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An Overview of Rural Finance for Rural Women


Poverty hits hardest at the female half of humankind. If a woman living in a rural area of a developing country, they are likely to be poorer than a man, more vulnerable, own no land, be less educated and in poorer health. And you are unlikely to live as long. Struggling to combine a ‘double day’ of low-paid work with care for the home, rural women often have to cope with frequent pregnancies and child mortality.

For women, perhaps the cruellest reality of all is that they have less chance than men to escape from poverty. A rural woman is likely to have little or no say in the way the family spends its income. Discrimination in education is the start of the vicious spiral of poverty. A girl may be deprived of schooling and literacy for no other reason than that she is female. Seventy percent of poor women in India cannot read or write. Illiteracy often excludes people from written knowledge and decision-making. Some rural women have been affected by trade liberalization.

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They are unable to participate in the marketing of export crops as they lack land rights and access to essential farm inputs. On the other hand, some women have gained by securing jobs in new export activities. Investment in rural women pays off.

  • Indian population is 48.1% women and 51.9% men
  • Female illiteracy is 62% whereas the male illiteracy rate is 34%
  • The labour force participation rate of women is 22.7%, less than half of the men’s rate of 51.6%
  • In rural India, agriculture and allied industrial sectors employ as much as 89.5% of the total female labour
  • Women have extensive work loads with dual responsibility for farm and household production
  • Women’s work is getting harder and more time-consuming due to ecological degradation and changing agricultural technologies and practices
  • Women have an active role and extensive involvement in livestock production, forest resource use and fishery processing
  • Women contribute considerably to household income through farm and non farm activities as well as through work as landless agricultural labourers
  • Women’s work as family labour is underestimated
  • There are high degrees of inter-state and intra-state variations in gender roles in agriculture, environment and rural production

Rural Women at a glance

Rural women comprise more than one-quarter of the total world population. 500 million women live below the poverty line in rural areas. Women perform 30 per cent of the agricultural work in industrialized countries”.Rural women the world over are an integral and vital force in the development processes that are the key to socio-economic progress.

Rural women form the backbone of the agricultural labour force across much of the developing world and produce 35-45% of Gross Domestic Product and well over 50% of the developing world’s food. Yet, half a billion rural women are poor and lack access to resources and markets.”

Rural finance and rural poverty

More than a billion poor people lack access to the basic financial services which are essential for them to manage their precarious lives. Good management of even the smallest assets can be crucial to very poor people, who live in precarious conditions, threatened by lack of income, shelter and food. To overcome poverty, they need to be able to borrow, save and invest, and to protect their families against risk. But with little income or collateral, poor people are seldom able to obtain loans from banks and other formal financial institutions. And even when they do have income or collateral, the amounts they require are often too small to appeal to banks.

Microfinance is one way of fighting poverty in rural areas, where most of the world’s poorest people live. It puts credit, savings, insurance and other basic financial services within the reach of poor people. Through microfinance institutions such as credit unions and some non-governmental organizations, poor people can obtain small loans, receive remittances from relatives working abroad and safeguard their savings. Accessing small amounts of credit at reasonable interest rates gives people with the willingness and know-how an opportunity to set up a small business. Records show that poor people are a good risk, with higher repayment rates than conventional borrowers.

Need credit to Rural women

Rural women play a fundamental role in daily management of agricultural activities and of the family unit. They are however often confronted with numerous obstacles when applying for credit. Consequently, they try to optimise their possibilities of accessing credit from the various existing rural finance services:

  • The “unofficial” system (an alternative established by community members)
  • The “official” system (banks and other official financial institutions), and Farmers’ organizations which give loans to their members.

Rural women fulfill multiple functions on a daily basis: they are mothers providing for their family’s well-being, farmers producing food for the family, shopkeepers supplying indispensable additional income. They are also in charge of natural resources management which ensures future food security for their families.

Although rural women represent a fundamental pillar for survival and management of the family unit, they are confronted with real difficulties in accessing additional resources such as credit. Various barriers arise when they try to undertake or develop any income-generating production activities.

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Loans facilitates to rural women

Loans play an important role in the economic, social and political improvement of the situation of women throughout the world. Improving rural women’s access to finance gives them a chance to become autonomous. This can contribute to increase agricultural productivity, development of income-generating activities alongside their production activities, better control of production methods, and improved natural resource management. As a result they will be able to ensure food security for the future of which they are the guarantors.

Additional sources of finance can help in developing necessary commercial agriculture within the national and international context, whilst retaining subsistence farming for the community’s daily needs.By increasing their economic power, they will be able to organize themselves more efficiently, to affirm their position as rural women farmers, to participate in decision-making processes and to draw up policies which concern them; as well as defending their own interests with public authorities and other relevant institutions.

Savings facilitate for rural women

Savings are seen as insurance against foreseeable future difficulties (constituting a dowry, bridging a difficult period, etc) or completely unpredictable (food shortages, natural weather phenomenon, foodstuffs sold cheaply because of the death or accident of a member of the family, etc). Rural women therefore insure themselves against future risks by saving in the form of land, herds, trees, gold jewellery, or by hoarding money, which also include risks such as theft, the compulsory gift of a sum to a member of the family in difficulty, a livestock epidemic, etc.

Access to safe and secure savings is an important part of addressing short-term, medium-term and long-term unforeseen circumstances. These savings allow them to protect their own funds and, as a result, to undertake other income-generating activities. Allowing them to control their incomes and to be paid for these activities, is to participate in granting autonomy to rural women.

Women’s responsibility in agricultural activities

Food crops are the basis of most rural production as they provide the necessary daily food rations for rural families. Within this context, women have a fundamental role in farming production activities, in particular looking after crops, and ensuring good management of these activities.

Faced with the depletion of natural resources, men are increasingly forced to migrate and/or carry out non-agricultural activities in order to secure their livelihood.

Rural women are therefore left to take on full responsibility for agricultural activities.

Savings/loan systems can therefore have a considerable impact in such cases. For example, loans can enable the acquisition of new technology or make it possible to hire labourers, thus allowing rural women to save time — hence reducing the fatigue of manual labour — in their agricultural activities. They can therefore retain their income-generating activities which they might otherwise have had to sacrifice in order to provide food.

Over and above their own economic interests, savings/loan facilities for rural women include much wider notions of political and social development such as time-saving, family well-being and food security, improved finance management, personal autonomy and increased representation.

Sources of finance are available to rural women

Women have several possible sources of finance at their disposal, each with its own advantages and disadvantages.
The unofficial sector has always played an important part in financing rural women’s activities. The different players in this sector are families, relatives or friends, private lenders including loan sharks, rural shopkeepers, and rural solidarity arrangements. The loans are thus either in money or in kind (for example loans of inputs reimbursed by harvested agricultural produce).

A new system of “semi-unofficial” micro-financing has also appeared during the last decade: the system set up by the non-government organisations which provide savings/loans to local rural and/or urban populations allowing populations who do not have access to the official sector to obtain loans at rates which are much better than in unofficial systems. We are including this finance model within the unofficial system as it was inspired from this system to better respond to the needs of the population. It attempts to correct the negative aspects whilst retaining the main operational methods.

The official sector includes country’s various official banks (national banks, rural banks, etc). These official finance institutions are dealt with in the second section of this document.

Farmers’ Credit Institutions exist alongside the systems mentioned above. They are specific to farmers’ organizations and take the form of agricultural loans/savings institutions and cooperatives which we will deal with in the third section.
Whenever possible rural women use several savings/loans strategies simultaneously, depending on their requirements, the amounts they may consider necessary, their reimbursement capabilities according to redemption dates, and as a function of their assessment of the risks they are taking in borrowing from the different finance systems.

At present, National economies are in the process of addressing the phenomenon of internationalization and its implications for the rural economy. Savings/loan systems can play an important role in avoiding the marginalization of rural women by their partial or total lack of integration into economic and marketing streams at the local, provincial and national level.SSS

Savings/Loans in the unofficial Finance sector

Small farmers have always set up unofficial micro-finance systems, even before experts in the field of development made this one of its favorite themes. To begin with, these were only bartering systems, before the unofficial finance system developed into proper loans which could be large sums of money.

Despite the constraints of this system, the unofficial sector is still today widely used and very useful for small producers and for rural women in particular.

Moreover, since there are numerous obstacles preventing access to the official credit system, many people retain the unofficial system as a source of savings and loans even if this alternative has a number of negative implications.

Rural women use the unofficial finance system

Rural women often use this system as they need small amounts of cash and the loans are granted according to social, relational and cultural conditions, and not according to purely economical conditions which would not allow women to benefit from them.

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They also constitute personal savings funds which enable them to address their family’s basic needs. These savings, if they are not hoarded or invested in material goods (herds, gold, or land etc), can be invested in the unofficial sector (private loans, relatives; tontines) and are generally given in the form of loans to another person.

Thus the unofficial sector functions as real banks with their own savings and loan criteria depending on the socio-economic context of the region in which it develops, and it is successful because it is appropriate to the local situation.
Revolving loans and savings associations meet both economic and social needs are very common in developing countries. There have considerable impact for rural women who have their own funds and control the use of them.

Through women’s groups they are also empowered to manage, to be represented and to make claims and demands and are thereby no longer alone to face obstacles encountered in their daily lives.

This revolving system of savings/loans is a basic element in the life of rural women and allows numerous activities to emerge from these funds which can sometimes attain quite high levels.

Various obstacles to the unofficial finance system’s efficiency

Numerous studies, mainly carried out by universities and non-government organisations, have highlighted obstacles in the unofficial savings/loans systems. According to purely economic criteria, the impact of loans is limited, partly because unofficial systems imply limited capital and high costs which do not permit the development of large-scale activities.

Moreover, the system usually lacks reliability through the insecurity of deposits and the lender’s more or less good management of his finance system.

Although the loans are granted at high-interest rates, there is virtually no remuneration for savings.
Apart from the development of community relationships, one of the possible negative points that can be noted is the social dependence which comes about due to the existing relationships with the person who has facilitated and/or made the loan.

Finally, by using the unofficial finance system, rural women are not integrated into the official finance system and their economic activities continue to be marginal. Therefore, their activities remain on a small scale and cannot develop in a satisfactory manner.

The unofficial finance system is interesting in that it constitutes a recourse in the event of sudden difficulties. Its impact remains limited also because of the essential role of the personal relationships played in granting loans.

Official system: Finance Institutions

The official system (public or private national banks, rural banks, or development banks) can ensure more ambitious financial services than unofficial systems. However, using them may be difficult for rural women.

As rural women are increasingly in charge of the family farm’s general management (rural exodus of men) and have to deal with the official finance system, facilitating access to loans could be a driving force in developing their production and processing activities, and in progressing towards agriculture for the local market.

Obstacles preventing rural women’s access to the official finance system

Rural women have little access to information concerning official savings/loans institutions. In fact, banks have a considerable communication problem with the rural environment in general, and with women in particular. The rare extension programs concern their operating and financial services, targeting mainly farmers, without worrying about the specific nature of female problems. This means that rural women have a very limited idea of the nature of institutional savings/loans facilities.

Rural women are often considered as being insolvent because they are subsistence farmers, and are seen as a high-risk population for finance institutions.

Banks and financial institutions hesitate to grant loans to women, as they are usually small loans and do not provide a good enough return for the banks.

They are heavy institutional constraints such as administrative procedures and the necessity for guarantees (land ownership title deeds). With the problems of illiteracy and the lack of management knowledge, rural women are discouraged from accessing these financial services. Of course, groups of women have a better chance of being provided with credit, but this necessitates organizing women inside the community and this is not yet common practice.

Perhaps the most difficult of obstacles to be cleared are those of a socio-cultural nature. It is particularly complex for rural women to address the social practices of their communities and is a long-term challenge. These include standards and social rules (including land rights and inheritance procedures), religious practices and cast systems, social taboos, prejudice against women and rural women in particular.

Lastly is the classical difficulty of all rural populations, and not necessarily specific to rural women. Banks rarely have agencies in rural zones and women, therefore, have to go to towns which often mean walking for many hours. This is the case not only to open an account or ask for a loan, but also whenever they make a deposit, require information, or have a request. To add to the cost in time and in transport, one must also add the social cost as many prejudices exist concerning rural women going to the town and the economic cost of their absence from their families with regard to their daily domestic tasks and production.

Difficulties in accessing loans encountered by rural women reduce the scope of their initiatives, block their economic and social development, with the result that they are kept in a state of dependency and daily insecurity.

Agricultural organisations which provide Finance services

Specialized in the rural sector’s problems, agricultural organisations are characterized by the fact that they are set up, owned, managed and controlled by their members. As they are independent and democratically operated, they can set up credit policies and programs which are better adapted to rural environments and to rural women when their voices are heard. They are consequently an extremely important element for implementing rural policies and defending the interests of all farmers, women and men.

Agricultural organizations have multiple sectors of intervention and can set up genuine rural development programs. Loans are one of the tools used in a general rural development policy, working towards solving the various economic, political, technical, social and cultural difficulties of this sector. However, setting up such a program of associating savings/loans for the development of other income-generating activities or parallel activities (training, techniques, nutrition, health etc) requires several conditions for success.

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Rural women’s participation and representation in agricultural organizations

To ensure better participation, it is important that borrowers – and women in particular – take part in the assessment of savings/loans programs so that they are involved in their sound management and therefore of their sustainability. Moreover, as there is no typical finance model, this active participation enables actual local needs to be identified and the best-adapted savings/loans system to be provided.

This is particularly true when the target population is rural women whose specific needs are not yet clearly defined. As the members of these organizations are in control of the policies set up, it is absolutely essential that agricultural organizations facilitate greater representation of rural women as members, allowing them to be represented in decision-making processes and on management committees.

Equal opportunities for men and women in becoming members of and participating in farmers’ organizations are a fundamental precondition for success. Rural women need to be active within decision-making structures to be able to draw up savings/loans policies which really meet their specific needs.

Rural women’s access to facilities provided by agricultural organizations

A rural development program including financial services should associate these services with improved access to inputs, land, technologies and training. It is very important for rural women to have full and direct access to the different services as members in their own right and not as wives of member farmers. This would enable them to have real control over the use of these facilities, in particular with respect to financing granted to them.

Taking the family unit into account

In rural development programs, efforts should be made to develop savings/loans facilities for the whole family unit, with lines of credit specifically for women. This will mean fewer divisions within the family, the community and society as a whole.

Also, implementing a rural finance program for women should entail considerations on maintaining the right balance between food production and commercial production so as not to affect family food and nutritional security. Such programs should allow all daily activities of the rural woman to be linked together without endangering family unit’s working and living conditions.

Training of and information for rural women

As regards training, extension and information on credit facilities from agricultural organizations, these should be adapted to the differences in men and women’s knowledge, to their different activities and to their daily planning (schedule and length of meetings are an important element in optimizing the presence and participation of rural woman).
Agricultural organizations must therefore take into consideration the issues of rural women when drawing up policies which are more in keeping with their needs and requirements and thereby reducing the existing inequalities between men and women’s access to their various facilities.

Under these conditions, finance can have a considerable direct impact on the life of farming families and on women in particular.


Female schooling can lead to a reduction in poverty by giving women the literacy skills and confidence they need to have a say about how things are run. A mother’s education often leads to better health and nutrition for her children. More investment in improving the lot of rural women could create a ‘virtuous circle’ of better education, improved health and higher income. And women need to be given the right to have more control over productive assets – land, water and credit, for example. Removing gender inequalities is not only morally right, it is good for economic growth and development


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  • The Associated Country Women of the World (ACWW) :
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