Where a little bit goes a long way: microcredit loans to women in need

Taçilik is, in fact, just one of thousands of indigent women whose lives were radically changed by obtaining as little as TL 100 up to TL 700 in credit from a micro lending institution. The money has to be repaid within 46 weeks in weekly or bi-weekly installments without interest but with a small service fee. Normally, these people are excluded from the formal financial system, as it is impossible for them to provide guarantees and the collateral demanded by commercial banks, in addition to coming up against social and gender barriers. But based solely on trust, the microfinance system has played a vital role in lifting the poor out of poverty throughout the world.

The microloan movement was developed when the world was searching for new ways to cure its severest problem: poverty. Bangladeshi economist Muhammad Yunus was the architect of the project, titled Grameen Bank, founded in 1976 with the conviction that “poor people can be both reliable borrowers and avid entrepreneurs.” The objective of the project was principally to fight against poverty by encouraging the poorest segment in the society, mostly women, to be involved in the production process. The idea, which earned Yunus a Nobel Peace Prize in 2006, envisions the provision of small and seemingly insignificant loans to people in need, who live in severe poverty, to support them to establish or develop their own businesses, rather than keeping them dependent on donations and continuing their poor standard of living.

Lifeline for women in need

The project has also been implemented in Turkey for the past seven to eight years, with the Maya Enterprise for Microfinance, an affiliate of the Foundation for the Support of Women’s Work (KEDV), active in the Marmara region, and obtained from the Turkish Grameen Microcredit Program (TGMP) operating in 45 provinces, but mainly in the southeastern provinces in which poverty is greatest as a result of terrorism.

So far, these institutions have given a total of 44,000 women the opportunity to start their own businesses. The amount of loans the TGMP has extended to women in need has reached TL 55.96 million, while KEDV provided another TL 8.67 million. Contrary to a widespread and unfair belief that poor people are unlikely and even unwilling to pay back the money they borrow, microloan credits have a solid track record on repayment with a rate of nearly 100 percent. And there are plenty of success stories among recipients of microcredit just like Taçilik, who managed to develop her business with the small loan she obtained from the TGMP.

In fact, these stories all indicate that a really tiny loan may have an impressive impact on one’s life, not only in terms of the financial gain that pulls one out of poverty but also in terms of having a respected role in both one’s economic and social life.

The value of this project can easily be understood during a talk with Emine Çiçek, director of the TGMP’s Diyarbakır office, who speaks excitedly about the women they are working with. Çiçek says that “microloans are a lifeline for these women.” It not only serves as a financing tool but, in a broader sense, as a sort of therapy that relieves them, she remarks. “They really trust us. Most of them reveal their most secret worries, which they can’t tell anyone else.”

But this did not happen out of the blue. People doubted that they would be given money without any requirements for collateral, especially during times when virtues like solidarity, helpfulness and charity are hard to find.

Yıldız Süleymanağaoğlu of Maya says that most of the women reacted to microloans with suspicion in the first months. “I remember a woman who asked me furiously and mistrustfully who we are and why are we giving them money. I did not enter into a discussion with her but just explained calmly how the system works. One year later she called and asked for microcredit,” she recalled.

“Those who own stores were also anxious, fearing that we may share the information they have given to us with tax officials.” However, she says, trust evolved with time and women are now happy to see institutions extending loans to support their business activities.

The majority of women’s businesses receive microloans are home based and traditional activities in the unregistered economy, like handicraft production, sewing, food production and “piece work” such as assembling toys at home. Hairdressing, animal husbandry and growing vegetables are also widespread among borrowers.

But why just support women and not the men also in need? According to Çiçek, women are much stricter about the repayment of their debts than men. “Women really work well here in Diyarbakır. They use the microcredit funds to earn money and meet the needs of their children. But a man is more likely to spend this money on alcohol or tobacco.”

In fact this “affirmative action” leads to one of the most striking outcomes of the microloan system: Women were encouraged by their husbands to get involved in working life in an intensely traditional province like Diyarbakır where women were generally only welcome in the home. Fikret Adaman of Boğaziçi University and Tuğçe Bulut of Cambridge University found in a survey they conducted through interviewing 800 microcredit recipients in 2007 across the country that the share of women who were prevented by their spouses or social circle from establishing a business through microcredit funds amounted to only 3 percent. The brutality of poverty overcame the social rules, they found in the survey.