 and in developing countries like African countries and south Asia women engaged in insecure jobs (UN 2009). Empirical studies conducted in Poland showed that there are more than 90% of women who are engaged in household work and also their paid, which is a real burden for them (Mandal 2008:163).In Mauritius, Women are more likely to face poverty than men; a report of the CSO showed that 8.9% of women compared to 8.1% of men live in relative poverty in 2009. There is a gap in income between male and female employee only Rs 7,100 for female and Rs 12, 330 for male (ESI 2010:11).
2.3 women and Poverty alleviation
Poverty alleviation is based on different strategies to reduce poverty at individual, group and community level. These strategies include education facilities to promote socio-economic development and break down barriers leading to disparities in our society (Barder 2009). Greenberg (2005) defines poverty alleviation as set of strategies to reduce the impacts of poverty on vulnerable groups. In 2000, the millennium development goals were set up to reduce poverty (UN 2000). It was followed by a guideline for poverty alleviation to better help organizations over the world to achieve this objective (DAC 2001).
To alleviate poverty barriers which restrict access and participation in society have to be removed (UNDP 2011). These barriers include; problem of unemployment, promoting human capital through educational facilities, trainings for development of skills, health facilities, support to family in difficulty through social benefits, promoting access to services through financial support and building up of self help groups to create solidarity and policies to reduce discrimination and inequalities towards the poor (Headey 2006).
2.4 Poverty alleviation among women through empowerment
During the Women conference of the United Nations, it has been declared that to have stability in terms of social, economic, politic, culture and environment, achieving gender equality and empowerment is the essential keys (UN 2009). Empowerment refers to creating opportunities so that individual can develop their capacities in terms of skills and knowledge to face social prejudices in society (Waterhouse 2003). It is the 3rd goal of the Millennium Development Goals which aim to reduce poverty till 2015. Empowerment takes place through decision making, building up of self-esteem in women, improving their status in society and at home (Cheston and Khun 2002). Kabeer (2003) focus on empowerment as being able to make own choices and taking decision to achieve goals. A report from Unifem declares that to achieve women empowerment, access to all basic resources is important (Unifem 2008). Women do not only face money problems but also social ones through exclusion education, politics, and the world of work.
Empowerment of women is very important to promote their participation in economic activities of society (Eyben 2008). Women are the ones who are most engaged in work and produce more but yet they only 10% of the income (Clinton 2009). Women tend to invest more even at home, a study done in Brazil showed that all household where women were in control improve the chances of survival of their children by 20% (OECD 2010). Why is empowerment important? It is because women are the one who are less educated, denied access to resources, support (financial), education and are mostly vulnerable in society, they are discriminated and exploited both at work and at home (Mayoux 2009). To achieve empowerment there are intervention from both government and Ngo’s working together to reduce poverty and promote women. In Mauritius, the NEF has been set up to promote empowerment of women through
2.5 Women and microcredit
Micro-credit is too wide which makes it difficult to define (Oikocredit 2011). It is generally define as small loans granted to people from poor background to help them improve their income (income generating activities) and way of life (Grameen bank 2011). In the 1800’s, Lysander Spooner found out that providing credit facilities to small famers was very successful that where came the new term micro-credit today, poor population have accessed to loans and payment facilities. In 1976, Muhammad Yanus (winner of the Nobel Prize in 2006) created micro-credit facilities in the Grameen Bank in Bangladesh. At first it was only meant to assess the facilities which can be provided to the poor but later proved to be a key tool to reduce poverty. This was followed by the United Nations declaring the year 2005 as the international year of Micro-credit with five main goals among which were to promote contribution of micro-credit facilities and enable accessibility to these facilities (UN 2005).
Micro-credit has been proved to promote social development and a tool to struggle against poverty in both developed and developing countries (Da Silva et al. 2007). MFI reports showed that 70 % of women are beneficiaries of micro-credit loans, this give an overview of women vulnerability and how they consider micro-credit loans as a way to get out of poverty.
One main question is raised: Why women? Evidence have showed that women are the ones who are less paid and work in secondary sectors where they are at risk and do not have benefits compared to men in society (ILO 2008). Women face too many inequalities such as unemployment and discriminations based on gender, it has to be noted that Mauritius gender statistics showed that we are ranked 63rd out of 146 countries on the Gender Inequality Index of the UN (CSO 2011). That is why micro-credit scheme has been introduced to promote access to resources such as land and infrastructure and also access to credit facilities. Besides Micro-credit programme also include training of women so that become independent and confident in their business (CIDA 1995). Micro-credit help women to improve their income household and build a safety-net which secure them and reduce their vulnerability to fall into traps of poverty., they become more mature to deal with issues of their business and make their own decision and choices (Mends 2000). Through entrepreneurship, Women have the opportunity to overcome cultural norms which trap them into their housewife role. (Swain and Wallentin 2007).
2.6 Empowerment of women through microcredit
Many authors find a link between credit and empowerment. Cornwall and Edward (2010) consider empowerment as crucial to overcome economic and social dilemmas in society. Micro-credit is a system which gives access to finance through loans and savings for entrepreneurships. Studies have shown that micro-credit has been useful to the poor household due to low cost (Miller, Morhnee, Stephens and Tazi 2006). It is a fact that micro-credit programme improved women situation (economic, social, political, cultural) and also in terms of education (trainings) allowing them to develop their skills (Johnson & Rogaky 1997).Empowerment has two dimension one in terms of household, women tend be at home doing housework and taking care of their family. With micro-credit programme they work and earn their own money which improves their status and their role at home compared to their previous role. They feel in a better position to apply their own decision (Osmani 2007).
There were extensive debates about women and poverty and the impact of micro credit as a poverty alleviation tool. Many literatures have referred to the micro-credit scheme as the best alternative to reduce poverty and to empower women (Bernasek, 2003, Bhatt 2001, Khand Ker el al 1998, Leach and Sitaram, 2002). An assessment on the role of micro-credit schemes conducted through a survey in the South Asia together with Ngo’s showed that these schemes have improved economic status of women in society through education and training to acquire professional skills in entrepreneurship so that they become self-efficient and this has improve their social status in their household and improved awareness (Hashemi, Schuler and Riley 1996).
Micro-credit programmes include Income-generating strategies, increasing awareness and empowering women. This help to socio-economic development of the country through education, participation in decision making, improving quality of health, sanitation and nutrition but most important of all to alleviate poverty through food security, income, improving literacy rates among women, thus leading to social inclusion of women in social, economic and political activities (Bernasek and al. 2003).
Halkias, Nwajiuba, Harkiolakis, Caracatsanis (2011) study targeting the “Challenges facing women entrepreneurs in Nigeria” with a sample of 62 females entrepreneurs a self-administered survey showed that women showed more devotion and effort for their entrepreneurship compared to male entrepreneurs. Another result was that female entrepreneurs can professionally control their entrepreneurship and maintain their household effectively. Micro-credit had also an impact on savings made each month to improve standard of living of their families (Siringi 2011). Kabeer (1998) found out that micro-credit is an opportunity for women to bring their own contribution in terms of money. Policies should target more social and educational spheres to encourage women in the combat to alleviate poverty. Besides (Rogers and Youssef, 1988; Consultative Group to Assist the Poor – CGAP, 2004: 6) findings showed that a rise in women income has positive influence on education, and health of children in the household.
A study conducted in Nepal showed that more than 68% which represent more than 89 000 women over 130 000 who were involve in empowerment programme and experienced a change in their role at home and towards their own community, they have become someone who is respected for efforts and sacrifice don to reach this target of women with confidence and esteem (Ashe and Parrot 2001). Micro-credit has open new avenues for women in terms of education and development of skills. Having access to credit is more secure for women and they are able to take care of their family. Reports have shown that women are the one who spend more for the welfare of their family; in-depth interviews conducted in Rwanda with women benefiting from micro-credit scheme have shown that more than 54% of them are now able to manage on their own in their business without men (URWEGO 1994).
It also helps to build up their self-confidence and self-esteem. Self-confidence is part of the aims of empowerment of women. It is the based to change women perception on various patriarchal aspects that exist in society and this also enable them to develop skills for the success of micro-credit. Micro-credit is a programme which train women to become professional business women and to be able to control their own business. Microcredit programme have empowered women leading to a change women role, status and relationship at home and in society. In-depth interviews conducted in Rwanda showed that there was an increase of 69 % in self-confidence and self-esteem of women (Ashe & Parrot 1994). Studies conducted by Gobezie (2007) showed that more than 54% of women (micro-entrepreneurs) feel more at ease to deal with decisions both at home and their enterprise with the increase in self-esteem and self-confidence.
2.7 Government contribution
The government plays an important role in promoting welfare through programmes and policies to better address the problem of poverty and promote equity (Cawthorne 2008). Funds from taxation help for development of the country and the government establishes a framework to know how to use funds efficiently (Serpa 2008). There is a belief that government intervention in micro-credit to give access to credit facilities only. But reality is that it acts as facilitator which provides access to service to the poor without ceilings. Another question usually asked is how micro-credit helps the poor? It increases income of poor household and improve patterns of consumption. When the needy people have access to credit, it helps them to maintain basic standard of living and have cash for emergencies. The government has an aim to promote welfare of citizens’ mostly needy ones; through micro-credit policies to better target and assist them but also programmes, which create opportunities to poor people to develop skills and gain experience in entrepreneurship and learn how to manage their business. Several reports have shown positive impacts of micro-credit on women but there is big dilemma, political influences which exist and result to abuses, giving privileges to others and drainage of funds to be allocated to micro-entrepreneurs (CGAP 2002). Such influences affect good running and success of these programmes.
Similarly to others countries like Bangladesh where the government work together with banks like BRAAC, in Mauritius there is the DBM which provide micro credit loans to people which also aim at socio-economic development and empowerment of women but through financial facilities. Micro-entrepreneurs (women) benefit from loan facility of Rs 150 000 with a period of five years for repayment, only women willing to create a small enterprise. These women are registered at the NWEC where they follow trainings to become independent wage earners (Nwec 2010).
2.9 Constrains of Micro-credit
Micro credit was supposed to play a vital role in reduction of poverty but it also has its dark side. This strategy is seen as being too simple to reduce the problem of poverty (Endeley and Thompson 2005). Explanations provided to justify the failure of Micro-credit programme is that it failed to target real needy groups, it can observed that non-poor are taking most advantages of this programme and poor are becoming poorer, criteria of selection are not appropriate and this causes abuses (Copestake, Morduch, Dugger 2004). For Duvenduck (2011), until now there have not been valid evidence which prove that microcredit positively affect women. Abuses are not only from rich people but also from male in households where women benefit from micro-credit schemes. They are aware of their wives’ eligibility to access micro-credit loans and use them for their own business having nothing to do with women entrepreneurship (Goetz and Gupta 1995). This raises the question of gender equality which exists in society and men always getting involved in female activities.
Furthermore, the main purpose of micro- finance was supposed to provide credit a facility in terms of loan to the marginalized group to help them to generate income for their own business, the state has failed in its mission. (Swain et al 2008:193). It has rather created a vicious cycle of indebtness among women; they get trapped and become dependent on the state and banks. The problem is that they often failed to have the level of profit expected and have to work double to save for loan repayment (Copestake 2001). A report published by business week (2005:4) showed that interest rates are higher and failure to repay loans means closure of their business and huge debts to clear.
It can be seen that intervention and contribution of private and public sectors are thin. There is a lack of continuous assistance to women entrepreneurs which makes the safety net very vulnerable as any mismanagement and low profitability can put the business at risk (Neff 1996). All these shortcomings of micro-credit have raised a question; is micro-credit really a tool to reduce poverty? Findings from different surveys showed that it really reduced poverty in the world but to some extent. Kandler (2005) found out that 31 % of women participating in micro-credit programs have been out of their abject poverty in Bangladesh. Another fact of micro-credit success is the increase and improvement of consumption patterns of poor people together with the increase in income this has lead to economic development. Kah (2005) reject the positive results of micro-credit in the developing countries. After a study in different countries with different methods like interviews, surveys and ethnographic surveys, Kay found out that it is a too optimistic assumption to classify micro-credit as a tool to alleviate poverty.
Micro-credit programmes also have short-comings which tend to be ignored. Antaitwe (2006) claimed that there programmes have failed to meet their aims and objectives. The reason provided was that the fact that people who deserve this service and assistance were excluded from these programmes (Hulme 2003). Another short-coming of micro-credit is whether these programmes are accessible to extremely poor people. Reports from the United Nations (UN) showed that these programmes are inaccessible to extremely poor because of high interest rates and lack of infrastructures and structural patterns to better assist needy people so that they develop their skills and become efficient in society.
Peredo and Chrisman (2006) focus on the fact that network should be created to enable better sharing and also facilities in terms of resources and management of enterprises including cost of resources, methods of distribution after production and how to value their products. Pollin (2007) consider microcredit as undervaluing entrepreneurship because it has rather encourage short-term income activities. Entrepreneurship is more based on investment of profit (Harper 2007), however micro-enterprises profit are used for personal matters like luxuries, education, health and other emergencies rather than for development of the country.
The main problem with micro-credit shemes is that they deal with economic problems than social ones. It is clear that poverty is the socio-economic problem for most of the world. The male dominance which exists in the most societies acts like a barrier for women success. Men have control over everything in society, even incomes earned by their wife in their enterprise are used for other purposes and women barely have access to it (Omorodion 2007). All these deep-rooted perception, values and customs prevent women to protest because they fear to be harassed, beated up, humiliated by their husband. To some extent micro-credit create tensions in households in most developing countries. For example Mauritius is a country where men power prevails both at work and home. Men refuse to accept women emancipation and recognize their capacities which are very essential for the success of micro-credit programmes (World Bank 2006). This might explain the high rate of domestic violence which was 39% in Mauritius in 2011 (ESI 2011). It seems that micro-credit programmes have been introduced only to increase economic activity and supply of labor through job creations (Pitt and Khandler 1998).
Micro-credit programmes were supposed to increase income of poor households but it failed because most of the money saved goes in loan repayment and in case of emergencies access to money become a big issue (Brett 2006). The fact that women have low status and are seen as weak ,ignorant and low skilled in society they tend to take loans to move further on the social ladder of society (Lucas 2001). They are trapped to being dependent on their husband and even more when they fail to repay their loan. This ideological image of women responsibility being at home to bring balance is a barrier to success, and though the effort to achieve gender equality in society it has failed. All government strategies for integration of women in society have failed and have provoked misconceptions about women failure in micro-credit programmes and confirming stereotype on women weakness and incapacity (Nesbitt 2006). Too little concerns are attached to empowerment of women (Bellman 2010), it is not only based on increasing their income and developing skills but it is based on changing deep perceptions. It is very difficult to change perceptions people make on women (Swain and Wallentin 2007:25).
2.8 Summary of literature review
Through the previous paragraphs, in-depth explanations about the impacts of micro-credit have been given by different authors. It seems that micro-credit programmes have been very efficient in terms of income-generating, development of professional skill to manage own business, emancipation of women in the World. Women have been empowered by these programmes through increase of confidence and assertiveness and independency. The importance of empowerment to alleviate poverty is pointed by many authors; micro-credit increases their awareness and make women more efficient in society. It has brought changes in family income and standard of living and a change in roles that women become entrepreneurs this imply devoting time to both their business and their family which is very hard and often end into conflicts. The government and Ngo’s also play an important role to promote development and emancipation of women together with policies to protect and respect their rights and programmes to make them successful women in the future. Despite all positive impacts of micro-credit on women, there are also short-comings. Micro-credit encourage women to take loan to build their own business and are also trained for it but there is not enough assistance for mentors to make sure these women are on the right track and to counsel them in case of problem to tackle within their business. The problem is when these businesses are unable to make enough profit to repay their loan, there went to deficit and loses their business, all their efforts, time and sacrifices made to achieves this. This result to women becoming dependent on their husband again and men control them again which means empow