1 The embeddedness of a microfinance market in gender relations in Kenya

Box 7.1 The embeddedness of a microfinance market in gender relations in Kenya

Informal financial services are an important feature of local financial markets in many parts of the world. Research into the financial services used by people in and around the small town of Karatina in central Kenya showed that one of the most widely-used services was informal group systems, especially the Rotating Savings and Credit Association (ROSCA). ROSCAs are systems in which a number of people form a group and contribute an agreed amount on a regular basis. At each meeting, the fund is usually given to one person, who takes all of the money, until everyone in the group has received the money in turn. The order of rotation may be determined by ballot, age, seniority or other social systems of preferment. In Karatina, these were used more by women than by men. Why was this? In some parts of the world, such as Taiwan, it is men who use ROSCAs more extensively than women.

The explanation is to be found in underlying gender relations. First, it is necessary to understand the division of labour and control of income in the household and how this influences the type of savings and loans services men and women need. While women contribute important labour to agricultural activities, it is usually the case that men control the income from activities with the highest financial returns. This enables them to make large and lumpy expenditures for which they have prime responsibility, such as asset purchase, school fees and farm inputs. Women are likely to be given control of smaller

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income streams from particular activities, which enable them to pay for food and other household items that are needed on a regular basis. These different flows of income result in men and women having different needs (demand) for financial services to manage these flows. Women have regular but small amounts to manage and ROSCAs are an ideal way of saving regularly to turn these into a larger amount over a number of weeks in order to make purchases of goods, such as household utensils or clothes. ROSCAs do not suit men’s needs in the same way. Their income, from the sale of such cash crop products like coffee, is often irregular. They can hence not make regular ROSCA contributions. Moreover, their need for loans (ROSCA payouts) can be strongly seasonal to buy farm inputs or pay for school fees. Hence, many men in a ROSCA would want to have access to the payout at the same time, so it is not such a useful mechanism for meeting their credit needs.

Second, we can look at the supply side, in the sense of what enables men and women to engage in ROSCA-type activities. One of the key reasons men and women explained their differential use of ROSCAs was the social consequences of non-payment. Women said they could not attend the group and experience the embarrassment and shame of not being able to pay the contribution or ‘spoiling’ the group. On the other hand, men were not ashamed of not paying, did not trust each other to make it work, did not like the strictness of the rules and realized that little could be done to them if they did not pay – so their groups had a history of failure.

These differences reflect gender norms that are deeply-rooted in society. Women’s groups have a long history in Kikuyu society and serve to socialize women in how they should act and behave. To be seen as being able to participate effectively in a group is an important social skill. At the same time, participation in the group enables the woman to provide some of the essentials in the household, like cooking utensils and blankets, that it is her responsibility to provide. In contrast, socialization processes for men were traditionally in the form of age-sets which did not promote solidarity after men settled down in a household. Now that these traditions have ended, there is no alternative process that promotes cross-lineage collaboration.

This story shows us how analysing underlying gender norms helps to explain the operation of certain types of financial services or, in other words, how these norms affect financial markets. Other better known features of the way gender norms affect differential participation of men and women in financial markets relates to their ability to access banks for loans since property, especially land, is rarely exclusively under women’s control. However, in Kenya it is not exclusively under men’s control either and its use as collateral requires that family members agree. Women can thus refuse to agree if they think the loan may be misused. There are also, more generally, deep social concerns about the potential loss of land. A further gender norm is that men usually hold the licences for the production of cash crops (tea, coffee) and hence it is they who can open accounts with crop-based savings and credit cooperatives while their wives will usually simply be co-signatories.

Adapted from Susan Johnson (2004a, 2004b).

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