Academic journal article Human Organization

Operationalizing Microfinance: Women and Craftwork in Ifugao, Upland Philippines

Academic journal article Human Organization

Operationalizing Microfinance: Women and Craftwork in Ifugao, Upland Philippines

Article excerpt

In the 1990s, microfinance emerged as the leading development strategy adopted to alleviate poverty and empower the "poor," particularly women. Views differ, however, on the extent to which access to financial services can enhance participants' quality of life. This paper addresses this ongoing debate by analyzing a new (mid- 1997) microfinance program in the northern Philippines established by the Central Cordillera Agricultural Programme (CECAP). Focusing on women's work in crafts, this paper argues that CECAP has initially focused on achieving financial self-sustainability within the short time frame allotted to the project, rather than emphasizing social change objectives. In so doing, primarily those women with already existing businesses or microentrepreneurs, not the "poor," are benefiting from the system; and many women are behind in their loan repayments. The fluctuating demand for crafts prevents entrepreneurs from passing on gains to small producers. By stressing timely loan repayments and not considering the broader socioeconomic and class infrastructure, CECAP's microfinance program has failed to build borrowers' collective agency and empowerment. This paper suggests that for microfinance to contribute to the needs of its members, programs must enfold social initiatives other than credit.

Key words: microfinance, women, empowerment, poverty alleviation, Phillipines

Situating Microfinance

In the 1990s, microfinance became the leading development strategy adopted by government and nongovernment organizations to alleviate poverty and empower the "poor," particularly women. Claims about the potential of microfinance to realize these goals have been advanced on the grounds that such programs can not only generate financially sustainable lending institutions, but also promote borrowers' self-reliance (Hays-Mitchell 1999; Morduch 1999; Todd 1996b). Cloning Bangladesh's Grameen Bank model, microfinance programs extend financial services for selfemployed livelihood projects to those who are not bankable by traditional criteria of collateral and income; and access to loans is dependent upon participants' membership in selfregulating borrower groups. Programs typically target women for household-level enterprises because of women's wellestablished propensity to pay back their loans and to contribute their earnings to household well-being. Such a policy focus assumes an increase in program cost efficiency and more effective poverty alleviation (Johnson and Rogaly 1997; Wright 2000).

Early studies lauded the initial success of microfinance initiatives, especially those of the Grameen Bank (e.g., Todd 1996a; Von Pischke 1992; World Bank 1991). The recent extensive literature on microfinance, however, offers little conclusive evidence about its impact on poverty alleviation and on women's empowerment, but several studies suggest considerable reason for caution (e.g., Jain 1996; MacIsaac 1997; Mayoux 1998; Rahman 1999a, 1999b). Those studies advocating the benefits of microfinance claim that it provides a cost-effective sustainable development model by increasing the incomes of the poorest, thereby enabling them to improve quality of life and resist oppression through collective action (e.g., World Bank 1991; Yunus 1994, 1995). Critics rest their skepticism on the basic premises that microfinance fails systematically to reach the poorest (Chowdhury 2000; McKee 1989), enhance women's status (Hashemi, Schuler, and Riley 1996; Lopez and March 1990), increase household income (Hashemi 1997; Wood and Sharif 1997), and treat the social causes (as opposed to the symp-, toms) of poverty (Goetz and Sen Gupta 1996; Rogaly 1996; Tendler 1989).

This paper engages these debates by analyzing a microfinance program in Banaue, Ifugao, northern Philippines, established in mid-1997 by the Central Cordillera Agricultural Programme, or CECAP.1 Modeled after the Grameen Bank scheme, CECAP's Rural Finance System seeks to establish a financially self-sustainable network of village-based savings and loan groups and to link these groups to local banks. …

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