Transforming microfinance for women's empowerment

A call for structural change

This is an opinion piece written by Dr Farzana Tanima, senior lecturer in the UOW School of Business. The tenor of the article has been edited by The Stand with the consent of Dr Tanima.

One such example is microfinance, where loans, savings, insurance, and other basic banking services are provided to individuals who typically lack access to traditional banking services. These individuals may not have collateral, a steady income, or a credit history, making them ineligible for loans from mainstream financial institutions. Typically targeting women, microfinance is the poverty reduction tool of choice for the World Bank and many donor organisations. Accordingly, microfinance institutions (MFIs) aim to alleviate poverty and empower individuals, especially women, by providing them with access to financial services. 

However, while providing short-term relief for women, microfinance often fails to challenge the underlying structures of inequality. These projects, rooted in a neoliberal ideology, perpetuate a narrative of individual success without addressing the broader systemic failures. Donor pressure on microfinance organisations to prioritise financial sustainability over social justice has led to a shift in focus, sidelining the needs of marginalised communities. Tokenistic efforts, such as participatory reviews and stakeholder engagements, have failed to address the underlying power imbalances inherent in microfinance. The core of the problem lies in the oversimplified measurement of women’s empowerment, often relying on basic statistical indicators like repayment rates showcased as a success story within annual reports. This approach neglects critical factors such as how loan funds are utilised, the distribution of control over loans within households, and the emergence of new patriarchal dynamics as women strive to meet repayment obligations. Microfinance tends to work around patriarchy rather than challenging it head on. 

To truly make headway in solving these issues, we need to shift our focus towards practical initiatives that address the root causes of gender inequality. In this regard, a paradigm shift in accounting practices is imperative. Dialogic accounting offers a promising alternative, allowing for the inclusion of voices traditionally marginalised in financial reporting. By amplifying the perspectives of poor women and feminist activists, dialogic accounting seeks to dismantle oppressive structures and advocate for meaningful change. In practice, this entails moving beyond conventional stakeholder engagement and relinquishing control to external facilitators, such as political action committees. By centring the voices of marginalised groups, dialogic accounting aims to identify and address structural barriers to women's empowerment, including cultural norms, corruption, regulatory failures, and inadequate social services. Ultimately, transforming microfinance requires more than just financial inclusion; it demands a reimagining of business practices that perpetuate inequality. 

A woman is sitting at a computer desk looking to her left. Dr Farzana Tanima is a senior lecturer in the School of Business. Photo: Paul Jones
In this regard, regulators can play a critical role in overseeing the microfinance sector to ensure that it aligns with principles of gender equality and social justice. They can implement robust regulatory frameworks, and establish and enforce regulations that prioritise the interests of marginalised communities, particularly women. This includes setting guidelines to prevent predatory lending practices, ensuring fair treatment of borrowers, and promoting transparency and accountability within microfinance institutions. Furthermore, regulators can integrate gender-sensitive criteria into their oversight mechanisms to assess the impact of microfinance initiatives on women's empowerment. This may involve monitoring the allocation of loans, tracking repayment dynamics within households, and evaluating the effectiveness of microfinance programs in addressing systemic barriers to gender equality.

Policymakers hold the responsibility of shaping the broader policy environment to support women's empowerment through microfinance. In so doing, they would demonstrate individual and collective commitment to the UN Sustainable Development Goals, in this case, Gender Equality. Policymakers within donor circles such as the World Bank and the United Nations can equally support the Gender Equality Goal, by working towards embedding gender considerations into financial inclusion policies and strategies, recognising the unique challenges faced by women in accessing and benefiting from microfinance services. This may involve conducting gender impact assessments, designing targeted interventions, and mainstreaming gender equality objectives across policy domains. Policymakers should design targeted support programs to address the specific needs of marginalised women, including those living in rural areas, belonging to minority groups, or facing intersecting forms of discrimination. This may entail offering financial incentives, capacity-building initiatives, and tailored assistance to enhance women's participation and agency in the microfinance sector. Furthermore, policymakers can foster partnerships between government agencies, microfinance institutions, civil society organisations, and other stakeholders to drive inclusive and sustainable development outcomes. 

Finally, practitioners within the microfinance sector can play a pivotal role in translating policy objectives into tangible actions that promote women's empowerment. They can integrate gender considerations into all aspects of microfinance operations, from product design and delivery to client engagement and impact assessment. This may involve tailoring financial products and services to meet the diverse needs of women clients, implementing gender-sensitive marketing strategies, and providing targeted support for women entrepreneurs. Practitioners can actively promote women's leadership and participation within microfinance institutions, including in decision-making processes, governance structures, and staff recruitment and training. Furthermore, they can collaborate with government agencies, policymakers, donors, and civil society organisations to leverage resources, expertise, and networks for greater impact. By forging strategic partnerships and alliances, practitioners can amplify the reach and effectiveness of microfinance interventions aimed at promoting women's empowerment and poverty alleviation.

Ultimately, accounting practices must undergo a paradigm shift to challenge existing constructs and embrace alternative approaches like dialogic accounting. By doing so, we can pave the way for a more inclusive and equitable microfinance sector, where women can shape their own destinies. Regulators, policymakers, and practitioners must work together collaboratively to address these challenges head-on and drive meaningful change. By empowering women, we empower families, and we empower intergenerational economic and social uplift.


Dr Tamina's research demonstrates UOW's commitment to the United Nations Sustainability Development Goals (SDGs), in particular SDG 1 (no poverty), SDG 5 (gender equality)and SDG 10 (reduced inequalities).