Small loans: Big hopes

Can economic empowerment programs give women the skills and power to reduce their risk of HIV?

By Catherine Zandonella

The shanty areas of Nairobi, Kenya are home to thousands of adolescent girls and young women, many of whom have migrated from rural areas. More than half of the girls aged 15 to 17 in these slums are living without parents and the vast majority are not attending school. Many are too poor to afford school fees, while others are forced to drop out of school to take care of extended family members affected by HIV/AIDS. The poorer and more isolated the girls, the higher their risk of HIV.

Here and in many other regions of the world, women have limited power to negotiate HIV prevention in their personal relationships. Intimate-partner violence, as well as poverty, is intricately linked to a higher risk of HIV throughout sub-Saharan Africa. A study in South Africa’s Eastern Cape found that roughly 30% of young men reported perpetrating physical or sexual violence against their main sexual partner during the past year. These same men also engaged in significantly higher levels of HIV risk behavior than their non-violent peers.

Establishing gender equality in these communities is a priority, and this goes hand in hand with economic empowerment. “If young people have financial capacity, you would expect a stronger ability to negotiate sexual relationships,” says Evelyn Stark, a microfinance specialist at the Consultative Group to Assist the Poor (CGAP). Empowering women economically could help them work their way out of poverty, gain independence, refuse unwanted sexual advances, and successfully negotiate condom use, contributing, some researchers hope, to an eventual reduction in HIV transmission.

One way to supply women with financial capacity and independence is through microfinance initiatives. The idea is to provide women with small loans, typically just a few hundred US dollars, which could provide the foothold they need to start small businesses. Microfinance programs have already provided economic opportunity for millions of women worldwide. Now a handful of researchers are testing the hypothesis that these programs can also foster an environment that empowers women in their sexual relationships. Female empowerment could create societal changes that could mobilize public awareness about AIDS and help stabilize the epidemic in sub-Saharan Africa, where 75% of all new HIV infections occur in females between the ages of 15 and 24.

Microfinance and HIV

Microfinance programs typically provide small loans, savings, or other financial products, including credit and insurance, to individuals who could not historically access loans because they lacked the types of collateral—land or personal savings—that banks and lending institutions require. In the 1970s, microlending emerged as a viable way to stimulate economic development among the poor. Since then it has been applied successfully throughout the world. The pioneer of this concept is Muhammad Yunus, founder of Bangaladesh’s Grameen Bank and recipient of the 2006 Nobel Peace Prize.

In microfinance programs, loans can be provided directly to single individuals or to small groups of collective borrowers. Although there are many ways to run a microlending program, one of the most popular is based on the concept of “group lending,” where borrowers pool their savings as collateral for a loan. Although the loans are given to individuals, it is the group that is ultimately held responsible for repaying them. The success of microfinance programs—repayment rates are typically well above 90%—depends in large part on the group pressure to repay the loans.

The earliest microfinance programs focused mainly on loans and less on training or education. But eventually it became more common to combine credit services with training on business development, literacy, and community-building skills so that loans could benefit the poorest people.

On the surface microfinance programs and HIV/AIDS programs seem to have little in common. But advocates of microfinance initiatives, especially in sub-Saharan African countries where AIDS is so shockingly prevalent, can not ignore the connection. Loan programs suffer when participants or employees become ill or must leave their business to care for family members with HIV/AIDS.

The popularity of microfinance programs also makes them excellent venues for reaching people with messages about HIV prevention. In Mozambique, 32 microfinance programs involve an estimated 100,000 clients. “This is an incredible platform for a whole range of public health and HIV/AIDS interventions,” says Guy Winship, who linked HIV/AIDS education and microfinance during his tenure as managing director of FINCA Uganda, one of the country’s largest microfinance organizations. As a result, the US Agency for International Development (USAID) and other organizations are now supporting the integration of microfinance programs and HIV/AIDS education.

Women’s empowerment

Educating women about HIV/AIDS is an important step, but many public health researchers hope that microfinance programs can go even further, helping women gain the self-esteem and negotiating power they sorely lack in their personal relationships.

Promoting female empowerment is the goal of an ongoing program in South Africa called the Intervention with Microfinance for AIDS & Gender Equity (IMAGE). Female empowerment involves acquiring knowledge and understanding of gender relations, developing a sense of self-worth and the right to control one’s own life, gaining the ability to exercise bargaining power, and developing the ability to create a more just social and economic order. The IMAGE study combines gender-based health education conducted by Rural HIV and Development Action Research (RADAR), a collaborative program between the University of the Witwatersrand and the London School of Hygiene and Tropical Medicine, with microcredit provided by the Small Enterprise Foundation (SEF). “We wanted to pair microfinance with specific training on gender and HIV,” says Julia Kim, a senior researcher with RADAR.

In the IMAGE study, women participated in a microfinance program where they received loans to help them start small businesses and routinely engaged in educational sessions that covered topics such as health care, gender relations, and HIV prevention. The project was designed as a randomized trial and researchers followed several thousand households over a two- to three-year period in Limpopo Province, a rural region of South Africa. After two years of follow up, researchers used questionnaires to evaluate the direct effect of the combined intervention on participants’ economic well being, their levels of empowerment, and the rates of intimate partner violence. HIV risk was also assessed among female participants who were considered at highest risk—in this case, those younger than 35.

The results were encouraging. Researchers found that households that received loans and training improved their economic status as well as their level of empowerment, based on pre-set markers that included, among other things, self-confidence, willingness to challenge gender norms, autonomy in decision making, perceived contribution within their household, and status of their relationships. Furthermore, levels of intimate partner violence were reduced by 55% in households that received loans and training.

Also, among women younger than 35, there was a significant increase in the number of women who received voluntary counseling and testing for HIV, higher levels of condom use with non-spousal partners, and improved communication about HIV/AIDS within their households, according to Kim.


Despite positive results, there is a concern that microfinance will be oversold as an intervention that can empower women, says Stephanie Urdang, of Rwanda Gift for Life. “If a woman can figure out with some support how to generate income,” says Urdang, “then clearly she is in a much stronger position to resist violence, to be independent, to make her own choices. But sometimes people have seen this as a panacea—that all that women need is a leg up and once they’ve got an income, then they can move ahead and take control of their lives.”

Indeed, microfinance programs alone do not always help reduce poverty. And even if they do empower women economically, this alone does not automatically enable women to control their own sexual and reproductive health. In some cases it may even make it more difficult.

This was apparent in one program, known as SHAZ (Shaping Health of Adolescents in Zimbabwe), that sought to empower young women in their sexual relationships through a microfinance program. In many cases, having income actually made girls in the SHAZ program subject to more sexual advances because it drew attention from men in the community. As journalist Helen Epstein wrote last year in her book, The Invisible Cure, “The researchers had not anticipated that their program to ‘empower’ these poor women was actually placing them right in the path of HIV.”

Researchers found that the social networks established by the girls were what provided the most benefit, and many participants reported greater knowledge of safe-sex practices at the conclusion of the study. “It is not the money that empowers them,” says Epstein. “It is the collective solidarity and support that they get from each other. That comes from them coming together either through a program that is organized, or spontaneously through a kind of social movement for women’s rights.”

A similar conclusion was reached by researchers involved in another microfinance program called Tap and Reposition Youth (TRY), which provided business education, mentoring, and small loans to young girls living in the slums of Nairobi. This program was a multiphase initiative undertaken by the Population Council and implemented by the Kenyan microfinance institution, K-Rep Development Agency (KDA).

Through churches and youth groups, the TRY program recruited 25 women between the ages of 16 and 22 to join five-person lending groups. Only 12% of participants lived with both parents, while others lived in single-parent households, were themselves head of the household, or lived with a boyfriend or husband. One-quarter of the girls reported having traded sex for money, rent, or gifts. With increasing poverty, there is an increased likelihood that their first sexual experience was non-consensual, occurred at an earlier age, and did not involve a condom. “You have girls who have been involved in [HIV education] programs for a long time say, ‘I had to have sex with my boyfriend without a condom because I needed to pay the rent,’” says Judith Bruce of the Population Council. “They have complete information, they are just economically vulnerable.”

All participants received six days of training on business planning, life skills, and gender roles before they started contributing small amounts of money each week to a group savings account, which constituted collateral for a loan. After the loan was secured, each participant was allowed to take a portion of the money, ranging from US$40 to $200, on a rotating schedule to establish a small business such as a food stand.

The program got off to a strong start, but eventually repayment rates started to slip. Girls dropped out of the program to protect their savings. At one point, loan officers required an adult guarantor who pledged to repay the loan in case a girl defaulted. This had the unintended consequence of increasing the girls’ vulnerability, rather than reducing it.

But this program also provided some benefit. “Given limitations, [the] findings are not conclusive. However, there are indications that among girls for whom microfinance is appropriate, it may result in greater negotiating ability within their relationships, including negotiating for safer and consensual sex,” says Annabel Erulkar, of the Population Council, who worked on the TRY project.

While microfinance may not be a magic bullet for reducing HIV transmission, a combination of microfinance programs targeted at certain populations and others aimed broadly at changing societal norms could help alter the vulnerability of girls and young women. It is one more way researchers are attempting to impede the spread of the epidemic in sub-Saharan Africa.