Women at the Center of European Microfinance

By Annie Brown

Microfinance Focus Europe, February 20, 2013: As microfinance migrates to the European Union and United States, it will of course look much different compared to the more established microfinance industry in the South. Even within countries and provinces, microfinance services can vary dramatically, as they should in order to best serve clients. However, there are universal aspects of microfinance that cannot be removed from the equation, no matter the geographic location.

Women’s empowerment must be a central aspect of European microfinance. This will be more important in some EU countries than others, as each country has its own history on women’s emancipation. However, within any cultural context, placing women at the center of microfinance will have far reaching benefits for women, nations and MFIs.

Microfinance is most commonly associated with “developing” or Southern countries, such as India and Africa. Similarly, the need for women’s empowerment is often only discussed in relation to these poorer countries. However, within the European Union women have yet to achieve equality, especially in the workplace. Facing this reality will be of vital importance to the success of European microfinance in aiding economic development.

If we look to the South, microfinance and women’s empowerment are synonymous because women are the focus of most lending efforts. It is well known that given the opportunity to borrow and save money, women tend to be more proactive in addressing problems in their homes and communities. Research has also shown that providing credit to women has a significant impact on a family’s quality of life, especially children. Also, women tend to have better credit ratings than men.

Many women borrowers in developing countries pursue traditional female trades, such as artisan crafts. Similarly, women entrepreneurs in the EU are more likely to open businesses in the fields of social justice, nutrition, childcare and healthcare – and therefore bring balance to the male-dominated world of small and medium enterprises.

An emphasis on women will not come at the expense of male entrepreneurs. Women face systemic inequality, and therefore deserve special focus. “Inequality in pay between men and women remains high in Europe,” according to the European Commission website. “The impact of pay gaps can be far-reaching, as lower pay increases the risk of financial dependence not only during working life, but also implies lower pensions and thus an increased risk of poverty during old age.” In 2010 GPG ranged from 1% in Slovenia to 28% in Estonia (see Eurostat chart below).


Women also make up a much larger percentage of low-wage earners. The 2010 Eurostat found that 17% of employees in the EU-27 were low-wage earners. “This category included 21% of female workers, whereas only 13% of male employees.”

Women represent a huge potential for entrepreneurial growth in the EU. Because women are treated unequally in the workplace, they are one group that has much to gain from self-employment. However, due to obstacles and systemic inequality, women are more inclined to think that starting a business is an impossible task.

In the European Commission’s “2020 Entrepreneurship Action Plan” there is a section devoted especially to the need to encourage women to pursue self-employment. The authors write, “Women constitute 52% of the total European population but only one-third of the self-employed or of all business starters in the EU€¦When establishing and running a business, women face more difficulties than men, mainly in access to finance, training, networking, and in reconciling business an family.”

The European Commission has called for member states to expand existing “Female Entrepreneurship Ambassadors” and “Mentors for Women Entrepreneurs” networks, design national plans to increase women-led companies, collect and report gender-disaggregated data annually, as well as establish affordable care for children and elderly dependents.

While it is important that the Commission has made these recommendations, they are still only recommendations. At last year’s UN Commission on the status of women, no agreed conclusions were adopted on the Commission’s priority theme, “the empowerment of rural women and their role in poverty and hunger eradication, development and current challenges.” This points to the fact that although the importance of women’s empowerment in improving national economies is understood, large administrative bodies are hesitant to take action on the subject. This is especially true in developed countries, because women’s inequality is often overlooked.

European Microfinance has the opportunity to play a large role in creating more women-led businesses, and can take action immediately. MFIs are motivated both socially and economically to do so, because once women are empowered to pursue financial independence, European MFI loans will increase dramatically.

In targeting women, it is important for MFIs to understand needs specific to women as a class, as well as provide women spaces not only to learn, but shape their businesses according to their vision. As demonstrated in developing countries, holding women’s meetings is an excellent way to empower women to speak freely about inequalities they face. Additionally, making loans for women a priority will demonstrate how important they are in rebuilding Europe’s economy and give them the confidence necessary to run a successful business.

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