Women-empowerment (WE) is a key part of every nation’s success. As women are the integral part of every society (1, 2). WE is most valuable for economic development of families and communities (3). It is most crucial for the growth and development of country (1). However, phenomenon of WE seem not to be well acknowledged in most of the developing countries, particularly in Pakistan. Therefore, the contribution of women in Gross Domestic Product (GDP) and economy is limited. Consequently, WE is still a problematic area in various developing countries comprising Pakistan. Women contribution in GDP and nation’s economic growth is recorded with an incomparable level in most of the developed and developing countries such as United States (US), United Kingdom (UK), Indonesia and Malaysia. For instance, women contribution in US is recorded 23-98% in the GDP and USD $3 trillion contribution in economy through participation in micro-enterprise (4). In case of UK, women contribution is 50% to annual GDP and 54.1% of total employment, in Indonesia, women contribution is 55% in GDP and 75% contributed in employment opportunities, in Malaysia, 44% in GDP and 56% in employment opportunities through micro-enterprises (2, 5, 6). These figures show that the women contribution is most important for the success of nation’s economy.
However, the women contribution is limited and not well acknowledged in most of the developing countries such as Pakistan. As the women contribution in Pakistan economy is only 25-30% (7). This contribution is very low as compared to the other countries as mentioned above. It indicates that the WE is still a problematic area in Pakistan. Government of Pakistan failed to empower women from past 63 years (8). This is one of crucial problem of low economic growth of Pakistan. To resolve this issue many microfinance institutes are working, however, the result is limited. It is due to the various vulnerability factors which effect negatively on WE and decreases the positive role of microfinance institutes. Health vulnerability is one of the important factors which effect any individual (9), therefore, it may also decrease WE. Moreover, environment which include climate change as well as disaster has the ability to effect on individuals by decreasing livelihood opportunities (10). Along with these factors, economic and political vulnerability also has equally important (11, 12) which can affect WE. These are the most important factors which are responsible of low WE in Pakistan, however, these are not addressed by scholars in the context of WE. Thus, this is one of the motivational factors of the study.
Microfinance provides various financial services to reduce poverty and empower its beneficiaries. It is an idea through which low-income people acquire financial services and enable themselves sufficient to get rid from poverty (13). Financial services comprise micro-credit, micro-saving as well as micro-insurance. Microfinance institutes has positive influence on WE and poverty alleviation (1, 14-16). Therefore, microfinance factors have significant relationship with WE. From two decades, microfinance institutes have emerged into an important global industry and it is fastest rising industries in whole world (17-20). Many microfinance institutes are advocating WE; however, the women population is living in vulnerable condition (21). As in Pakistan, 3,130 microfinance units are working with gross loan portfolio PKR 108,881 million and covering 99 districts of Pakistan (22). Additionally, the participation of women is increasing, and it is more than men.
Thus, an important question is raised. Why the WE is not achieved in Pakistan? Even, many microfinance institutes are working, and women participation is increasing day by day (22). Most of the microfinance institutes are especially focusing on women’s advancement. Hence, low WE is based on some responsible factors. Particularly vulnerabilities which are based on health vulnerability, environmental vulnerability, political vulnerability and economic vulnerability (12, 23). These vulnerabilities decrease the positive influence of microfinance institutes towards WE. Hence, the current study has two prime objectives:
- To examine the effect of microfinance factors on WE. This objective leads three sub objectives:
1.1 To study the influence of micro-credit on WE.
1.2 To study the influence of micro-saving on WE.
1.3 To study the influence of micro-insurance on WE.
- To examine the moderating role of vulnerabilities on the relationship of microfinance factors and WE.
The current study focused on the Southern Punjab Pakistan. As this area is related to the high poverty areas of Pakistan (24) and more research is required on WE in this area (8). In Bahawalpur (a part of Southern Punjab) poverty falls from 69.64% to 55%. Moreover, this area consists of two parts. One part consists of desert and other part consists of nearby rivers which threatens women micro-enterprises. Hence, the vulnerabilities are more in this area which are the responsible factors of low WE.
This study is important because it has key contribution to the literature by highlighting various vulnerability factors. This study highlighted that health vulnerability, environmental vulnerability, political vulnerability and economic vulnerability are those factors which are responsible of low WE. The conceptual framework of the current study was drawn based on empirical evidence as well as theoretical gaps identified in the prior literature. The support and explanation for the framework were drawn from two theoretical perspectives, i.e. Mayoux’s Feminist Empowerment Theory and Relational Theory of Risk. In present study, the vulnerability was incorporated as a moderating variable to understand better as well as explain the relationship between microfinance factors and WE. According to the Mayoux’s Feminist Empowerment Theory, microfinance increases the WE. However, from the results of the current study, in the areas like Southern Punjab, Pakistan, where the vulnerability factors exist, the theory fails to justify this statement. As in these areas, microfinance is not beneficial to reduce poverty and enhance WE. Therefore, vulnerability could be service as one of the limitations of the Mayoux’s Feminist Empowerment Theory. Thus, this study contributed by findings the limitation of Mayoux’s Feminist Empowerment Theory through examining moderating role of vulnerability.
2.1 Women-Empowerment (WE)
WE is one of the process of preparing women to be economically self-determining, self-reliant, and having higher positive esteem that enables women to face any challenging situation as well as to contribute to various development activities (25). In this process women get more control over the different resources, human and control over intellectual resources involves information, knowledge, idea, financial resources such as money and control on decision making power at household level, community level, nation level and gain more power (26). Microfinance institutes are trying to enhance WE by their services such as micro-credit, micro-saving and micro-insurance. Because microfinance has been considered to be a useful tool to alleviation the poverty and enhance WE (27). As the microfinance services have significant positive relationship with WE.
Scholars and practitioners define vulnerability in different ways (28). It can be described as the “probability of risk today of being in poverty or to fall into deeper poverty” (World Bank, 2012). As cited by (29): “it involves a combination of factors that determine the degree to which someone’s life and livelihood are put at risk by a discrete and identifiable event in nature or society”. It is a probability of experiencing future loss in welfare, and a family becoming poor or continuing to be poorer if living in poverty (30, 31). The concept of vulnerability entails how communities respond and adapt to social, environmental and economic changes (32, 33). It is a higher degree of experience to shocks, risks as well as proneness of food uncertainty that can challenge the household’s existence (34).
Literature highlighted different dimensions of vulnerability because it varies from region to region. Banerjee and Jackson (23) described that, vulnerability is based on three dimensions; social, economic and environmental vulnerability. Social vulnerability consists of solidarity circles and social relations. A strong social relationship enables poor people to defend themselves better against vulnerability (35). Solidarity circles entail friends and family, which are the fundamental assets that help in dealing with poverty. Environmental vulnerability consists of climate change and natural disasters including floods, cyclones and river erosion (23). Due to the changes in the economy such as recession and failure in micro-enterprise, people are exposed to vulnerability. In these conditions, poor people lose their capability to repay the loan. According to previous studies (36, 37), the place is one of the major determinants of vulnerability. Place and environmental vulnerability consist of natural disasters including earthquakes, flood, excessive rainfall, shortage of water, windstorms and food scarcity. There are also other dimensions of vulnerability such as health which include the breakup of families, the death of an employed member, loss of farming skills and increase in the presence of fatal diseases (36, 37). Women living in poverty are also facing various vulnerabilities such as political injustices which decreases the WE (12).
2.3 Mayoux’s Feminist Empowerment Theory
The Mayoux (38) feminist theory is one of the prominent theories to discuss WE. This theory focuses on women social and economic empowerment, particularly in developing countries (39). The core idea to focus women is that, a higher level of women poverty (39). As the 70% poverty belongs to poverty worldwide (Kabeer, 2012). This theory is one of the entry points of microfinance to WE. According to framework of Mayoux (39), provision of opportunities to women such as credit and saving encourages the decision-making power. Women invest credit into micro-enterprises which generate income and income increases the economic empowerment among women. It also enhances social empowerment by increasing the decision-making ability of women. It increases the social capital by enhancing the network. It focusses on poor women and women who can play a role for change (40). This theory focuses on equity and equality among men and women. As the decrease in gender discrimination leads to enhance women social and economic empowerment. Finally, this theory tries to enhance WE by using microfinance factors. Framework of Mayoux’s Feminist Empowerment Theory is highlighted in Figure 1 which shows that services of microfinance institutes have the ability to increase WE by reducing the poverty level.
[Insert Figure 1 Here]
2.4 Relational Theory of Risk
This is the underpinning theory which explains the vulnerability effect on WE. Relational theory of risk is primarily based on three major fundamentals: “an object at risk, a risk object, and a relationship of risk” (41). These three variables are interlinking with each other’s which explains the effect of one object on another object.
An object at risk is based on any object containing value which is at stake due to the risk object. Risk object is based on an entity that threatens the object at risk. It is an object consists of different identity traits pertaining to danger and harm. These risks may involve hazards such as any environmental change, health issues, social issues such as discrimination among men and women, low income level and political issues. As vulnerability involves different hazards such as natural disasters, climate changes, physical hazards, economic problem of women, social problems, political issues and any other dangerous objects (12, 23, 36, 37). The connection between risk object and an object at risk is known as the third element of this theory which is relationship of risk. In the current study, vulnerability is considered to be a risk object, WE is considered as an object at risk and the relationship of these two is the third element of this theory. Additionally, the relationship of microfinance factors (micro-credit, micro-saving, micro-insurance) and WE is a valuable relationship, hence, this relationship is also considered as an object. The value of this relationship is at stake due to vulnerability. The equation of this theory is given below.
[Insert Figure 2 Here]
2.4 Hypothesis Development
2.4.1 Micro-Credit, Women-Empowerment and Vulnerability
Microcredit is one of the important microfinance services which offers small loan to improve existing small-scale business of poor people or establish a new one (42). It is a provision of cash and a smaller amount of loan to self-employed people to improve their small business (43). It improves women income and also increase the decision-making power (25). Microfinance institutes provide credit to poor women and these women invest this credit in micro-enterprises which generate income and enhance decision making power. Therefore, micro-credit has positive role to enhance social as well as economic empowerment of women community. According to Al-Shami, Razali (14), credit enhance WE by decreasing the issue of gender equality.
Moreover, according to Zoynul and Fahmida (44), micro-credit enhances the social and women economic empowerment. On the other hand, Atmadja, Su (45) found that financial capital has negative impact on women micro-enterprise. As the micro-enterprise generate income and enhance empowerment, in case of negative impact it decreases the income which leads to decrease in WE. Additionally, micro-credit is not a good indicator of empowerment Garikipati (46). Hence, sometimes micro-credit shows negative, less effect or not effect at all. It is due to the vulnerabilities which effect the women micro-enterprises adversely. Vulnerability “involves a combination of factors that determine the degree to which someone’s life and livelihood are put at risk by a discrete and identifiable event in nature or society” (29). Particularly in Southern Punjab Pakistan, vulnerabilities are linked with desert, nearby rivers, social problems and political issues. Deserts consists of wing storms, water and food scarcity, less rainfall and different diseases. Social vulnerability includes health issues, single earning hand, physical disability and discrimination. On the other hand, in other part of this area, nearby rivers cause flood in rainy season which effect agriculture area and other women micro-enterprises. This area is also politically vulnerable. Thus, in this area, vulnerabilities disturb the income generating activities of poor women which effect negatively on WE and microfinance services. Thus, it is proposed that:
H1: Micro-credit has a significant relationship with WE
H2: Vulnerability moderates the relationship between micro-credit and WE
2.4.2 Micro-Saving, Women-Empowerment and Vulnerability
Micro-saving based on saving accounts which increases the saving (47). It is one of the microfinance services which enables people to save their assets with the help of weekly saving and also to contribute in group saving (48). Microfinance institutes provides the opportunity of individual and group saving. Micro-saving enhances the productivity of rural women (49). As saving is one of the microfinance services which has long lasting effect on women (50). According to Bernard, Kevin (51), saving has positive impact on women microenterprise. Therefore, it enhances the income from microenterprise which automatically boost up WE. Nevertheless, micro-saving promotes WE (52) and help people to resolve their health emergencies (50). On the other hand, as discussed above, financial capital which is also include savings have negative impact on women micro-enterprises (45). This negative effect is due to the vulnerabilities which reduces the positive influence of microfinance institutes on women. Poor women utilize their savings to mitigate the effect of vulnerabilities and could not invest in income generating activities. Therefore, vulnerabilities moderate the relationship between micro-saving and WE. Therefore, following hypotheses are proposed:
H3: Micro-saving has a significant relationship with WE
H4: Vulnerability moderates the relationship between micro-saving and WE
2.4.3 Micro-Insurance, Women-Empowerment and Vulnerability
Micro-insurance is the safety of people having poor economic condition against hazards in exchange for systematic premium payments equivalent to likelihood which involves a cost of risk (53). Microfinance institutes provide various financial services including business insurance facility to help poor people in a vulnerable economic situation for protection. It makes them capable of purchasing assets and these facilities frequently ignored by the commercial banks (54). Poor people manage shocks by using various strategies including formal group based and self-insurance (55). These shocks include vulnerabilities such as health, floods, water scarcity, wind storms, any other natural disaster, social, economic political issues. However, use of finance to mitigate vulnerabilities restrict women to capitalize in various income earning activities which reduces the positive contribution of insurance to enhance WE. Vulnerabilities destroys the micro-enterprises of poor women and most of the women use insurance to mitigate the effect of vulnerabilities. Hence, micro-insurance is one of the tools to enhance WE. However, vulnerabilities moderate this relationship as highlighted in below hypotheses;
H5: Micro-insurance has a significant relationship with WE.
H6: Vulnerability moderates the relationship between micro-insurance and WE.