Social and Economic Effects of Microfinance Program for Women in Nepal

Abstract

Microfinance these days is the most common term when someone talks about the poverty. It is not a new concept. But it was recognized only when Muhammad Yunus start a Grameen Bank concept on a small village of Jobra, Bangladesh and have a huge success. After that many MFIs were established and they were successful in reaching the poor people and in fulfilling the irvision. Microfinance is a collateral free loans to the poor people who lives in rural and remote are as payable in a small installments which makes people little easier to repay the loan amount. Our dissertation is about microfinance and to explore the social and economic effect of microfinance on women in Nepal. This research mainly focuses on the poor people, especially women, who borrowed loan from microfinance institutions. Our study will try to show the social and economic impacts of the microfinance services on women in Nepal, to identify the constraints faced by women clients from the microfinance activities and to recommend measures for enhancing the effectiveness of micro credit for women in Nepal on the basis of findings of this study. The study sample includes 54 respondents out of the 100 population of ultimate beneficiaries from research conducting through interview with women who are using the microfinance facility from various microfinance institutions. From the analysis of data, there were positive improvements with regard to income received and saving mobilization through activities undertaken with increased funding supports in successive years. The change in income effects the change in saving of the client. Improvements were also observed in participation in social and political events, decision making, leading in house hold activities, building self-confidences, involvement in community work all in all show the significant positive changes in the empowerment of women members. But despite of constraints like high repayment pressure, the debate about higher interest rate,rigid time period of fixed loan installment payment period Microfinance Institutions are focusing on achieving their goal of alleviating the poverty, improving the status of the poor women in the society as well as in the family and also contributing in the human development programs in Nepal. For better enhancing the effectiveness of micro credit for women in Nepal the constraints that the women have faced to some extent is needed to be reduced. Since there is rigidity of time for loan repayment by microfinance methodology of MFIs, it should be revised in sucha way that women client's time involvement in the process should be reduced. Economic impacts of microfinance services targeted to women is significant thus should further be encouraged. The loan amount should be increased such that there would be widening up the area for the loan investment. There has been tremendous pressure on women regarding the repayment of loan so it has to be shared among the family members of the microfinance clients. Microfinance institutions need to extend the empowerments of women through providing sufficient skill and development training such that they could create their own job.