Empowerment of Women in Rural Ethiopia: A Review of Two Microfinance Models

Role of delivery models in women’s empowerment
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This paper discusses two approaches to microfinance and demonstrates how they contribute to women’s empowerment.

Microfinance plays a major role in many gender and development strategies because of its relationship to poverty alleviation and women’s empowerment. Investing in women increases microfinance’s positive impact since women mostly spend their income on household and family needs. The paper uses Ethiopia as a case study to discuss positive and negative impacts of Group Guarantee Lending Model (GGLM) and Community Managed Loan Funds (CMLFs) on women. The study reveals that:

  • Most MFIs in Ethiopia use the GGLM model;
  • CMLFs can act as an alternative method of service delivery;
  • CMLFs have the greatest potential to reach women in the poorest and most isolated areas, if they are properly supported;
  • Empowerment does not occur simply through the delivery of microfinance;
  • Patriarchal structures at the community and household levels reflect centuries-old patterns that cannot be shifted by a few years of microenterprise intervention;
  • All stakeholders in rural development should undertake sustained efforts that aim to reach women.

Finally, the paper outlines major issues that MFIs should consider when implementing both models.

About this Publication

By Gobezie, G.