Estimating the Effects of Microcredit on Women's Empowerment: An Empirical Evidence from District Attock

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1 Estimating the Effects of Microcredit on Women's Empowerment: An Empirical Evidence from District Attock Muhammad Waqas Chughtai Lecturer, School of Management Sciences, National Textile Institute Islamabad-Pakistan Muhammad Fazal Zaheer Research Scholar, School of Management Sciences, National Textile Institute Islamabad-Pakistan Sania Taj Research Scholar, School of Management Sciences, National Textile Institute Islamabad-Pakistan ABSTRACT The main purpose of this research work is to explore the impact of micro credit on Women s empowerment with respect to increase in their income & saving and other social improvements which are caused by the micro credit. For this research analysis, the data collection is restricted only within the selected areas of Tehsil Hassan Abdal District Attock where National Rural Support Program (NRSP) is disbursing the micro credit through Community Organization of women & through group lending which may fail to represent the actual scenario of the whole country. The results conclude that the micro credit plays a very positive role in the lives of rural women. Keywords: Micro Credit, Women Role, Human Resource Development. Small & Medium Enterprise INTRODUCTION Land, capital, labor, and organization is the major four factor of production. All factors are very important but labor is very important factor it control the other three factors. It is very important to realize that the labor is independent to treat the dependent variable. In the developed countries the system is men and women is treated equally both have equal importance but in the developing countries there is huge difference between men and women s specially in Pakistan the economic system is very bad. Pakistan has rigid culture in rural areas and religious restrictions (Malik et al, 2005). The rural females far away from basic facilities like health and education etc. in Pakistan only one way to encourage the rural women s that should be empower financially with the help of micro finance institute. Micro credit is the very useful tool to solve the economic problem of the females. Our half population is consisting on female. The population of Pakistan towards empowerment through microcredit is encouraged but not reasonable. Women contribution in the labor force is very less. & government has taken many steps to boost the role of women in labor force, still due to less contribution of women in business and job opportunities; country is not able to match herself with international standards and trends about women participation in economy (Weiss, 2001). There are lots of definitions which presented time to time by scholars about the standards of empowerment of women but there is one thing which fulfills all other standards and that is, women must be consider equal as to the men because she has brain, two legs, two arms, sense to hear, to listen, to smell, to feel and to see and many important is that woman has equal wants as the man has. Most of cultural obstacles are connected with the poverty and especially the less empowerment of the women. As like every individual whether man or women has a right to fulfill her basic needs for living such as food, education, clothing, up right self-esteem (Malian et al, 2003). On some stages the urban women of Pakistan is more powerful than rural women because of some abatement of caste, gender, ethnic, cultural & religious problems. Fact is that 2/3 population is living > RJSSM: Volume: 04, Number: 11, March 2015 Page 167

2 in rural areas, so according to the women ratio in population so that our 2/3 women population is living in rural areas. It is truth at the present stage that it is not possible to create the massive employment in the rural areas by government but most important and hopeful is that rural women can start their own small scale self-businesses with the help of micro credit. It is quite clear that micro credit is playing very important role in Bangladesh, India and Pakistan. Grameen Bank, BRAC in Bangladesh and NRSP, PRSP (Punjab Rural Support program), SRSP (Sarhad Rural Support Program), AKRSP (Agha Khan rural support program) and many more are the best examples (Shahab, 2000). If our nonproductive sector of women becomes productive then lot of our problems can be solved. Our rural area is adversely affected by less income & saving of women and microfinance institutions are playing very important role in this way because it is not possible for the government that they should create vast employment facilities for the women in rural areas (Mustafa et al, 2000). This problem can only take over with the support of microfinance institutions because there is a need of social mobilization and trainings such as business orientation workshops along the micro credit. Lot of research work has done on this topic but there are 1ots of things which are vacant for the discussion precisely. This research work is based on the analysis of income and saving of the rural women after attaining micro credit & to explore other sociological improvements which are caused by micro credit and CO's. This research work will also provide the vision and help to NRSP and other NGO's that what are the steps which are important to take on that can promote micro credit in real sense. Research Objectives 1. To study the impact of micro credit on women income & saving. 2. To explore other sociological women empowerments which are caused by microcredit. 3. To give positive suggestion for the developing microcredit schemes to ultimate empower the women in the society. Research Hypothesis This research aims to test the hypothesis that whether H 1: Micro credit has significant effect on women empowerment. H 2: Micro credit makes positive change in the income, savings, and sociological changes in the lives of rural women s. LITERATURE REVIEW Mula et al (2013) revealed a significant positive change in the economic variables in the areas of self-income, employment generation, asset building, productive investment, savings which led the socio-economic uplift of rural women folk and empowered them particularly in the sphere of child education, leadership and entrepreneurship ability, technology adoption, decision making etc. Dhanonjoy et al (2013) stated that Bangladesh is one of the high density countries of the world. 40% of its population lives below the poverty level of which rural women are poorer. The rise of the Micro Credit Institution in the global context is identified as an important phenomenon which has implication for the development prospects of the poor. The paper was designed to identify the role of Grameen Bank (GB) and to analyze rural women s economic empowerment as the outcome of microcredit interventions. In this regard, an exploratory research has been made to focus on the activities and impacts after receiving micro-credit from GB. Sara et al (2013) concluded that the role of women is still under scrutiny in spite of 21st century dawning. While in most of the emerging economies role of women is increasingly being redefined, women in Pakistan sadly are still faced with cultural and religious taboos despite the fact they comprise almost half of the population and contributing strongly to the national economy though mostly informally. Despite being significant contributors their status is vulnerable due to the few factors like their mobility, education, lack of financial funds, others like social restraints and minimal institutional support and many more, these may lead them to disempowerment. > RJSSM: Volume: 04, Number: 11, March 2015 Page 168

3 Paneeret al (2012) argued that only a fraction of these activities are truly empowering for the participating women, however, drawing inference from the household data, preliminary results indicate that SHGs could be leading to empowerment of women. Ayesha & Jahanian (2012) concluded that women empowerment is one of the fields of concern in the development of not only developing countries but also developed countries. It is an issue of great importance in the context of national development for countries round the globe. It is also important for institutions such as banks which target women and aim at women empowerment to sell their products and service and hence engage in profit maximization activities. In most of the developing countries the Situation is worse as women over there are less privileged with respect to men who have more access to resources and exercise more power. Sarfraz (2011) shown that there is a positive impact of microcredit program introduced by PRSP in the rural Gujarat on women s empowerment. The role of women in overall development has not been fully understood, nor has it been given its full weight in the struggle to eliminate poverty, hunger, inequality and injustice at the national as well as the international level. The continued assumption that the responsibility for child rearing and for family needs lies with women alone, as well as the persistence of intra household inequalities, places ever strains on women s health, limit their chances for a fair share in the benefits of society. Jabeen (2010)The convention on the exclusion of all structures of discrimination against women and convention rights of child to which the government of Pakistan is also responsible to provide equal status both of the parents in upbringing of their child, regardless of their substance position In spite of above most separated women face many sided challenges in obtaining their valid rights owing to the vagueness and lacunae in the present legal frame work, in concerned and biased explanation of legal provisions and Islamic commands, a corrupt law enforcement instrument, unable judicial set-up and a costly, burdensome and taking places profession. Sultana et al (2010) concluded that most of the rural women had a very low level of education i.e. primary level of education with an average family size of 5.66, and an average farm size of 0.26 hectares. The respondents received a total amount of taka annually as credit which they could utilize for performing different types of income generating activities. They deposited money mainly in banks Personal annual income. Mustafa et al (2008) explained that due to these reasons poor people have less access to the loans which leads and push poor people in more poverty so the microfinance is a way to finance these poor people, those have no collateral or any property for guarantee. They appreciate the Islamic mode of loan giving "Qarz-e-Hasna". But here question arises that whether the landlord of the country who is running this country since the Independence Day will announce the Qarze-e-Hasna for the poor nation of this country. But in the rest of world micro enterprise institutions are playing very important role in enhancing the economic activities. Heraniet al (2008) explored the causes of poverty in Pakistan and used secondary data. They investigated that since the independence, poverty decreased only in three fiscal years. Rehman (2007) investigated the system of micro credit and barriers which are outreach for women in Pakistan. Mainly the research is based on the previous research papers; data of different NGO's or can say secondary data is used in the research paper and only 15 females interviewed. In his research, for these 15 females it was not necessary whether they were stake holders of any micro credit program or not. Quantitative and qualitative impact is just assessed with direct interview to the staff of different NGO's. RESEARCH METHODOLOGY To explore the real impact of micro credit on women's empowerment with respect to income & saving and other social improvements, sample of 250 individual borrowers will be selected for the analysis, residents of Tehsil Hassan Abdal, District Attock and convert data into two types of analysis, quantitative analysis & qualitative analysis. In the quantitative analysis data will be collected of first time borrowers and repeated borrowers and then analyzed the rate of change in their income & saving. To analyze the impact of micro credit on the income & saving of the rural women multiple regression will be used, in which three variables will be taken income, saving and loan amount. In the first step to see the Loan Amount's impact on income, simple regression will be used in which Loan Amount will > RJSSM: Volume: 04, Number: 11, March 2015 Page 169

4 be taken as independent variable and income will be treated as dependent variable. In the second step to analyze the impact of Income and loan amount collectively on saving, multiple regression will be used in which loan amount and income will be treated as independent variables and saving treated as dependent variable. RESULTS & DISCUSSION Impact of loan amount on income: Simple regression is used to assess the impact of loan amount on income. In whole process loan amount is taking as independent variable and income is treated as dependent variable. Total sample strength of stake holders is 250. Statistical software Minitab is used in all quantitative analysis below: Where Y= +β! X! Regression Analysis The regression equation is: Income: Loan Amount X l Table No. 1: (a) T- test and p- test Predictor COEF ST.DEV T P Constant Loan Source: Amount Authors Calculations Table No. 2: (b) Analyses of Variance Source DF SS MS F P Regression Residual Error t Total Impact of Loan Amount and Income on Saving Multiple Regressions is used to analyze the impact of loan amount and income on saving. Saving is taking as dependent variable and loan amount and income are taking as independent variable below. Sample strength is 250 stake holders. Statistical software Minitab is used below to assess the impact. Now we come to the final analysis below: Regression Analysis The regression equation is Saving: Loan Amount X I Income X 2 Table No. 3: Regression Analysis (Impact of Loan Amount and Income on Saving) Source DF SS MS F P Regression Residual Error Total Interpretation of the Results Regression result present that there is a positive Relationship between the loan amount income and saving. As the preceding Regression shows, the partial regression coefficient loan amount xl of means that holding other variable constant (Income), the average amount of saving goes up by 10.3 percent for every percent increase in loan amount. So the relation is positive and significant between these two. Similarly, a partial slope coefficient of means that if the income goes up by > RJSSM: Volume: 04, Number: 11, March 2015 Page 170

5 percent, the average amount of saving goes up by 37.I percent, holding other thing constant. As expected the relationship between the two variables is positive. The value of R-square 95.7 means that 95.7% percent variability in saving is explained by our model, that is, by the two explanatory variables loan amount and income. High R-square indicating that the model we have chosen fits the actual data quiet well. At the.05 level of significance, the F value of and its corresponding p-value of indicate that the relationship is significant; that is, we can reject the null hypothesis Ho: p1:0 that loan amount and income has no impact on income generation since the p-value is less than o:0.05. Note that the same conclusion is obtained from the /-value of and and their associated p- values of Thus; it is concluded that the relationship between the loan amount, income and saving is significant and positive. And reject the Null Hypothesis that there is no positive relation between loan amount, income and saving. Analysis of the answers regarding quantitative impact Some questions were asked, which were closely related to the loan because first important thing is to get loan that, is woman get credit easily from the organization? Does she need any permission from their house members for obtaining credit? And sever l other questions like these. The basic objective of this part is to explore that either women is feeble or having strong position in decision to getting loan and to assess some habits which show the woman's responsibility i.e. maintaining saving record and refunding of loan out of their income. The questions and their outcomes which are achieved during field research will be discussed one by one below: Table No. 4: Question 1. Do you keep your saving record? Status Absolute Figure of Percentage Answer Yes No Total Table No. 5: Question 2. Do you need to seek-permission from any one in order to borrow a Credit? Status Absolute Figure of Answer Percentage Yes No Total There were 82 percent women told that they need permission and only 18 percent women told that they do not need to seek permission. It is observed in the field research that it is not due to the negative cultural enforcement but woman thinks that male can better decide for them either what she wants to do is better for her or not. Table No. 6: Question 3: Did you give any financial guarantee at the time of taking loan? Status Absolute Figure of Answer Percentage Yes 0 0 No Total > RJSSM: Volume: 04, Number: 11, March 2015 Page 171

6 There are 100 percent women told that they do not give any financial guarantee to the organization at the time of getting loan but they give verbal guarantee for each other member. It is so good to see that the stake holders and organization have friendly relations with each other and women take credit so easily at the door step without any hurdle of collateral which is compulsory in commercial banking. After repaying one or two loan stake holder becomes reliable client for the organization. Table No. 7: Question 4: Do you save money Earned from your Business? Status Absolute Figure of Percentage Yes Correspondent No Total There are 80 percent women told that they earned money from business and 20 women total they do not save money because loan amount is not enough for getting earned money from business. Table No. 8: Question 5: Do you face any hurdle in getting loan from the NGO/Institution? Status Absolute Figure of Percentage Yes 13 5 No Total Most of women found satisfied with the role and services of organization in this field Research. As it asked to the women that either they face any hurdle in getting loan from the organization and NGO or they get easily. 95 percent women told that they can borrow a loan easily and only 5 percent women told that they face hurdle in getting loan. However the ratio of women who are satisfied is too large so it shows that there is a good relation between borrowers and organization. Qualitative Analysis In-depth Analysis In this part of research the condition o f women is assessed before utilizing credit and after utilizing credit and assessed that either there is any positive change or not. Through qualitative analysis it is assessed that either women came out from the agony or not. Now we finally turn to the in depth analysis of the qualitative improvements. Analysis is converted into three categories in this part. It is the dire objective of this part of study that it will assess that what is the status of women among all. The feedback of part three of the questionnaire is describing below one by one in the form of tables and diagrams and finally Chi-Square is used for each qualitative analysis. Table No. 9: In Depth Analysis Yes (with husband or Other Family No Total S/No Question yes (ALONE) Were you allowed to go hospital or health care unit before starting your business or 1 working? 132(52.8%) 114(45.6%) 4(1.6%) Are you allowed to go to hospital now? 158(36.8%) 92(36.8%) 0(0%) > RJSSM: Volume: 04, Number: 11, March 2015 Page 172

7 Figure 1: Before Utilizing Credit Were you allowed to go hospital or health care unit before star?ng your buisness or working? 132(52.8%) 114(45.6%) 4(1.6%) 0 1 Figure 2: After Utilizing Credit Are you allowed to go to hospital now? 158(36.8%) 92(36.8%) 0(0%) corespondent Are you allowed to go to hospital now? 158(36.8%) 92(36.8%) 0(0%) 0 There are 52.8 percent respondents told that they were allowed to go to hospital alone, 45.6 percent told that they went with husbands and other family members and 1.6 percent told that they were not allowed to go any hospital anyway before utilizing credit. After utilizing the credit the ratio has been changed to 63.2, 36.8 and 0 percent in order. Chi-Square Test: Expected counts are printed below observed counts: > RJSSM: Volume: 04, Number: 11, March 2015 Page 173

8 Table No. 9: Chi-Square Analysis You(Only) You & Your Husband Other Persons of House Total I Hypothesis Test Summary Research Problem: Do the respondents have same distribution of answers comply with that described before utilizing loan? Statistical Hypothesis: Ho: Pr=2; P2=:195; P3=43:.05 H1: Ho is false. Decision Rule: Reject Ho at the 0.05 level of significance if the calculated value of 1z equals or exceeds than the tabulated value Calculation: The calculated value of 1z is is given in the table above. Decision: Reject Ho Interpretation: The respondent's answers after utilizing loan are different than the respondent's Answers before utilizing credit. CONCLUSION Woman of less developed country is much faint and weak than the women of developed country. It may be due to considering inferior thing to the woman or it may Be due to bad cultural heritage. Mostly drama of abasement to the women plays with the name of religion. It is another fact that all the religions of the world taught us to respect the women, but it is the truth that theocracy shook the pillars of equality in the less developed countries. Less developed countries including Pakistan face the unequal rights, physical, mental abasement and all the symptoms which show the inferiority of the women, question raises in the mind that how can tackle these problems. Mostly scholars have been giving the statements about the empowerment of the women, but the selection of the way, in which women can experience true and perpetual empowerment, is much important. Mostly people think that they can do better the situation through education but can they educate throughout the country as soon as possible? People think that they can solve this through media but our most of areas are free from media. Same like these, there are several options on which every government has been taking step time by time. SUGGESTIONS 1. True empowerment can only exist, when government empower women financially. Because government and NGO's can financially assist them that they run their own businesses at small scale 2. With the proper assistance to the women sector, NGO's can run labor section and can run effectively our one factor of production very effectively, when State will utilize her maximum labor, definitely country will be able to utilize other factors of production properly. > RJSSM: Volume: 04, Number: 11, March 2015 Page 174

9 3. Various training program should be organized for the women to effectively utilize their loan amount. 4. Staff of the organization visits permanently to the CO and assist them in running their business. 5. Educated women should be encouraged. REFERENCES 1. AnsoglenangGilbert, (2006) "Rural Women and Micro Credit Schemes from the Lawra district of Ghana" Faculty of Social Science, University of Tromso, Norway (PP , 42, 43, 45, 76,55) 2. Ayesha, jahanian (2012) Micro credit tool of woman empowerment Research journal of india vol. 4 Pp Dhanonjoy, ali. Akram (2013) Practices of micro credit on woman empowerment research journal of india vol.3,pp Expansion of Civil Society: Alternative Ways Out of the Debt & Poverty Distinguished Lecturer at Pakistan Society of Development Economists. The Pakistan Development Review (PP.401, 420) 5. Farhatjabeen (2010) Entrepreneurship & Microfinance-A tool for empowerment of poor- Case of Akhuwat Pakistan"vol 3 Pp Gobind, M Herani,Gobind, MPervaizWaism, Allah WasayoRajar&Riaz Ahmed Sheikh, (2008) "The nature of poverty and its prospects: Pakistan Evidence" Indus Institute of Karachi University, Sindh University, BIZTEK. April.(PP 1-10) 7. Harpers (2002) Impact of microfinance for development in education & health. (PP.65-90,VOL 2000) 8. Heraniwasim, wasayo, rajar& sheikh (2008) impact of credit on woman empowerment asian journal vol.2 Pp Jakimow,Tanya& Patrick Kilby, (2006) "Evaluating the empowering potential of Development Interventions" Indian Journal of Gender Studies. (PP.376, 384) 10. Klasen& Wink (2003) Discrimination of women is widespread (PP.23-45,VOL,2001) 11. Maliah Hussein &Sheraz Hussein, (2003) "The Impact of Micro Finance on poverty & Gender Equity Approaches Evidence from Pakistan" Pakistan Micro Finance Network.December.(PP. 2-14, 21-29) 12. Malik HussainNiaz&Luqman Muhammad, (2005) "Impact of Micro Credit on Women Empowerment" Department of Agricultural Education, U.A. Faisalabad. Pak. J. Agri. Sci., Vol. 42(3-4).(PP ) 13. Momen,Md,Nurul&Mst. Marzina, Begum, (2006) "Impact of Micro Credit Program for Women Development in Bangladesh": A Case Study of BRAC Asian Journal of Information technology 5(11): , 2006 Medwell Journals.(PP.1282, 1283) 14. Mula g. noureen,akhtar (2013) Evaluating the empowering potential of Development Interventions vol.5 Pp Mustafa and NodirbekIsmailov, (2000) "Entrepreneurship & Microfinance-A tool for empowerment of poor- Case of Akhuwat Pakistan" (PP.14) 16. Mustafa and NodirbekIsmailov, (2008) "Entrepreneurship & Microfinance-A tool for empowerment of poor- Case of Akhuwat Pakistan" (PP.14) 17. NasreenAslam Shah, (2000) "Changing role of women in Pakistan: A study of Social and Economic Activities of Women Entrepreneurs" (PP. 62, ) 18. Paneersalvan (2012) The impact of micro credit on woman empowerment research journal of America vol. 3 Pp Rehman,ur,Waheed. (2007) "Micro finance barriers to the microfinance out reach for women in Pakistan" SLU department of Economics Uppsala.(PP.7, 9, 22, 15) 20. S sultan, Muhammad,ali (2010) Impact of micro credit on rural development and woman empowerment vol.3 Pp 44 > RJSSM: Volume: 04, Number: 11, March 2015 Page 175

10 21. Sarfaraz, khan (2011) Rural Women and Micro Credit Schemes from the Lawra district of Ghana vol. 3 Pp Shahab,aslam (2000) Role of micro credit on woman empowerment a case study of Pakistan research journal of America vol. 3 Pp Weiss, Almat (2001) Micro credit and its effects on woman empowerment Business journal (pp. 12 vol. 2) > RJSSM: Volume: 04, Number: 11, March 2015 Page 176