Microfinance, Food Security and Women's Empowerment in Côte d'ivoire

Transcription

1 Mcrofnance, Food Securty and Women's Empowerment n Côte d'ivore Dr Namzata Bnaté Fofana, PhD Lecturer/researcher, UFR Economcs and Management Unversty of Abdjan- Cocody/ Ivoran Economc and Socal Research Center (CIRES) Leader of Gender and development unt at CIRES Côte d Ivore E-mal address: namzatab@yahoo.fr Abstract Ths paper deals wth the effectveness and the capablty of mcrofnance nsttutons n enhancng women s lvelhood and empowerment n rural areas. Ths study uses both a theoretcal and emprcal approach that represents the nteracton of women s lvelhood and mcrofnance. The emprcal analyss conssts of an n-depth analyss of mcrofnance nsttutons and a survey analyss appled to cross-sectonal data collected from 185 women who have access to credt from MFIs and 209 women who have no access to MFIs credt. The results show that mcrofnance nsttutons have ncreased the ncome of female borrower and mproved the level of farm producton whch s a man development goal n most Afrcan countres whose economes are based on the agrcultural sector. Ths paper found, on the one hand that women wth more power n decson-makng have more chance to obtan MFI credt; On the other hand, access to MFI credt led to the mprovement of women s partcpaton n household decson makng through ther contrbuton n household standard of lvng. Keywords: Mcrofnance, farm productvty and empowerment

2 I Introducton 1.1 Justfcaton There has been an ongong debate on poverty durng the last few decades. Poverty exsts everywhere n the world. The UNDP annual report from 2006 states that 2.5 bllon people lve on less than 2 USD per day and account for only fve percent of the global ncome, whle the rchest 10 percent account for 54 percent of global ncome. Furthermore, an estmated 800 mllon people wll stll be trapped n poverty and by 2015, 600 mllon wll be left starvng, most of them lvng n sub- Saharan Afrca and South Asa (Von Braun, 2007). There are many poor countres, especally n sub-saharan Afrca (above 40 percent), compared to Asa and the Pacfc where the share of the poor fell from 30 percent n 1990 to 9 percent n 2004 (Ravallon et al., 2007). In such a context, the man objectve should be to contnue lookng for solutons that can lft the poor out of poverty and for scentfc communtes and polcy-makers who can help make that happen. Mcrofnance as a credt nsttuton s seen as one of the relevant tools that can provde small loans for poor people who have no access to a formal bank. Mcrofnance nsttutons enable the poor to undertake ncome-generatng actvtes and to mprove ther lvelhoods. Mcrofnance has been recognsed as a sgnfcant means of economc development n recent decades, especally durng the mcrocredt summt held n Washngton DC n February In addton, the Unted Natons General Assembly nomnated 2005 as the Internatonal Year of Mcrocredt n order to boost mcrocredt and mcrofnance programmes around the world. Snce then, mcrofnance has attracted more attenton from governments, NGOs, researchers and cvl servants. Worldwde, women are more lkely to be poor than men especally n developng countres where an estmated 70 percent are women (World Bank, 2007). Women are poorer than men because they often lack access to economc resources and opportuntes, educaton and support servces, and do not have access to land. There s also the lack of attenton to gender equalty n economc polcy. Nevertheless, women contrbute to the physcal work n farm producton and support the lvelhood of the farm household n many countres (Ells, 2000). In Afrca, women now consttute the majorty of smallholder farmers, provdng most of the labour and managng farms on a daly bass (Sato, 1994). Women ncreasngly take charge of farm actvtes because of the mgraton of men from rural areas to ctes or abroad, n search of pad employment. War, sckness and death from HIV/AIDS of the rural male populaton also explan the ncrease n women s workload. Ths trend of the growng domnance of women n agrcultural producton has been termed the femnsaton of agrculture (FAO, 1999; FAO, 2005; Hart, 1994; Cornhel, 2006). Femnsaton of agrculture makes t more necessary to take acton to enhance women s ablty to carry out ther agrcultural and non-agrcultural actvtes and ther other household tasks. Dong so wll 2

3 ensure the food securty n the country. As mentoned above, mcrofnance can address these needs by enablng women to generate ncome and mprove ther economc power. Women n Côte d Ivore contrbute to both food crop producton and cash crop producton. They also domnate the nformal sector. However, just lke n other countres, Ivoran women have acheved lttle mprovement n agrcultural productvty and the country s not yet self-suffcent n food producton. Women s ncomes are low as a consequence of low productvty, whch has to do wth the lack of resources avalable to acqure modern nputs or launch new ncomegeneratng actvtes. It s n ths context that the state of Côte d Ivore s commtted to supportng women fnancally through mcrofnance. Therefore, mcrofnance programmes have been promoted snce the early 1990s n order to help women to mprove ther lvelhood and that of ther famles and to postvely contrbute to the economc growth of the country. New mcrofnance nsttutons have been launched throughout the country, especally n rural areas where many poor people lve. Despte the prolferaton of MFI programmes and the fact that t has been more than a decade snce MFI programmes were frst mplemented n the country, lttle emprcal research has consdered the effectveness of provdng loans for the rural populaton n general and Abengourou rural women n partcular. Moreover, lttle s known about gender relatons wthn the household n relaton to women s access to and the use of mcrofnance servces. There are some nsuffcences and weaknesses n mcrofnance studes, whch have to be addressed n order to fnd out how mcrofnance can be made more effectve n ts msson to provde fnancal servces that meet the needs of the rural populaton especally women. Most of the studes have revealed that women n general need fnancal servces to carry out ther actvtes more effcently and to mprove ther standard of lvng. They also recognsed the necessty for mcrofnance programmes to meet women s needs. Yet, t s not clear how ths can be acheved, because few studes use a gender perspectve to nvestgate ntrahousehold resources allocaton n relaton to women s economc actvtes and access to fnancal programmes. So, n order to enhance the effectveness of mcrofnance for women, and to justfy the presence of mcrofnance nsttutons n rural areas, there s a need to address the queston about how do MFIs mprove women s poston? Ths paper has the ambton to combne both the standard economc aspects of mcrofnance for women, such as the ncome, food productvty, and socal aspects lke changes n women s status and decson-makng power and control over loans (gender perspectve). By dong so, the study wll help dentfy women s needs and how mcrofnance programmes can address them n the Abengourou regon of Côte d Ivore. 3

4 1.2 Research objectves and questons Ths paper ams at ganng nsghts nto rural women s needs n terms of support for economc actvtes and empowerment and the way n whch MFIs address these needs n Côte d Ivore. In relaton to the research objectves, ths study wll try to answer the followng research questons: 1. What are the effects of partcpaton n mcrofnance programmes on women s food producton and ncome? 2. To what extent do mcrofnance programmes strengthen women s decson-makng power? II Lterature revew Ths secton presents an overvew of the mcrofnance feld and how t can be connected to poverty, a matter that has become a sgnfcant developmental ssue around the world and partcularly n Afrca. It dscusses how mcrofnance programmes can support women n ther struggle for lvelhoods of households and ther empowerment. 2.1 Mcrofnance and poverty In developng countres, especally n Afrcan, poverty s predomnantly rural n character. Most of the poor lve n rural areas, where agrcultural producton s the key actvty (UNDP, 1997; ADB, 2000). Rural households n general and women n partcular face dffcultes n generatng ncome from agrculture due to the low level of productvty, whch has to do wth the lack of resources for buyng adequate nputs. These constrants prevent the poor from achevng food securty and earnng a lvelhood free of hunger. Poverty reducton has become a major ssue n developmental polces. To nform polcy, ncome earned by ndvduals has been used as an ndcator to assess whether they are poor or not (Van Maanen, 2004; Thorbecke & Nssanke, 2005). Nevertheless, the use of ncome as the man ndcator has been crtcsed, as t does not take nto account all dmensons of poverty. Now t s ncreasngly realsed that poverty s a multdmensonal concept. The frst dmenson s ncome. Accordng to the ncome approach, poverty s defned as the lack of ncome to provde for the basc needs of lfe: food, shelter, water, educaton, santaton, and health care or lack of resources, such as land for agrcultural purposes. Capabltes form the second dmenson. The capablty approach consders poverty to be the absence of sklls and abltes to earn a lvelhood (UNDP, 1997). In addton, the poltcal dmenson (no access to poltcal decson-makng, no legal protecton) and the soco-cultural dmenson (lack of respect for human dgnty, no socal acceptance) can be dstngushed. Hence, ncome only s too lmted an ndcator of poverty. In rural areas, men and women need fnancal support to nvest n agrcultural producton and non-agrcultural ncome-generatng actvtes such as small trade, food processng, handcraft actvtes, etc. They may also need credt for 4

5 consumpton, especally durng lean perods. In spte of ths fact poor households generally have lmted access to formal banks to borrow from. Ths s because: a) poor households are not able to provde the collateral requred by the banks as they do not own land or cannot prove legal ownershp; b) the scale of transactons related to ther actvtes s small and therefore results n hgh transacton costs (Moll, 2003). Contrary to formal banks, mcrofnance nsttutons (MFIs) normally provde comprehensve packages, ncludng small loans, savng facltes, payment servces, money transfers and n some cases nsurance, to poor and low-ncome households that have no access to formal banks. MFIs also provde tranng and nformaton about how productve busness actvtes should be run. By dong so, mcrofnance s seen as a means to allevate poverty. MFIs can empower poor people, partcularly poor women, and strengthen economc and socal structures (Morduch, 1999; Rahman, 2004; Mayoux, 1999; ADB, 2000; Van Maanen 2004; Greeley, 2003). Ths explans the commtment of governments, nternatonal donors and non-governmental organsatons (NGOs) n developng and developed countres to support and mplement MF programmes (Smanowtz, 2004; Mayoux, 1999; Hulme, 2000). Women have been the prmary target of mcrofnance n most countres. Accordng to the Mcrocredt Summt Campagn Report (2005) n a sample of 3100 programmes, 83.5 percent of the clents are women, as are 95 percent of Grameen s clents (Armendárz & Morduch, 2005). Women are targeted for many reasons. The frst s related to poverty as explaned above. So, provdng fnancal servces for women may enable them to carry out ncome-generatng actvtes, ncrease ther productvty and ncome and acheve welfare for ther households. Evdence suggests that loans to women result n meetng socal goals lke mprovng household food consumpton, health and educaton. The second reason for lendng money to women s fnancal. Women generally seem to be more credt-worthy than men because they have a better repayment record (Hulme, 1991). They use money for the beneft of the household especally ther chldren, whereas men are perceved as beng more tempted to use ther earnngs to satsfy ther own needs nstead of nvestng t n busness or usng t to mprove ther household s welfare. Armend{rz and Morduch (2005) explaned that women tend to be less moble and more at home than men. Ths s an advantage for MFIs because t becomes easer and less costly for MFI managers to montor them. Also for group borrowng t s mportant that the female members work n each others proxmty. The general enthusasm about mcrofnance should not obscure the fact that despte ts mportance, the effects of mcrofnance on poverty reman on the whole a controversal ssue. There are doubts about whether mcrofnance really benefts women, snce there are studes that report negatve effects (Hulme and Mosley, 1996; Chua et al.(2000); Rahman, (1999); Armendárz & Roome, (2008). 5

6 The negatve effects of mcrofnance have been explaned by several reasons, ncludng the nablty of mcrofnance to address all dmensons of poverty (human, economc, poltcal, and socal-cultural) as dscussed above. The negatve effects may also have to do wth wrongly nvestng the credt because women have lttle or no control over the use of ther loans. For example, Rahman (1999) found that Grameen Bank borrowers used ther savngs and household assets to pay weekly nstalments. However, other studes have found postve effects on poverty allevaton. Studes suggested that lendng to women does mprove household ncomes and leads to other benefts lke ncreased lkelhood dversfcaton, more market actvty, more educaton and better health (Ptt and Khandker, 1998; Sebstad and Chen, 1996; Hulme and Mosley, 1996; Mosley, 2001 Chua et al.,2000; Morduch & Haley, 2002; Mosley & Rock, 2004; Zaman, 2004). 2.2 Intra-household resource allocaton and decson-makng power In the process of makng a lvng, men and women show evdence of power relatons between them n terms of resource allocaton and decson-makng. Insght nto ntra-household resource allocaton s needed to understand women s roles and ther capablty to mprove ther lvelhood and that of ther households and to take advantage of and proft from MFIs. Household resource allocaton or decson-makng has been examned by the New Household Economcs (NHE) approach. Developed by Becker (1965), the NHE consders the household as a sngle decson-makng unt and a unt of producton and consumpton that seeks to mnmse costs of producton and maxmse the jont objectve utlty functon of all ts members by poolng and combnng household resources. By dong so, the household behaves as f t has one set of preferences (Haddad & Alderman, 1997). Ths means that all household members share the same preference functon. To put t dfferently, a sngle decson-maker (the household head, usually a man) s assumed to act for the welfare of the entre household (Qusumbng & De la Brère, 2000). Such untary models have been used to analyse household-related phenomena such as household market demand, household producton and consumpton, labour supply, educaton, health and so on and so forth (Akram-Lodh, 1997). However, untary models have been crtcsed for ther lack of a gender perspectve. For example, the models cannot explan how men and women wthn the household behave or make decsons n terms of the access to and the use of household resources and tme allocaton (Ells, 2000). Ths s because these approaches are constructed under the assumptons of the household consstng of a nuclear famly (husband, wfe, and chldren), poolng of household resources, a jont utlty functon, the possblty of the substtuton of household labour and the household as a sngle entty (Akram-Lodh, 2005; Moser, 1993). In practce, household members have dfferent tastes and preferences that cannot be represented by one ndvdual. Therefore, they not only play dfferent and changng roles n socety but also often have dfferent needs. Moreover, the sngle household utlty obscures the lkelhood of conflct and nequalty n 6

7 household decson-makng. As ponted out by Sen (1990), the household mode of nteracton nvolves both cooperaton and conflct. A number of alternatve models have been suggested to take ntra-household relatonshps between men and women nto consderaton. Contrary to the untary model, the collectve models explctly allow for dfferent decson-makers, dvergng preferences and conflct wthn the household. Household members are conscous of the fact that, through cooperaton, ther overall well-beng mght ncrease, but they not necessarly agree on the dvson of the gan (Holvoet, N., 2005). These models are termed dfferently, rangng from the Nash-barganng model (Manser & Brown, 1980; McElroy & Horney, 1981), to (partly) noncooperatve models (Becker, 1973; Chen & Woolley, 2001), separate sphere barganng (Lundberg & Pollak, 1993; Lundberg & Pollack, 2003; Lundberg et al, 1997) and the collectve model. The Nash-barganng model consders that household members pursue ther own nterest gven ther relatve postons wthn the household. Accordng to Agarwal (1997), the barganng approach to studyng the household provdes a useful framework for the analyss of gender relatons and of how gender asymmetres are constructed and lead to conflcts. She argues that barganng models would suggest that polces and resources be drected dfferently by consderng the gender of the target group. The Nash-barganng model presents the utlty functon as conflctual and dependent on the fallback poston or the threat pont of ndvdual household members (.e. the utlty level that s guaranteed f no agreement or bargan s acheved). The threat pont for an ndvdual plays a crucal role n determnng the allocatve outcome. Accordng to ths model, the stronger the household member s fallback poston, the more power he or she has n decson-makng. In the collectve model, an ndvdual s power s represented by the sharng rule, whch allows household members to acqure ther own prvate goods on the market by takng nto consderaton the household s total expendture. Once agan household members wth a bg share wll ncrease ther utlty. The threat pont and the sharng rule generally depend on factors such as ncome, age, educaton level, socally prescrbed gender roles, and other extra-envronmental parameters that do not enter the ndvdual preferences. In many socetes men are more lkely to have control over the ntrahousehold allocaton of resources and tasks. Studes have analysed the relatonshp between ncome generaton, economc empowerment and barganng poston wthn the household. In partcular, ncome earnng s supposed to ncrease women s barganng poston by ncreasng ther power n household decsonmakng (Hashem, Schuler and Rleym, 1996; Odebode, 2004). Wth regard to mcrofnance, gvng fnancal support to women s actvtes may help them to ncrease ther ncome, strengthen ther fallback poston, hence ther barganng power and ther say n household decson-makng. To put t shortly, women s ncreasng role n the household economy due to MFI wll lead to ther empowerment. In lne wth ths, Holvoet (2005) found that membershp n women s groups shfts overall decson-makng patterns from norm-guded behavour and male decson-makng to more jont and female decson-makng. Armendárz and Roome (2008), found that, provdng women wth MFI loans can result n hgher ncome n the hands of women whch mght be used n health 7

8 mprovement and educaton of women and ther households and eventually empowers women. They call t the women empowerng effect. However, studes have also argued that ncome earnng does not always lead to the mprovement of women s barganng power n the household. For example, Gonzales de la Rocha (1994) and Laer (1997) argued that ths stuaton may happen when women do not have control over household resources and ther wages for cultural and deologcal reasons,.e. that women are subordnated to ther husbands. In her study Odebode (2004) found that some women wth hgh access to captal had low decson-makng ablty and a weak ntra-household poston. Lkewse, Garkpat (2008) found that lendng to women s lkely to strengthen the household s ablty to cope wth vulnerablty across ncome groups but that the women themselves, especally the poorest ones, are not lkely to see consstent mprovements n ther household status. Evdence from Bangladesh suggests that mcrofnance does not ncrease women s barganng power entrely because on average women borrowers surrender nearly 40 percent of ther control over the nvestment decsons they make to ther husbands. More alarmngly, over 90 percent of the returns these women realse from ther nvestments are handled by ther husbands (Goetz & Gupta, 1996). From the above, t appeared that ncome ganed by women does not always lead to ther empowerment. Ths result shows that factors other than ncome may have an nfluence on women s decson-makng power wthn the household. In lne wth ths, Odebode (2004) suggested that soco-cultural norms, especally n Afrcan socetes are factors that can affect ntra-household relatonshps between men and women. Dvergence n outcomes wth respect to women s empowerment may also be explaned by the method of evaluaton. The lterature overvew above shows that wthn the households, women have some real constrants not only to obtan mcrofnance credt, but also to productvely nvest and be able to ncrease ther ncome and beneft from the money they have borrowed. These constrants related to women s decson-makng power are crucal and need to be better nvestgated. In partcular, there s a need to understand how decsons are made wthn the household and how mcrofnance can help women to ncrease ther ncome and thus strengthen ther fallback poston. 2.3 Overvew of the hypotheses From the analyss above t becomes clear that the MFIs have both postve and negatve effects on women borrowers, dependng on the type of study, the country, the regon and the envronment. Weghng the evdence has led to the formulaton of a set of hypotheses. All the hypotheses are stated n ther alternatve form and wll be tested aganst ther null hypotheses of no dfference or no change. Hypothess 1: Women wth MFI credt dffer from women wthout MFI credt n the followng respects: a. they have more ncome; 8

9 b. they have hgher productvty Hypothess 2: Mcrofnance credt wll have a postve mpact on the realsaton of women s strategc and practcal gender needs: women who have obtaned MFI credt have more power n household decson-makng than before takng credt. Fgure 4.1 Map of the study area 9

10 III. Research methodology 3.1 Study area Ths study was conducted n Abengourou located n the Central Eastern regon of Côte d Ivore; Abengourou regon occupes a surface area of 5,200 km² wth about 288,200 nhabtants. Ths populaton conssts of 53 percent of male and 47 percent of female. Economcally, durng the eghtes, the Abengourou regon was the leadng producer of coffee and cocoa, whch are the man export products of the country. The regon s stll one of the man agrcultural producton regons, wth coffee, cocoa and staple crops as the core products. Women are the man producers of staple crops (cassava, maze, plantan, peanut) and hortcultural crops (peanut, eggplant, hot pepper, okra, tomato, etc.), whle men are engaged n cash crops producton (coffee and cocoa n general). In addton, women are engaged n trade of agrcultural products and non-agrcultural goods. Mcrofnance nsttutons (MFIs) are present and contrbute to the development of the regon especally the Natonal Unon of Credt and Savng Cooperatves of Côte d Ivore (UNACOOPEC-CI or smply COOPEC), and the Mutual Savngs and Credt Network (RCMEC or CMEC). These two MFIs have been selected for ncluson n ths study because they are the most mportant mcrofnance nsttutons n the country and are the sole mcrofnance nsttutons n the study regon. COOPEC has set up a specal credt programme for women, called Women Access to Fnancal Servces (AFISEF), whch gves techncal and manageral support to female borrowers. In contrast to the COOPEC, the servces provded by CMEC for women are lmted to credt. However, CMEC provdes group lendng, n addton to ndvdual loans. 3.2 Research desgn and Data collecton methods Ths paper ams at assessng the effectveness and the capablty of mcrofnance nsttutons to fnancally support women n rural areas. It seeks to assess whether MFIs can provde adequate loans to women n order to enable them to carry out ncome-generatng actvtes and acheve more power wthn the household. To acheve ths objectve, a cross-sectonal survey among women has been conducted. In addton to the survey, qualtatve research has been conducted to understand some socologcal or cultural ssues, especally women s decson-makng power, The basc research unts n ths study were women who borrowed money from mcrofnance nsttutons. To assess the effects of MFIs loans on women s lvelhoods, the study also ncluded female non-borrowers. These women are consdered as control group. Fnally, mcrofnance nsttutons (COOPEC and CMEC) formed a dfferent type of research unt, studed n order to understand ther functonng and the extent to whch they have acheved the poverty allevaton goal. 10

11 Prmary quanttatve and qualtatve data have been collected to answer the research questons. A combnaton of quanttatve and qualtatve data collecton methods can gve a more comprehensve understandng of the studed topc. A wrtten questonnare was used to collect emprcal data through face-to-face ntervews. Mult-stage samplng was used to select the study sample. The frst step was the vllage samplng and the second step was the study unt samplng wthn the vllages. Three vllages (Appronpron, Sankadokro and Améléka) from a lst of twelve, where CMEC MFIs work where selected. For COOPEC, two out of four vllages were selected (Zaranou and Eblassokro). The reason for selectng only three vllages out of twelve where CMEC s present s prmarly that before the feldwork perod some CMEC nsttutons were not functonng well due to ncreased non-repayment of the prevous loans. At COOPEC two out of the four MFIs were newly set up n these vllages, so the perod of loan provson was too short to conduct the survey. Focus group dscussons (FGD) were conducted wth two groups of women nvolved n ths study: those who had obtaned credt (FGD1), those wthout credt (FGD2). FGD s a method used to collect qualtatve data from a small group of people. It was used n ths study to get nsghtful nformaton about women s perceptons of: a) credt (both ndvdual and group lendng) n terms of ts utlty and effectveness; b) household labour allocaton, women s decson-makng power wth respect to ther needs; c) mportance of MFIs; d) use of loans and ncome. The study sample comprsed a total number of 185 adult women who had borrowed money from COOPEC and CMEC (95 women takng credt from COOPEC and 90 women from CMEC) n rural areas and who undertook agrcultural or non-agrcultural actvtes selected as explaned above. There were 209 adult women wthout MFI credt, but who undertook agrcultural or nonagrcultural actvtes (control group). IV. Analyss of the effects of MFIs n rural areas 4.1 MFI credt and Women empowerment Among borrowers characterstcs, women s empowerment s a crtcal factor whch can play an mportant role n generatng and makng proft from ther nvestment. It may also gve them better opportuntes to get fnancal support from MFIs whch n turn may renforce ther power through, for example, the ncrease n ther ncome. Wthn a household, woman s decson-makng power to manage her lvelhood s assocated wth her beng able to choose the type of actvty she wants to carry out, to freely decde whether to borrow money or not and, n partcular, to have control over the money she borrows. For MFIs, such women are more relable n terms of usng the money for nvestment purposes wthout any nterference from a husband 11

12 or relatves. On the one hand, empowered women can therefore make more proft from MFI credt and contrbute to the sustanablty of the credt nsttuton. On the other hand, women s ncome can be ncreased by MFIs through supportng ther lvelhood actvtes and thereby renforcng ther fallback poston, thus enhancng ther say n household decson-makng. To assess ths effect of MFIs on women s empowerment, we frst use factor analyss to select the factors representng women s decson-makng power. The degree of nfluence n household decson-makng was measured by ten survey tems. For each tem, the nformaton was collected on the bass of women s subjectve response referrng to both the stuaton before credt-takng and the stuaton after credt-takng. Specfcally, data on empowerment before takng credt was collected by askng retrospectve questons. To reduce the number of tems, factor analyss was used takng nto account the two stuatons (before and after women obtaned MFI credt). To analyse the effect of MFI on women s decson-makng power, we ran a t-test for related samples by comparng women s empowerment before and after takng MFI credt. Decson-makng power here refers to the reverse causalty and s used as an endogenous varable. Dong so wll dentfy ndvdual and nsttutonal factors that may affect the outcomes and the effcacy of credt partcpaton. From the results of factor analyss, two factors were found, explanng 43 percent and 21 percent of the tem varance respectvely. In the same order, these percentages were 44 and 21 n the stuaton after MFI credt. The tems whch were hghly loaded on the frst factor concerned women s partcpaton n decsonmakng n terms of the use of household consumpton goods and household ncome, household expendture on equpment, schoolng of chldren, and the partcpaton of women n communty ceremones (shaded n Table 1). Ths factor was nterpreted as a practcal gender needs factor. The second factor encompassed women s decson-makng n terms of borrowng money, tradng goods, and the use of women s ncome and credt (shaded n Table 1). Ths factor was assocated wth women s own busness actvtes reflectng women s strategc gender needs. 12

13 Table 1 Factor loadngs from prncpal component analyss on women s decson-makng power before takng MFI credt. Factor 1 (Practcal Gender needs) Factor 2 (Strategc Gender Needs) Who makes decsons to borrow money Who makes decsons about the trade of goods Who makes decsons to use household consumpton goods Who makes decsons to use woman s ncome Who makes decsons to use household ncome Who makes decsons for schoolng of boys Who makes decsons for schoolng of grls Who makes decsons about household equpment expenses Who makes decsons for woman s partcpaton n communty ceremones * KMO: ; Explaned varance: 64.70% Rotaton Method: Varmax 2 wth Kaser Normalsaton. Table 2 Factor loadngs from prncpal component analyss on women s decsonmakng power, after takng MFI credt. Factor 1 (Practcal Gender needs) Factor 2 (Strategc Gender Needs) Who makes decsons to borrow money Who makes decsons about the use of woman s credt Who makes decsons about the trade of goods Who makes decsons to use household consumpton goods Who makes decsons to use woman s ncome Who makes decsons to use household ncome Who makes decsons for schoolng of boys Who makes decsons for schoolng of grls Who makes decsons about household equpment expenses Who makes decsons for woman s partcpaton n communty ceremones * KMO: 0.82; Explaned varance: 65.61% Rotaton Method: Varmax wth Kaser Normalsaton. 1 KMO (Kaser-Meyer-Olkn) measures the samplng adequacy whch should be greater than 0.6 for a satsfactory factor analyss to proceed. Wth KMO=0.80, we can say that factor analyss n ths study was approprate. 2 The Varmax rotaton method assumes the ndependence between the factors. However, we frst conducted factor analyss wth oblmn rotaton to check whether factors were related. We found a correlaton coeffcent r=0.387 whch seemed a bt hgh. However, n order to proceed wth uncorrelated factors n subsequent analyses we used the uncorrelated factor soluton (Varmax). 13

14 The results of the t-test (Table 3) ndcates sgnfcant dfferences between the two stuatons wth respect to the power n decson-makng related both to women s practcal needs (t= 3.11; p<.005) and strategc gender needs (3.36; p<.005). The results suggest that MFI credt has gven more power to female borrowers. Indeed wth the ncrease n the ncome they earned from ther actvtes, women borrowers were able to renforce ther fallback poston. Ths led to the mprovement n women s ablty to be fnancally more nvolved n the management of household resources. Accordngly, t gave them the opportunty to renforce ther power n household decson-makng. Credt takng has also ncreased women s power n decson-makng regardng strategc gender needs, meanng that women are more lkely to make ther own decson about what types of goods to produce and sell, and, more mportantly, they could decde how to use ther loans and ther ncomes. Achevng power n strategc gender needs s a very mportant ssue for women as t may affect the proft a woman can make from MFI servces provded for them and, consequently, the effectveness and the capablty of the credt nsttutons to fnancally support women n general and rural women n partcular. It s noteworthy that women s responses to retrospectve questons used to assess the empowerment of women before and after obtanng MFIs credt are subject to recall bas, namely hndsght bas 3. Hndsght bas should normally work aganst our hypothess, meanng that the dfference between the power before obtanng MFI credt should be less and may not be sgnfcant. However, our result showed a sgnfcant dfference between the two stuatons. Table 3 Women s decson-makng power before and after obtanng credt Before obtanng MFI credt After obtanng MFI credt Mean Std.D Mean Std.D t-value Practcal gender ** needs Strategc gender needs ** ***sgnfcant at 1%; ** sgnfcant at 5%; Source: Research results based on the household survey, Effects of MFI credt on food producton and ncome We am to analyse whether obtanng MFI credt leads to change wth respect to outcomes such as ncome and farm productvty whch are mportant factors to ensure food securty wthn the household. 3 Hndsght bas refers to the tendency people have to vew events as more predctable than they really are. People often recall ther predctons before the event as much stronger than they actually were. Wth hndsght people consstently exaggerate what could have been antcpated wth foresght (Fschfoff, 1980) 14

15 Dfferent research methods have been used to assess the mpact of mcrofnance credt on the borrowers. One of the smple and wdely used methods n the mcrofnance lterature s to compare programme partcpants (the treated group) to non-partcpants (control group) on key outcomes that are expected to be affected by partcpaton. Usng the mean dfference to measure the mpact of credt between two groups that may be dfferent wth respect to some characterstcs may lead to overestmaton or underestmaton of the mpact. Thus, ths method was crtcsed for gnorng the selecton problem. Another method s propensty score matchng (PSM). Ths technque whch s performed to reduce the selecton bas s used n our study to assess the effects of MFI credt on women wth respect to some outcomes of nterest. Ths method s descrbed below The propensty score matchng method (PSM) PSM s a method recently used n mpact assessment. It s defned as the condtonal probablty of recevng treatment gven pre-treatment or exogenous ndvdual characterstcs (Rosenbaum and Rubn, 1983). In our case we can defne PSM as the condtonal probablty of a woman obtanng credt from MFIs (COOPEC and/or CMEC) gven certan characterstcs such as age, educaton level, martal status of women, and so on. The PSM method helps to adjust for ntal dfferences between the treated and control group by matchng those treated and controls wth smlar propensty scores based on observable characterstcs. The dea of the PSM method s to construct the outcomes ( Y 1 ) of programme partcpants (borrowers) wth the outcomes ( Y 0 ) of comparable non-partcpants (non-borrowers). Therefore, any dfference n the outcomes between the two groups s attrbuted to the programme or treatment. Two man assumptons underle the PSM method. The frst assumpton s the condtonal ndependence assumpton (CIA) accordng to whch the selecton s only based on observable characterstcs, and potental outcomes n the untreated state are ndependent of treatment or programme partcpaton. It s noteworthy that ths assumpton s strong as unobservable characterstcs may also cause bas but are gnored n the process. The CIA condton requres that selected exogenous varables are those whch smultaneously affect the partcpaton and the outcomes. However, these varables should not be nfluenced by partcpaton n the treatment. The second condton s the common support (CS) requrement whch ensures that ndvduals from the treatment and control groups are comparable before the treatment. Accordng to Heckman et al. (1999) cted n Tesfay, (2009), common support ensures that ndvduals wth the same observable characterstcs have a postve probablty of beng n both treatment and control groups. Thus estmaton can be performed on ndvduals that have common support. The average treatment effect on the treated group (ATT) s the dfference between the mean outcomes for matched treated and untreated ndvduals that have common support condtonal on the propensty score. The model s wrtten as follows: p 1 X E X Pr (1) 15

16 Where p s the propensty score; It represents the probablty of a woman of obtanng MFI credt; = 0,1 s the ndcator of exposure to treatment, =1 f treated (havng MFI credt) and =0, otherwse. s the vector of pre-treatment characterstcs. In our case s represented by age, household sze, educaton level, martal status, ethncty, and decson-makng power (PGN and SGN). If outcomes are assumed to be ndependent of programme partcpaton after controllng for propensty score, and equaton (1) holds, the average treatment effect (ATT) s represented by: 0, p ATT=, 1 p 1 (2) The estmaton of the average treatment effect usng the PSM method s done n three steps. The frst step s to construct a predcted propensty score that estmates the probablty of beng treated gven a set of exogenous characterstcs for each group by usng a probt regresson model (equaton 1). In the second stage, ndvduals are matched on the bass of ther predcted probabltes of partcpaton. But an estmate of the propensty score s not enough to estmate the average treatment effect because the probablty of observng two unts wth exactly the same value of the propensty score s n prncple zero. To overcome ths problem, dfferent methods are used by whch weghts are gven for matchng precson. Among these methods, four are the most wdely used (nearest neghbour matchng, radus matchng, stratfcaton matchng and Kernel Matchng (KM). The latter s used n ths study. Wth KM, all control cases are matched to each treated case but weghted so that those closest to the treatment case are gven the largest weght. Accordng to Tesfay (2009), KM has the advantage of ensurng low varance because t uses the weghted average of all ndvduals n the control group to construct the counterfactual outcome. Whatever the methods used, the qualty of the matches may be mproved by mposng a good common support restrcton. To ensure comparablty once propensty scores are estmated and cases are matched, the next step s to test the balancng property usng a t-test whch assumes that pre-treatment observable covarates dd not dffer statstcally between control and treated groups. From the balancng test a balanced dstrbuton of the covarate s obtaned meanng that there s no dfference between the two groups. It also gves the percentage reducton n bas. So, any dfference n the outcome between the treated and the control s due to the treatment (obtanng MFI credt n our case). Defnton of exogenous varables and outcomes To construct a propensty score that estmates the probablty of obtanng MFI credt, the control varables representng women s characterstcs were: the average age of women, household sze, educaton level of women, martal status, gender of household head, decson-makng power of women wthn household, type of 16

17 actvty, wealth, and ethncty.the control varables are expected to smultaneously nfluence the probablty of a woman obtanng a loan and the outcomes. The outcomes of nterest to be measured are women s net ncome, women s and household assets and the productvty are ncluded as well. Below we present a descrpton of each outcome of nterest. Income: One of the most mportant outcomes of the provson of loans by MFIs to the poor s to enable them to earn and ncrease ther ncome. By lendng money to the poor, they can set up ncome-generatng actvtes or extend and mprove exstng actvtes. The net ncome n ths study represents the total amount of money earned per month by women from agrcultural and/or trade actvtes. We made ths choce to have the same bass of comparson as traders who make money everyday, whle farmers get money once a year by sellng crops after the harvest. Farm productvty s an mportant varable n rural areas where agrculture s the man actvty. In general, t s commonly thought that rural households and women n partcular face dffcultes n generatng ncome due to ther low level of productvty. The provson of credt n the agrcultural context s supported by the argument that gvng credt to farmers may help them to acqure farm nputs such as seeds and fertlzer that wll add value to farm producton and therefore make ther farms more productve. In the study area, female farmers had borrowed money from ether COOPEC or CMEC to produce crops, manly cassava, yam, plantan cash crops and hortcultural crops. Productvty s defned as the ablty of women to produce proftable crops usng ther scarce resources, ncludng nputs and hred labour. Farm productvty was estmated n value of crops per hectare and s gven as follows: VQ j PjQ Aj j where VQ s farm productvty (value per hectare obtaned by a woman ), the prce of crop j produced by woman I; produced by woman I and P j s Q j represents the quantty of crop j A j s the area cultvated n crop j (n hectare). Assets: Assets are the basc factors of producton, consumpton and nvestments that are controlled and accessed by the household. Assets are represented by the sum of monetary value (n francs CFA, local currency) of lvestock, equpment, electrcal applances and consumer goods that belong to the household (see Appendx 1). Several studes have found that the provson of loans for women may enable them to buld up and mprove the value of ther assets (Rahman, 2004; Mayoux, 1999; ADB, 2000; Van Maanen, 2004). 17

18 4.2.2 Results Characterstcs of female respondents The results from Table 4 ndcate the soco-demographc characterstcs of women who have obtaned MFI credt and women wthout MFI credt. It presents unmatched and matched average sample coeffcents. From the unmatched sample, we can conclude that women who obtaned MFI credt are adult Agn female household heads wth few household members. They have more power n decson-makng wthn the household. In the matched sample there s no sgnfcant dfference between the two groups of women wth respect to the varables n the table. Ths means that the bas between women wth and wthout credt was reduced and therefore the treatment and the control groups are now comparable on the bass of ther pre-treatment characterstcs. Table 4 Soco-demographc characterstcs of women wth and wthout MFI credt Unmatched samples Matched samples Percentage reducton n bas Women wth credt Women wthout credt N=209 t-test Women wth credt N=137 Women wthout credt N=179 t-test p- value N=185 Age n ** years Household ** sze Female ** household head Marred woman (dummy) Prmary educaton (dummy Decsonmakng ** power (SGN) Decsonmakng ** power (PGN) Ethncty: Agn *** Source: Research results based on the household survey, 2006 Table 5 presents the probt regresson model for propensty scores. It ndcates that Agn women who have more power n decson-makng are more lkely to obtan credt from MFIs (COOPEC or CMEC). Agn s the prncpal ethnc group n the study area, and ths fact may gve Agn women more of chance to be well nformed about the servces offered by MFI, as most of the MFI agents n the regon belongs to ths group. There may be a postve dscrmnaton n favour of Agn women n 18

19 the process of the provson of credt as reported durng the focus group dscusson. Decson-makng power n terms of SGN s postvely lnked to obtanng MFI credt. Women wth more power n decson-makng, have more chance to obtan MFI credt. As explaned above, when a woman has power wthn the household, she can effcently nvest her money and make a proft. MFIs wll therefore prefer such a woman n whom they wll have more confdence. As predcted, women wth a large household sze are less lkely to obtan MFI credt. The same holds true for marred women and female household heads. Contrary to what we expected, nether the level of educaton nor age was sgnfcant. Ths means that n our study, these two varables dd not affect or explan MFI credt takng. Table 5 Probt model of the propensty score to estmate MFI credt effects Probablty of obtanng MFI credt Coeffcent Z-value Age Age squared Household sze ** Female household head * Power of decson-makng (SGN) ** Power of decson-makng (PGN) Prmary educaton (dummy) Marred woman (dummy) * Ethncty: Agn (dummy) *** Constant term * Source: Research results based on the household survey, 2006 The effects of MFI credt, after controllng for potental bas, s presented n Table 6 These effects are the dfferences n outcomes between the groups of women wth and wthout MFI credt, respectvely, and are ndcated by the average treatment effect ATT. A postve ATT for a partcular outcome means that partcpaton n MFI credt has led to a postve change n that partcular outcome. And ths change can be attrbuted to partcpaton n MFI credt. The results ndcate that the matched dfference n ncome between women who receved MFI credt and women wthout MFI credt s postve (t=2.76; p <.05). Ths means that female borrowers earned on average more ncome than non-borrowers. Thus, we can say that MFI credt has helped women to mprove the level of ther ncome. Furthermore, the table shows that after propensty matchng, the value of women s assets was not sgnfcantly dfferent between the two groups. However, a postve dfference n the value of household assets was found. Ths nterestng result s the proof of women s contrbuton to household expendture. Female borrowers may use ther ncome to contrbute to household expendture rather than to buy goods for themselves. The partcpaton n MFI credt resulted n the ncrease of the value of household assets. Ths result s not surprsng as durng the focus group dscusson some women reported that ther man objectve for takng credt was to contrbute to household lvelhood and consumpton and to be able to take care of 19

20 the household members and chldren n partcular. The partcpaton of women n household lvelhood s a way for them to ncrease ther fallback poston, and an opportunty to gan more power wthn ther household. Table 6 suggests that the value of producton was sgnfcantly dfferent between the treated and the control groups. The average treatment effect s postve, meanng that female borrowers who nvested ther loan n farmng have acheved a hgher value of producton per hectare than women wthout MFI credt. Ths dfference s reflected n the yeld of crops such as cassava, yam and plantan. Female borrowers produced on average 8,650 klograms per hectare of cassava 4, whereas the yeld n the control group was only 4,841 klograms on average. The factors explanng these dfferences may be lnked to the use of nputs such as hred labour and modern seeds. Indeed, female borrowers n the study area spent much money on cassava, yam and plantan. Even more money was used to hre labour because labour was a real constrant for women n farm producton. Some tasks such as ploughng and fellng trees are rarely performed by women as ths s men s work. Table 6 Average effects of obtanng MFI credt on a set of outcomes Mean Unmatched Matched Wth credt Wthout credt Unmatched dfference T- value Matched ATT T- value Income n 50,179 29,331 20, , ** FCFA/month Women s assets 39,807 21,879 17, , (FCFA) Household assets 552, , , , ** (FCFA) Value of producton/ha (FCFA) 597, , , , ** Source: Research results based on the household survey, Lke coffee and cocoa, cassava and plantan and yam can be consdered cash crops n the regon, though ths depends on the context and the objectves that one wants to reach. For example, when a woman borrows money and grows one of these crops, t s more lkely that the crop wll be produced manly for the market rather than for household consumpton. Then the crop becomes a cash crop. In the study regon, cassava s nowadays generally produced as a cash crop. 20

21 V. Conclusons The objectve of ths paper was to analyse the effectveness and capablty of MFIs n enhancng women s lvelhood actvtes and empowerment, and ensurng food securty. MFIs are found to be effectve n enhancng women s ncome. The mprovement of the value of farm producton s a man development goal n most Afrcan countres whose economes are based on the agrcultural sector. Studes have suggested that the progress n ths sector s assocated wth the use of modern nputs to ncrease the level of producton. The fndngs of ths study show that MFI credt has mproved the value of farm producton through postve productvty. Although ths study establshed the postve relatonshp between MFI credt and women s ncome, t suggested that female borrowers were more lkely to use ther earned ncome not to buld up ther own assets, but to contrbute to the mprovement of the household standard of lvng. Dong so enables these women to enhance ther fallback poston and to acheve more power n decson-makng wthn the household. To corroborate ths statement, our fndngs on the effects of MFI credt on women s empowerment showed that women s access to credt has sgnfcantly ncreased ther power n fulfllng ther practcal and strategc gender needs. Ths means that wth MFI credt, women ganed more power wth respect to ndvdual (women themselves) and household ssues. Wth the ncrease of farm producton and ncome, women can provde food for ther household and therefore ensure food securty n rural areas. Ths result was confrmed by focus group dscusson where some women explaned that the ncrease of food producton enabled them to provde food for the household. Wth the ncome ganed from ther actvtes, women were able to buy food that they dd not or can not produce. 21