The capitalistic society of the modern world has created a deep divide, segregating people all over the world even more from one another. The majority of capital accumulates to a couple of people, which comes at the cost of exploiting the working and lower class. From here, there is also a large discrepancy between the two groups in terms of development, or the resources, technology, infrastructure, and overall connectivity of a society. This is where the “development challenge” arises. The Millennium Development Goals, created through the United Nations, were made when there was an issue of five billion “poor” people to a mere one billion “rich”. Over the last forty years, incredible amounts of progress have been made to alleviate this population; over 80 percent of those five billion now live in rapidly developing countries. But, the true test of the “development challenge” per say, is how to assist the bottom billion, those countries that are continuously failing behind. Another way to interpret this would be this; while the modern world and developing world delve into the technology and advancement of the twenty-first-century, the bottom billion live a world stuck in the fourteenth-century, continuously facing civil war, plague, and more. (13) The poor are often seen as desperate and helpless, not equipped with the monetary capital and sometimes even skills to enter the market and be able to provide an income for their livelihoods. However, a man by the name of Mohammed Yanus, has seemingly found a solution to end this issue. He has established an institution by the name of Grameen Bank, and focuses on lending “microloans” to financially marginalized groups of society, creating microfinance. Microfinance prioritizes women, as loans given to women are seen as investments into social development, such as the schooling of children, improved household nutrition, or investment in a home, while actively fighting gender roles. (3) This process has also been analyzed by economist Ananya Roy as an investment into “poverty capital”, or the valuation of the poor as a currency for investment, as a part of development. Microfinance seems to be contributing to poverty alleviation, while also promoting female empowerment, through its primary focus on lending to women. But, the question remains in how effective microfinance is at destructuring all the institutions that allow for mass accumulations of wealth, and in turn poverty. For one, many other social stratifications within society not only remain with microfinance, but are actually reproduced through microfinance. In this essay, the topic of microfinance within the countries of Guyana and Jamaica will be analyzed; a country that has benefited by micro loan resources is also reinforcing social stratifications in the allocation of those funds. While microfinance attempts to actively reduce said structures, mainly gender, in many places around the world, historical social hierarchies within communities still exist and actively contribute to the distribution of resources and wealth, therefore devaluing microfinance as an effective means to eradicate poverty.
While evaluating microfinance, one can look at the vast amount of money that has been poured into the market. According to BNP Paribas, in 2016 there were over 123 million customers at microfinance institutions internationally, with a cumulative loan portfolio of $12 billion. The regions with the highest amount of microfinance activity include southern Asia, Latin America, and the Carribeans. Another important fact is that 84% of borrowers in 2016 were women, a majority of whom were more from rural areas (BNP Paribas). The significance of this lies in the fact that first most, rural communities are seen as places that are inaccessible to major financial institutions in the developing world. Microfinance yearns to fix that, by becoming accessible for people who live in areas that are not directly connected to the growing technology of the outside world.
More importantly, women are utilizing the resources of microfinances. The focus of microfinance comes from the intersection of multiple lenses into the identity of the woman. For one, there tends to be a “feminization of poverty”, in which women in a low-income household tend to disproportionately carry the burden of poverty much more than their male counterparts. This is according to research in which despite the women becoming a bigger part of the labor force, they are still burdened with the responsibilities of being a woman in society, like their tasks to maintain households and raise children (70). Additionally, women become better borrowers due to the bank effectively converting the social capital of a women’s reputation into trustworthiness within the institution. What this means is that these financial institutions have looked into these communities and see that women, for example, be a part of a society that uses the social capital of outward appearance and character. The financial institution can then convert this social capital into actual monetary capital by emphasizing the responsibility women have in paying back their loans to be meaningful and contributing members of society. In order to maintain their good character within their communities, women will pay off their loans in a responsible manner, therefore allowing women to gain the trust of banks (68). While social capital is an ideology that can ascend gendered lines, it is important to note that banks often try to work with the social structures surrounding women, since there tend to be more.
Further, the prioritization of women in making financial decisions for the household, and therefore participating in labor for the family turns many long-standing gender roles on their head. To understand this, there must be an understanding of the idea of familial stratification. Mostly predominant in Western culture is the idea of the nuclear family, which is the concept of two parents, and their dependent children. The reason for the rise of the nuclear family in the mid 1900s in the United States, varies from theorist to theorist. According to sociologist Talcott Parsons, however, the nuclear family was the “perfect” type of family to lead a life in the Western world. The father and mother, as results of a life of gender socialization, would fall into roles in providing for the family that would allow the family to thrive. As a result of a life of being taught “expressive attributes”, little girls would grow up to be empathetic and caring mothers, devoting their life to the well being of their family and household. On the other hand, boys were being taught “instrumental attributes”, allowing them to gain skills like independence and leadership and make them successful workers in the economy (Functionalism and Parsons). Parsons theory revolved more around why the nuclear family was needed in the post-industrialization period within the United States, but his ideas about gendered roles are universal (62). For example, if one were to look at India, where the majority of microfinance institutions are located, one could see the inequality due to a societal ideology that is ingrained into the culture. Using the public versus private sphere model, Indian gendered roles tend to place the men in the culture into the public sphere of work, and women into the private sphere. The public sphere, or the visible and recognized labor within society, tends to be more masculine, since it deals with the production of goods and service, and paid labor. Women, however, tend to be associated with the domestic life of household work, and attending to children. This unpaid labor falls within the private sphere, and is often invisible no matter which social or economic level one looks at within society (33-34). Further, women are perceived as “a drain on the wealth of a family” due to expectations of a lavish wedding and traditional dowry payments, in which property or money from the woman’s side of the family is given to the man’s side, most often a condition of the marriage (35). With all this in mind, microfinance holds a powerful role in women empowerment not only within India but within many other communities as well. By giving women the financial power within a family, they are empowering these women to make decisions for themselves without the obstruction of the patriarchy. In society’s where women are interpreted as a burden, microfinance allows them to contribute and be in a place where they can contribute to their household.
In the realm of the gender stratification within a society, microfinance seems to be breaking down the structures of gender which is ultimately helping to deconstruct the gendered lines of poverty, and allow women, who most often feel it the worst, a place where they are able to alleviate themselves and their families out of poverty. Additionally, this process aids the erasure of these same harmful structures. But, the effectiveness of microfinance in breaking down other structures where financial disparities exist are being debated. One place where this is seen are in the country of Guyana. In Guyana, there is a large racial divide that arose during the enslavement period and was cemented in the independence era. Since independence, the control of power and resources within the society has bounced between two dominant ethnic groups: Afros and Indos.