Women Borrowers of Microfinance: An Urban Lahore Study

INTRODUCTION Microfinance was initiated in the 1970's by Dr Muhammad Yunus, through provision of small business loans to impoverished rural villagers in Banglade. (1) The objective of microfinance over the last three decades remains to target 'the poorest of the poor', enable them to mobilize small business ideas and to invest in non-financial social development of the borrower. (2) The achievement of the millennium development goals has been recognized to have links with microfinance expansion, as a tool for social development and elimination of poverty. (3) In 2005, 1.4 billion people in the developing world (25% of total population), lived below poverty lines of USD 1.25 per day. (4) it is estimated that 70% of people living below poverty lines are women (5) and fears concerning the ' feminization of poverty' have encouraged policy research toward possible solutions through microfinance services. It has been discussed that women have characteristics which trap them in poverty including lack of education, limited employment opportunities, low income, lack of labor laws and unpredictable labor supply due to domestic responsibilities and child-care. (6) Additionally, microfinance and women have become viable partners because women are known to be more credit-worthy in terms of loan repayment and to use their enhanced income for household welfare. (7) PAKISTAN AND MICROFINANCE Pakistan is situated in South Asia bordering the states of India, Afghanistan, lean and China. With a population of 180 million people it is the sixth most populous country in the world. According to the Pakistan 1998 census, the urban population of Pakistan could be as high as 50%, (8) which signifies that poverty is not just a rural phenomenon and that the financing needs of the urban poor must be addressed equally in Pakistan. An estimate by the State Bank Pakistan Annual Report in 2009 lists that 62 million Pakistani's live below poverty lines. (9) Lahore is the second largest city in the country with a significantly large urban population that lives under severe poverty. (10) Apart from fears of escalating poverty the region is rendered unstable by political insecurity, sectarian strife and rising inflationary pressures. (11) Compared to the global market, the microfinance sector in Pakistan is small but not without prominence. At the end of 2010, total Pakistan microfinance borrowers stood at 2 million, of which 56% were women. (12) It has been estimated by the State Bank of Pakistan Microfinance Department that there is immense potential for growth of microfinance in Pakistan as only 7% of the local market has been tapped. (13) The impact assessment of Pakistan microfinance sector is plagued by a lack of data about microfinance borrower profile and inconsistency in recording of their respective loan profile. (14) LITERATURE REVIEW Though no clear evidence exists to support the positive impact of microfinance on the global economy in terms of eradication of poverty, (15) many analysts agree that loan provision to women from poor households improves their quality of life. (16) It has been found that majority of working women in Pakistan are middle-aged mainly because they have older children and can better manage paid-work and domestic responsibilities compared to younger women. (17) Additionally, working women in Pakistan are found to be predominantly involved in home-based occupations due to the lack of skills and because home-based work may be easily abandoned or stalled in case of child-care or household emergencies. (18) Local analysts have concluded that a void exists in support for paid employment of young women between the ages of 15-19 due to lack of opportunities, education and training. (19) Furthermore, it has been documented that 38% of the time microfinance in Pakistan is used for non- business purposes (20) and women borrowers are utilizing loan themselves only 36% of the time. …