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Who Gets Credit? The Gendered Division of

Microfinance Programs in Egypt

Ghada Barsoum

To cite this article: Ghada Barsoum (2006) Who Gets Credit? The Gendered Division
of Microfinance Programs in Egypt, Canadian Journal of Development Studies/Revue
canadienne d'études du développement, 27:1, 51-64, DOI:
10.1080/02255189.2006.9669120

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Published online: 15 Feb 2011.

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Who Gets Credit?
The Gendered Division of Microfinance Programs in Egypt*
Ghada Barsoum
ABSTRACT -Microcredit is a poverty alleviation strategy strongly associated with gender inequalityand thefemi-
nization of poverty. In Egypt, microcredit operates within two major models. The economic survival model targets a
female clientele with very small loan sizes and mainly group lending mechanisms. The business enhancement model
primarily targets a not-so-poor clientele. A gap emerges where there are hardly any lending mechanisms addressing
poorer men. I argue in this paper that the lopsided focus on providing microfinance services within the economic
survival model to poor women and the exclusion of poor men constitutes a myopic poverty alleviation strategy that
can actually oppress women rather than empower them. It is also a strategy that excludes a significantproportion of
the poor, namelypoor men who primarily work within the rubrics of the informal economy. The paper is based on
fieldwork in rural Upper Egypt and in two urban squatter areas in Cairo.

IU?SUMl? - Le micro-crkdit est une stratkgie d'allkgement de la pauvretk que l'on associe ktroitement avec les
inkgalitks entre les sexes et la fhinisation de la pauvretk. En Egypte, il s'inspire de deux principaux modkles. Le
modkle de la survie konomique cible une clientklefeminine par leprtt de trkspetites sommes et des mkcanismes de
prtt ax& surtout sur les emprunts de groupe. Le modkle de valorisation des entreprises cible principalement une
clientkle beaucoup moins pauvre. I1 seproduit un kcart lorsqu'il n'existe presquepas de mkcanismes de prttpour les
hommesplus pauvres. Selon l'auteure, lhpproche dkskquilibrke qui consiste d o f i r aux femmes pauvres des services
de microfinancement selon le modkle de la survie kconomique en ewluant les hommes pauvres est une stratkgie d'al-
lkgement de la pauvretk d courte vue; elle peut mtme, en fait, oppritner les femmes au lieu de renforcer leur
autonomie. Cette stratkgie exclut aussi uneproportion importante despauvres, r f savoir b hommes qui travaillent
surtout duns les secteurs de I'kconomie inforrnelle. L'auteure s'inspire de son travail sur le terrain duns la rkgion
rurale de la ~aute-Egypteet de deux ktablissements urbains de squatteurs au Caire.

Microfinance is one of the widespread economic interventions at the grassroots level that addresses
gender inequity and the economic integration of women. Loosely defined, microfinance is the provi-
sion of small-scale banking services -primarily loans -targeting a low-income clientele. Loans are
usually short-term and are essentially small in size. The term "microfinance"encompasses a whole
range of financial services including credit, savings, and insurance. Particular emphasis, however, is

* An earlier version of this paper was submitted at the World Forum on Sustainable Development,Johannesburg,
South Africa in August 2002. Fieldwork for this study was made possible by a grant from the International Center for
Economic GrowthlEconomic Policy Initiative Consortium in 1999. As consultant to the Ford Foundation in the summer of
2000, I conducted more interviews in order to provide a review of the field of microfinance in Egypt. This paper has signifi-
cantly benefited from discussions at the Population Reference Bureau fellows training program on policy-orientedresearch
during the summers of 2001 and 2002.

CANADIAN
JOURNALOF DEVELOPMENT
STUDIES,VOLUME XXVII,NO 1,2006
52 GHADA BARSOUM

placed on the provision of credit. Described as non-conventional financial mechanisms, loans are
usually unsecured by collateral and are hence designed to target a clientele with few material assets.
Microfinance refers, therefore, to expanding the frontiers of formal banking in order to reach
excluded groups.
Definitions of microfinance diverge according to the implementation scheme and program
objectives. The Microcredit Summit (2-4 February 1997) emphasized the target group of programs
as "very poor people" and defined the purpose of microcredit programs as aiming to provide "self-
employment projects that generate income, allowing them (borrowers) to care for themselves and
their families" (Microcredit Summit Campaign 1997). Not all microfinance programs operate
within this framework. In Egypt, microfinance has long operated within two major models: the
business enhancement model and the economic survival model (also known in the literature as the
poverty alleviation model). The latter is closely linked to the definition postulated by the Summit. It
primarily refers to the provision of credit to home-based small-scale economic activities, and is
usually introduced as a component of an integrated developmental approach with a social agenda
focusing on issues of advocacy, education, awareness raising, improvement of housing units, and so
on. Group lending is the predominant lending mechanism in programs with a poverty alleviation
focus in Egypt. Group lending serves as social collateral for a clientele laclung in material assets.
This model builds on the Grameen Bank experience in Bangladesh,where members are responsible
as a group for the repayment of the individual loans. The business enhancement model, on the
other hand, focuses on small or microbusiness formation and growth by the not-so-poor who use
more capital and/or more highly skilled workers than home-based economic activities (Davies
1984).Loans are relatively larger in size, though not as large as those available through regular bank-
ing channels in less-developed countries. The lending mechanism is primarily individual lending.
Some material assets or an operative business are crucial for loan approval. Therefore, while the
economic survival model would target self-employment and start-up projects, the business
enhancement model targets clients with existing businesses. Providers of this type of credit in Egypt
adopt a minimalist approach, where very few other services, if any, accompany the provision of
credit. These could include training on business-related skills such as bookkeeping, quality control,
and marketing.
This paper looks closely at the gender division of programs along these two major approaches to
microfinance. As I show in this paper, lending within the economic survival model in Egypt is strictly
limited to a female clientele. On the other hand, lending within the business enhancement model
primarily targets a better-off clientele. A gap emerges where there are hardly any lending mecha-
nisms addressing poorer men. This lopsided focus in the provision of microfinance to poor women
and the exclusion of poor men constitutes a myopic poverty alleviation strategy that actually
oppresses women rather than empowers them. It is also a strategy that excludes a significant propor-
tion of the poor, namely poor men working in the informal economy. Mokhtar and Wahba (2002,
134) show that about half the workers in Egypt experience features of informality in their employ-
ment. Male members of this group cannot meet the stringent criteria of programs within the busi-
ness enhancement model and are automatically disqualified from most of the programs operating
within the economic survival model for their gender.
This gendered approach to the provision of microfinance in Egypt has its roots in the women in
development (WID) and the gender and development (GAD) paradigms. "Women-only" projects
were donors' formula to the demands of the WID proponents in the early 1970s to allow poor
women productive employment and effective contribution to the needs of their families. Small-scale
income-generating activities for women were the major tool for reaching this objective. While the
 THE GENDERED DIVISION OF MICROPINANCE PROGRAMS I N EGYPT 53

WID discourse succeeded in directing development resources to women, the shortcomingsof focus-
ing on women in isolation began to surface in the late 1970s (Razavi and Miller 1995). The GAD
paradigm shifted the focus to the role of gender relations in women's subordination. GAD situated
women's experiences and social situations in the context of the social and power relations between
men and women. The new paradigm recognized that although the majority of positions of power are
occupied by men, many men remain marginalized (Sharp et al. 2003). However, the shift from WID
to GAD did little to shake the lack of "male-inclusive" gender initiatives (Chant and Gutmann 2000,
2,14). Cornwall (1998) argues that men have largely remained missing from the GAD discourse and
from mainstream development. Despite the growing rhetoric on the inclusion of men, Goetz and
Gupta (1996) show that in Bangladesh the number of microfinance programs for men has been
shrinking and that an increasing number of men use their female relatives as conduits of credit.
This paper is based on ethnographic research done in Egypt during the summers of 1999 and
2000. In 1999, I was part of a study conducting an impact assessment of microfinance programs on
the livelihood of recipient households. During this period, I conducted fieldwork in rural Upper
Egypt and in two squatter areas in Cairo, visiting and interviewing 54 recipients of credit from seven
different credit providers. This stage also included interviews with staff members of the credit-
providing organizations, donors, local non-governmental organizations (NGOs), and community
development organizations (CDAs). In 2000, I conducted more interviews in Cairo, meeting another
32 borrowers receiving credit from five different providers.
In the following sections, I start with a short review of the field of microfinance in Egypt. I then
closely look at the two models for providing microfinance in Egypt, their targeting mechanisms and
operation. Section I11 of this paper provides an impact assessment of microfinance programs with
focus on gender relations and the economic survival of the household.

Microfinance is not new to Egypt. Like many countries, Egypt experienced agricultural microlending
as early as in the 1950s through the government-owned bank, Principal Bank for Development and
Agriculture (PBDAC). Another early model was the Productive Families project (PF), which was
initiated by the Ministry of Social Affairs1 in 1977 to provide microcredit to low-income families,
conditional on having a government employee guarantor. The field of microfinance in Egypt has
dramatically expanded since the late 1980s. It is safe to argue, however, that the expansion of the field
has been largely donor propelled. The availability of funds created the interest and initiated the
momentum. Till this moment, the field remains a progeny of some unorchestrated initiatives by
different donor and international aid agencies. In the absence of institutional memory, many
programs started and died out with few learned lessons. In this section, I attempt to construct a
history of the microfinance field in Egypt because it allows for a better understanding of the current
situation.
Despite the limited documentation of the early experience, there were a number of sparsely
distributed pilot scale projects that should be considered. UNICEF had a program for rural women
with a focus on female-headed households in 1982 (Khafagi et al. 1987).The program was imple-
mented by the Ministry of Social Affairs. The Ford Foundation funded the Association for Garbage
Collectors in Cairo in 1983 to provide credit and employment-related training for this disadvantaged

1. The project now operates under the auspices of the Ministry of Rural Development.
54 GHADA BARSOUM

group. Oxfam and Save the Children had microlending programs too. The early experience in Egypt
had some major trends reflecting the global experience of the field of microfinance and the WID
development paradigm, which provided its impetus. Programs primarily fell within the economic
survival model. The earlier experience was mostly rural in focus and supported home-based income-
generating activities. Projects were implemented on a pilot scale with close donor intervention and
support. Little emphasis was placed on project sustainability. The rural focus, the emphasis on a
female clientele, the close donor intervention and support, and the little emphasis on project sustain-
ability were the major characteristics of the field of microfinance at that early stage.
The field of microfinance in Egypt dramatically changed in the late 1980s. In 1988 an initiative by
the United States Agency for International Development (USAID) in Egypt geared such changes.
USAID funds were earmarked for the development of the small and micro-enterprise sector. The fund
was directed toward seed capital, institutional development financing, training and technical assis-
tance, and research (USAID 2000). USAID designed two models for the delivery of credit in Egypt: the
foundation model and the bank model. The foundation model was to establish not-for-profit founda-
tions to serve as intermediaries between individual borrowers and the lending banks where seed funds
were deposited as a guarantee of a credit line for these borrowers (ABA 2000). Two foundations were
first established: the small Enterprise Development Foundation (Cairo Foundation, which provides
credit in the Cairo governorate) and the Alexandria Small Business Association (ABA).The model was
later replicated in five other governorates: Port Said (1995),Assuit (1996), Sharkyla (1997),Dakahleya
(1998), and Kafr El-Sheikh (1999). The bank model was implemented by the National Bank for
Development with dedicated staff in 13 of its branches to the provision of small and micro-enterprise
lending and mobile units radiating out of each branch (USAID 2000).
While expanding the field significantly, the USAID contribution initiated a new stream in the
microfinance field in Egypt that distinguished it from the earlier experience. It emphasized the busi-
ness enhancement model vis-l-vis the earlier poverty alleviation model. Different methodologies and
targeting mechanisms emerged. The new target group was small businesses in urban locations instead
of the earlier emphasis on rural home-based activities. The clientele of the new initiative was largely
male despite donors' emphasis on a female presence. Loan sizes were relatively large. More emphasis
was placed on program self-sufficiency,sustainability,and even profitability (ABA 2000) as opposed to
the earlier reliance on donor funds. In their targeting schemes, programs emphasized the economic
potential of the borrower rather than their poverty Extension officers were predominantly male and a
strict bonus and salary system was implemented in order to tie the repayment rate of the borrowers to
the income of the extension officer who chose them and was responsible for the collection of their
loan instalments. This wage system constituted a vital mechanism that ensured that only prospering
businesses received credit and that volatile or low-income economic activities were filtered out.
Established in 1991, the Social Fund for Development (SFD) is the current largest donor in the
field of small and micro-enterprise lending in Egypt. SFD functions as a governmental organization
that was initiated specifically to mitigate the negative impact of structural adjustment policies and
that acts as an intermediary between international donors and local constituencies. More than 70%
of the budget of the Fund for Phase 11 (1997-2000) was allocated for the two main programs provid-
ing credit at SFD: the Small Enterprise Development Organization (SEDO) and the Community
Development Program (CDP) (SFD 1999).These two programs neatly follow the distinction already
existent in the field between the economic survival model and the business enhancement model.
SEDO targets unemployed youth and new graduates with relatively larger loans (LE 35,000, or
Egyptian pounds) following the business enhancementlgrowth model. In 2000, more than LE 2.3
billion were committed to support small enterprises (SFD 1999). Most of the credit recipients are
 THE GENDERED DIVISION OF MICROFINANCE PROGRAMS IN EGYPT 55

males in urban areas. Credit is provided through governmental and commercial banks and is subsi-
dized at a differentiated interest rate structure depending on the loan size, the borrower's type of
business, duration of the loan, and whether the loan is for a start-up or an existing ~ r o j e c tDespite
.~
the emphasis of these programs on the informal sector and micro-entrepreneurs, the loan approval
requirements of many of them included a work permit, economic activity licensing, social security
registration, tax card, and commercial registry, which are documents unavailable among micro-
entrepreneurs working in the informal sector.
CDP, on the other hand, provides revolving funds to grassroots organizations for the provision of
microcredit for poverty alleviation and economic survival. These organizations include local and
international NGOs, CDAs, branches of the PBDAC, and offices of the government-initiated PF
program. Priority is given to organizations operating in the poorer communities in Upper Egypt,
Delta, and squatter urban settlements in Cairo. Following the economic survival model, CDP consid-
ers credit an element of an integrated package including primary health care, literacy, community
schools, women empowerment, population and family planning, and environment (SFD 1999).
Intermediary organizations are required to consider these other aspects in designing their lending
programs. Credit is provided on a group collateral basis at a low interest rate (7%).
In 1997, USAID renewed its support to the microfinance field in Egypt by starting a new agree-
ment with the Credit Guarantee Corporation (CGC) to serve as an umbrella organization that
provides technical and financial services to different implementing entities from NGOs and CDAs.
CGC was established in 1990 with funding from USAID and nine Egyptian financial institutions as a
not-for-profit corporation in order to "assist in the delivery of credit to small businesses that lack
sufficient collateral to obtain loans from banks" (USAID 2000). The arrangement is for CGC to
extend a leverage mechanism at lending banks in favour of the constituent NGOICDA, which would
then provide credit to individual borrowers.
Although the SFD and USAID are the current major donors in the field of microhance in Egypt,
there is a plethora of programs funded through other donors. The economic reform policies of the
1990s rendered microfinance an embraced mechanism for poverty alleviation and employment
generation. Virtually every donor with a poverty alleviation mandate in Egypt supported or contin-
ues to support microfinance programs in Egypt by providing seed capital, technical support, or
research and information dissemination. The list includes but is not limited to the Canadian
International Development Agency, UNICEF, the Ford Foundation, the National Council of Negro
Women, the Egyptian-Swiss Development Fund, Save the Children, the German Agency for
Technical Co-operation, the Netherlands Organization for International Development Co-operation,
the United Nations Development Programme (UNDP), the Friedrich Ebert Foundation, the Italian
Fund of Egypt, and more recently the European Commission's MEDA Programme (the Euro-
Mediterranean Partnership).
The long list of donors, however, does not mean that microfinance has become widely availaljle
in Egypt. According to the United Nations Capital Development Fund (UNCDF), 95% of the poten-
tial demand for microfinance in Egypt is not being met (UNCDF n.d.). As I show in this paper, the
gendered approach to the provision of microfinance further aggravates the situation by making this
service available to only one segment of the poor.
The microfinance field in Egypt remains the outcome of different unorchestrated donor-
propelled initiatives. It is for this reason that there are no reliable statistics on the number and

2. For loans amounting to less than LE 50,000, the interest rate is 7%; for loans between LE 50,000 and LE 200,000, it
is 9%; for larger loans, the interest rate is 11%.
56 GHADA BARSOUM

characteristics of microfiliance clients in Egypt.3 Donor funds come with the know-how, the
methodology, and the targeting mechanisms, particularly when it comes to gender. As I show in the
following section, the gender division of these programs is highly pronounced. Economic survival
programs strictly target females mainly in both urban and rural areas; business enhancement
programs, on the other hand, reach better-off males mainly in urban areas.

The limited participation of wcmen in the market economy in Egypt has been a well-documented
pattern. In a recent study by the World Economic Forum (WEF) to assess the current size of the gender
gap in 58 countries, Egypt occupied the lowest rank (WEF 2005). Females account for less than 20%
of the labour force across rural and urban locations in Egypt (Assaad 2002, Moreover, unemploy-
ment among females according to the market definition -that is, without including those engaged in
subsistence activities in a g r i c ~ l t -
~ eis very high, reaching 27.6% (25).A number of researchers high-
lighted the role of religious and cdtural factors in limiting the economic participation of women. Abu
Nasr, Khoury, and Azzam (1985, 6, 31) give primary attention to the value system of "sharaf/ird"
(honour) in explaining female limited labour participation in the Arab world. They argue that family
honour depends on the conformity of females to "modesty codes" of sex segregation, parental surveil-
lance, early marriage, and rigid female sex roles. Such codes restrict the activities of females to the
domestic domain. Kandiyoti (1988, 1991) highlights the role of what she terms the "patriarchal
bargains," in which women withdraw from non-domestic work in keeping with more respectable
domestic roles in exchange for male protection and support. Hoodfar (1999,15) rightfully takes issues
with this culturalist approach, noting that the focus on gender ideology and the role of Islam reflects an
unrealistic vision of the Middle East and Muslims as living in the realm of ideology and religion while
the rest of the world lives within the economic structure. Instead, she calls for an analysis that looks at
individual economic behaviour in the context of the household. Because of women's complex roles and
responsibilities as mothers and wives, the supply of female labour cannot be explained solely in terms
of individual strategies. Many women, though contributinghours of work to support their households,
do not consider this real work. Focus on women as the target group of microfinance programs
responds to their iimited economic participation similar to many countries in the South.
However, gender is a major divider in the targeting matrix of microfinance programs in Egypt.
Lending within the economic survival model with its very small amounts and group lending mecha-
nism is strictly available to women. Small-enterpriselending, with larger-size loans and the require-
ment of some sort of collateral or a fixed address for the business, predominantly reaches a male
clientele. We are left with a situation in which poorer men, particularly those working and living within
the rubric of the informal economy, have no microcredit lending channels available to them, and in
which a better-off female clientele is not targeted. This is a serious gap that has to be considered.
Program design, objective, and targeting schemes are responsible for this gender division of
microlending programs. First, group lending is a mechanism only available to programs targeting

3. One of the few statistics is provided by the UNCDF, which reports that an average of 220,000 micro-entrepreneurs
have access to financial services in Egypt (Uh'CDF n.d.).
4. The figures on female labour participation in Egypt vary depending on the definition of what activities count as
labour participation.The classic distinction between the use value of a woman's work vis-A-vis the market value of a woman's
work remains at the core of the confusion. If we account for women engaged in subsistence activities in agriculture, animal
husbandry, or the processing of agricultural goods, female labour participation rises to 46%. However, if we exclude produc-
tion for own consumption, female labour participation is reduced by 25 percentage points (Assaad 2002,ll).
 THE GENDERED DIVISION OF MICROFINANCE PROGRAMS IN EGYPT 57

women in Egypt. Group lending serves to substitute for material collateral,business registration, and
documentation. These are commonly lacking in the economic activities of the poor. In other words,
group lending serves to compensate for the informal nature of the economic activities of the poor.
Men are not eligible to apply to programs with group lending and can only receive credit through
individual lending within the business enhancement model. These programs require some sort of
collateral, documentation, or signs of project success and viability Limiting group lending to women
implies that it is only poor women who are part of the informal economy and who lack material
assets or business documentation. Mobile male merchants, a significant segment of the poor, cannot
meet the lending preconditions of the business enhancement model because they are unable to
provide the needed documentation, guarantees, or collateral. The situation is more difficult when
they live in urban squatter areas where there is not even documentation of the residence address.
Institutions providing microfinance service within the business enhancement model are very
strict in their criteria for loan approval. Even those who do not have complex documentation
requirements must follow stringent rules related to the level of success of the business before approv-
ing the loan. Most of these programs consider repayment the major sign of success (Dichter 1998,
22). These programs not only boast sustainability but also aim at profitability. In the literature of a
major microcredit provider in Egypt, as well as in i n t e ~ e wwith
s staff, the profitability of the lend-
ing program as opposed to its level of outreach and targeting of excluded groups is mentioned as a
sign of its success.
Credit extension officers in the business enhancement lending programs are a crucial link in the
lending process: they decide on the eligibility of loan applicants. Extension officers refuse to give
loans to appf cants who do not seem to already have successful businesses. This is not surprising
since the income of the extension officer is closely tied to the health of hislher portfolio and the
repayment rate of the borrowers. In an interview with a credit extension officer, he noted, "If I see
dust on the shop shelves [connotinglow turnover of merchandise], I don't process the loan.n5This
means that a merchant who needs to boost a plummeting business cannot have access to credit, let
alone those who do not have a fked business place. Ineligible to receive loans from programs within
the economic survival model since the programs strictly target women with group lending mecha-
nisms, and unable to meet the stringent criteria of credit providers within the business enhancement
model, poorer men remain at a double jeopardy.
These stringent rules of programs within the business enhancement model also fail for a number
of reasons to include women who work within the rubrics of the informal economy First, by only
approving loans to the most successful and to projects with the most potential, these companies
stereotype women as entrepreneurswith little potential for expansion and limited skills. Projects by
women are typecast as projects that are initiated to cover the household needs primarily in the
absence of a male breadwinnera6These stereotypes constitute a filtering mechanism that discourages
extension officers from approaching female entrepreneurs or approving their loan applications.
Second, many low-income female entrepreneurs work outside fixed establishments as peddlers pass-
ing by their female customers' homes, or as producers of some home-based product (dalalat).These
are socially sanctioned economic activities for women in poorer areas because they allow for limited
contact with men. Because they have no f m d economic establishment or business documentation,
these women are not eligible for the larger-size loans and are forced to restrict their budget to match
whatever loan limits are offered by programs targeting women with a poverty alleviation focus. Third,

5. AU i n t e ~ e w were
s in Arabic. Tianslation is made by the author.
6. Interview with an extension officer in Cairo.
58 GHADA BARSOUM

programs within the business enhancement model require an identification card, which is a rare
document among the predominantly illiterate lower-income women (El-Kholy 1996). Fourth, the
majority of the extension officers in programs that provide larger loans for business enhancement are
male. This limits the accessibility of loans to female borrowers. A top official at a major credit provider
for business enhancement noted in an interview, "The decision to filter out female extension officers
was because they were subjected to sexual harassment by clients and also because they tended to take
extended maternity leaves." An organizational culture that discriminates against women, an extremely
demanding client portfolio of more than 100 clients, and programs collecting instalments on a weekly
basis inhibit females from pursuing the job of an extension officer. In interviews with extension offi-
cers, they note that their working day is prolonged till midnight during payment collection periods
to ensure a good repayment rate. These are not conducive working conditionsfor female employees in
a conservative society Female borrowers, therefore, constituted 13%-15% of borrowers from one of
the major credit providers within the business enhancement model in 1999.
Thus economic survival lending, with its very small loans, remains the only option available to
low-income women even if their businesses require larger amounts of capital. It is not an uncommon
complaint of many urban female peddlers that they needed larger loans but were constrained by the
lending scheme of the organizations that approved them for loans. Simultaneouslytaking loans from
different credit providers is not unusual. The process has to be done discretely because it is highly
discouraged by the loan providers. The different small loans, taken together, make the needed
amount. In interviews with credit providers, some expressed the need for a central agency that keeps
a database of borrowers to prevent them from taking loans from different organizations at the same
time. The request is made without questioning the reason why borrowers resort to such measures.
At the community level, programs with the economic survival model are more ubiquitous espe-
cially in villages and urban squatter areas. Limiting the provision of credit to women in poorer
communities,together with the accompanying discourse of empowerment and awareness raising,
stigmatizesmicrofinance programs among traditional groups as a Western tool that challenges tradi-
tional gender roles. Microfinanceprograms, funded by foreign donors and applied by foreign or local
NGOs that bring in foreign consultants or foreign visitors, all pose them as alien bodies within the
community In a rural CDA that already provides credit to women under the auspices of an interna-
tional NGO, a board member of the CDA noted sceptically that "people do not see the value of
giving credit to women." This comment, coming from a board member of a CDA providing credit,
reflects how microfinance programs are perceived as foreign bodies. Although "widows and orphans"
are traditionally the target of many indigenous charitable religious organizations, these programs
only provide donations and pay tuition fees for the education of children. Loans for women are prob-
lematic to religious groups from two aspects. On one hand, with the potential of granting women
independence, loans are perceived as a challenge to established patriarchal gender roles. On the other
hand, with all the rhetoric on interest rates being illegitimate in Islam (riba), the whole business of
providing loans with interest remains problematic. Focus on women and the exclusion of men
renders the situation more problematic on the community level.

Research on microfinance and the empowerment of women is very ambivalent. On one hand, there
is a huge body of literature arguing that microfinance improves the economic status of women and
empowers them. Arnin, Becker, and Bayes (1998) argue that by providing women a source of income
of their own, microfinance programs reduce their economic dependency on their partners and
 THE GENDERED DIVISION OF MICROPINANCE PROGRAMS IN EGYPT 59

increase their "domestic prestige." They further argue that the exposure to new ideas and values, such
as those promoted by the lending organization, allows women to be more assertive of their rights.
These findings are supported by the many stories printed and posted on the Internet by providers of
microfinance who list "self-respect:' "dignity," "self-dependence:' "courage:' "human spirit:' and
"triumph over the cruelties of poverty" as results of microfinance. Paradoxically, Fernando (1997)
argues that in microfinance institutions, women's interests are subsumed and subordinated to the
aspirations of the NGOs and that the success of microfinance programs is the result of activities of
institutions that are considered oppressive of women. Writing about the experience in Egypt, Bibars
(1998) notes that women who take credit are abused by their husbands who seek to seize this extra
source of income. These findings correspond with Goetz and Gupta's (1996) research on loan use by
rural women in Bangladesh. They noted that a significant proportion of women's loans were
controlled by male relatives, leading to exacerbating tensions within the household and to the under-
mining of the survival strategies of the household when men invest loans badly and women are
forced to repay
It is my contention that we should not expect much from microlending; it is a mechanism that
allows for starting or boosting a small income-generating project. To argue that a small project with
a limited budget that can barely sustain a household would challenge socially ingrained gender rela-
tions of power and eradicate poverty is an overstatement. In a group discussion of female borrowers
in Assuit (Upper Egypt) and in reply to questions probing gender relations within the household
after the loan, a woman noted assertively, "The man is the man and the woman is the woman." The
woman refers to gender roles being left intact even after the loan. Another woman argued for the
importance of having a man in the house, noting, "The man is the home, he is the source of its conti-
nuity and prosperity (ammar el bit)." Their descriptions of the poorest of the poor are as such: "a
woman who does not have a man:'"a woman whose husband is unable to work:'"a woman who does
not have an offspring," "a woman whose offspring are married and do not support her:' or "a woman
whose offspring is only girls" (Assuit, 13 July 1.999).In all cases, it was their ingrained conviction that
the poorest of the poor has to be a woman who has no one to support her. Ironically, most of the
interviewed women were recipients of loans for more than two years. They were of different ages.
Loans could not challenge socially ingrained notions about women's economic dependency on men.
While microlending does not challenge ingrained dispositions regarding gender roles, it is a
source of income that provides some cash to an otherwise economically constrained household. As
one woman in a squatter area in Cairo said, "It is as if you're getting a salary while you are at home"
(Sarnia, Cairo, 22 June 1999). This woman sells sleeping gowns and bedcovers to her neighbours in
instalments after she buys them in cash with the amount of the loan. Another woman noted, "They
get you a job and make you save money at the bank" (Hanem, Cairo, 10 June 1999). This woman
refers to the saving component in the lending program of Save the Children in Cairo. When asked
how the income is spent, a common response is "everyday expenses,"which relates to food and trans-
portation costs of the different members of the households and to private tutoring in urban areas for
households with school-aged ~hildren.~ By making more cash available in the household to be spent
on food, credit contributes to the improvement of the nutritional level of the members of the house-
hold, specifically the younger ones. The diet of poor households in Egypt is deficient in animal
protein because of its relatively high price. The increase in income allows households to get meat

7. While the Ministry of Education in Egypt has long attempted to address this problem, private tutoring in public
schools remains a necessity for school students in poorer areas. Limited government spending on education as reflected in
crowded classes and underpaid teachers renders private tutoring a necessity.
60 GHADA BARSOUM

more often. However, this statement on nutrition should be further qualified. In poor households,
more protein could mean a quarter of a kilogram of meat every week instead of having the same
portion once a month. The situation is highly contingent on the initial household income level and
the type of income-generatingproject. Moreover, the distribution of this relatively expensive protein
addition to the household diet is not equal among the household members. Male members are priv-
ileged with the larger portions. Females may just taste it or have to suffice with the soup, even when
the female is the one responsible for the income-generatingproject.
Limiting the provision of microfinance to women and excluding men further burden and
oppress women. Interviews with many of the low-income female clients in both rural and urban
poor areas reflect their eagerness for microloans similar to theirs for men with no collateral. Interest
in loans for men is primarily vocalized by women who are burdened by unemployed sons, husbands,
or brothers. Women argue that if these men had access to loans, they would be able to start busi-
nesses instead of spending time and money on "cigarettes and sitting at cafks drinking tea." A staff
member of one of the major credit providers related an anecdote of when a woman stood up in one
of the large meetings, to which the governor of the city was invited to see the microcredit project,
and asked for loans for men, blaming different developmental programs for ignoring this group.
These demands, coming from the field and voiced by women who are the target of microfinance
programs, reflect a serious gap in the microfinance market in Egypt. As social actors, these women
are well placed to inform researchers and policy-makers of what they see is needed.
When credit is only available to poor women in the community, we are faced with two recurring
scenarios. First, willing to start projects on their own, or having existing businesses with no docu-
mentation that needs capital, men resorted to taking loans in the name of female relatives, usually
their wives. Credit, originally conceived as an empowerment tool for women, becomes an extra
burden to them now that they are accountable for loans over which they have no control. If men had
access to loans, they would be the ones accountable for them, responsible for paying them back. In
some organizations,when extension officers learn that a woman is not the real client, the loan is not
renewed for a following cycle. The whole household is therefore punished. Other organizations turn
a blind eye as long as the repayment instalments are made on time. Both reactions by the lending
organizations penalize the woman. In the first case, this restriction becomes a penalty for the whole
household depriving them of the added source of income. In the second case, the restricted lending
mechanism of the institution allows the woman to continue in a situation where she is accountable
for a debt over which she has no control.
A second recurring scenario is the husband deciding that since the woman can get a loan she
should also do the job. Loans become an extra burden on women and an excuse for men for not
taking their share in the responsibility The case of Sahar, a borrower in a squatter area in Cairo, illus-
trates this point. Describing her day she says:

Because I am the one who received the loan, I have to take care of the shop in his absence ...A
woman never gets a rest until the end of the day.When there is much work in the shop, I stay
late till two in the morning, to start my next day at six (20 June 1999).

Sahar runs a retail store owned by her husband, which is basically a room in their house. The loan
she received is directed toward the purchase of goods for this store. Because the store is owned by her
husband, she is not only an unpaid worker but she also takes share in the liabilities and losses. Her
day is not limited to her work at the store selling merchandise. Sahar also cooks and sells meals in the
neighbourhood for single men who live in the same squatter area, known to be a gathering for
 THE GENDERED DIVISION OP MICROPINANCE PROGRAMS IN EGYPT 61

mobile merchants. Filling in the gaps, Sahar buys large rolls of sewing threads and makes smaller
rolls out of them to be ready for retail sale at the shop. She also raises poultry at the house. All these
activities go hand in hand with her tasks as a mother of four school-aged children.At the same time,
her husband follows a far more relaxed schedule. The loan remains her burden and responsibility In
that sense, the loan becomes a double-edged tool. On one hand, it might have had an empowering
impact in giving Sahar more leverage and responsibility in the running of the household. On the
other hand, the loan is a debt, a liability that burdens her and adds to her load.
The case of Sabah, also living in a squatter area in Cairo, further illustrates this point. At the time
of the interview, Sabah was in her fourth loan cycle, receiving a loan of LE 900 to support her small
business of selling vegetables on the street. She has four daughters and a son, all of whom go to
school. She noted that her husband used to give her 10 pounds per day to cover the expenses related
to the clothing or tutoring of the children. At the time of the interview, he was not working, and even
this little contribution was discontinued. The cart he used for selling vegetables had been confiscated
by the authorities, a penalty for squatting on the wrong side of the street. With the deteriorated
economic situation of the husband, and with Sabah being able to secure a loan, the burden of
supporting the household fell totally on her shoulders. She noted that she is responsible for rent,
electricity,buying clothes for the children, and the fees for private tutoring. Describing her day, she
said that she commutes to the main vegetable marketplace at the outskirts of Cairo by dawn to buy
the vegetables that she sells for the rest of the day She commented, "I say the dawn prayers while
walking." All this at a time when her husband remains out of work. Unable to secure a loan, the
husband could not restore his confiscated cart. No lending institution within the business enhance-
ment model would give him a loan given the volatility of his business and the possibility of confisca-
tion by the authorities,let alone his lack of documentation and inability to provide collateral. Sabah's
husband's limited resources and inaccessibilityto credit constitute a burden she has to bear.
The cases of Sahar and Sabah illustrate how the limited accessibility of poorer men to loans
further burdens poor women. Researchers err when they profile the above cases as epitomes of
women's empowerment. It is true that both Sabah and Sahar have access to credit, go to meetings,
have relative freedom of mobility, and are exposed to the different ideas and values of the lending
program. However, it is a mistake to consider these changes as challenges to structural gender
inequalities and prevalent notions of men's superiority Loans do not always serve the woman. In
many cases women take loans and remain unpaid workers in their husband's businesses, as in the
case of Sahar. Even worse, they become unpaid workers with the liability of a debt. When loans are
controlled by the woman alone, as in the case of Sabah, the income is swallowed by the demands of
the household and the woman is left with nothing for herself. At the same time, the limited accessi-
bility of credit gives her husband an excuse for reneging on his responsibility for household
expenses. It is my contention that had Sabah's or Sahar's husbands had access to credit, the life
circumstances of these two women would have improved. At least, their households would have two
income earners instead of one.
The assumption that men can be the target group of programs providing larger loans is blatantly
wrong. Not all informal economy workers would need loans of LE 35,000, as those made available by
organizations within the business enhancement model, even if they miraculously became eligible for
such loans. These larger-scale micro-enterprise lending programs require registration and a f ~ e d
address for the place of work and residence. Small entrepreneurs, specifically in poor squatter areas,
do not meet these criteria. In some squatter areas in Cairo, occupants cannot provide a proof of
address as they have no electricity bills, either because they do not have access to electricity or
because they get it through illegal wiring. Mobile merchants,who constitute a significant segment in
62 GHADA BARSOUM

the urban poor, also have no fixed address of work. This situation denies them access to credit
through regular micro-enterprise channels and leaves them with little option other than to take out
loans through their female relatives: a situation that, as illustrated, constitutes further burdening of
these women.

The imposed division of microfinance programs along gender lines limits the impact of these
programs in empowering women and poverty alleviation. This division reflects an uncritical gender
approach of programs. This study is critical of the targeting policies that seek to report numbers of
females as beneficiaries without closely looking at how lending programs affect these women. The
provision of a service such as microfinance to one gender, excluding the other, remains an unbal-
anced approach that reflects a myopic poverty alleviation vision.
While excluded from programs with a poverty alleviation focus and group lending mechanism,
poor men cannot have access to programs within the business enhancement model despite the
proclaimed focus of these programs on the poor. Although many of the programs within the busi-
ness enhancement model advertise their lending methodology as seeking little documentation or
collateral, extension officers filter out the poor for fear of default loans. Those who actually need a
loan to boost a less successful business are turned away. Providers of credit within the business
enhancement model not only emphasize sustainability and the health of their revolving fund but
also increasingly emphasize the profitability of the lending program. A study on one of the business
enhancement lending programs refers to "cost coverage at all costs" (Dichter 1998,22). Goals of job
creation, business growth, or poverty alleviation are overshadowed by this sustainability and prof-
itability quest. This emphasis is channelled to the extension officers through a rigid incentives system
that penalizes them for default loans and delinquent payments, a measure that constitutes an effec-
tive filtering mechanism of borrowers with limited resources and volatile informal sector businesses.
While the focus on sustainability is a sign of the field maturing from its donor-dependency begin-
ning, it has a dramatic impact on the targeting of these projects. It is ironic to see how microfinance
evolves from being a mechanism created for reaching the poor to a product from which the poor are
specifically excluded.
The gender-biased approach of microfinance is not unique to Egypt. In 2004, Grameen Bank, the
world model for microfinance,had 95.66% of its clientele composed of female borrowers. Looking
at actual use of loans from four organizations in Bangladesh, including the Grameen Bank, Goetz
and Gupta (1996) show that a significant proportion of these loans was controlled by male relatives.
Women's loans are being treated as a resource for men (56).Nevertheless, credit providers emphasize
women's high repayment rates as a sign of program success, even while acknowledging that their
female borrowers act as "middle-men" between the credit provider and the male borrowers (55).The
gender-biased approach of these programs is therefore a capitalization on women's financial disci-
pline and limited mobility
Since group lending is the modus operandi of microfinance programs that target a poorer clien-
tele, Barr and Kinsey (2002) attempted to account for their gender bias by testing the assumption that
women have greater propensity to feel shame and induce feelings of shame. Through data from an
economic experiment in 12 Zimbabwean villages, Barr and Kinsey concluded that men were no less
responsive than women to shame-inducing and social sanctions. However, they noted that women
were more effective in sanctioningothers who behave anti-socially. Barr and Kinsey h i w g h t the role
of self-selection on the side of female borrowers, due to their comparative advantage in working with
 THE GENDERED DIVISION OF MICROPINANCE PROGRAMS IN EGYPT 63

groups, in the limitation of microfinance programs to women. In making this argument, Barr and
Kinsey err in downplaying the roles of the donors and credit providers. Donors, uncritically embrac-
ing a GAD approach, pride having a larger number of female borrowers. Credit providers, on the
other hand, capitalize on women's high repayment rates, as Goetz and Gupta (1996) show.
Questions regarding the impact of including men in pro-poor microfinance programs on
women's participation have long been tackled by the literature on GAD and the empowerment of
women. Concerns that if these programs become more gender-inclusive, fewer women would partic-
ipate have to be embedded in a critical discussion of the objectives of poverty alleviation and
women's empowerment. If we limit the discussion of women's empowerment to "power over" men,
then including men in these programs would be at the expense of women or vice versa (Sharp et al.
2003). Instead, the empowerment of women should be understood as "power from within," a para-
digm in which women's agency is reckoned. As this paper shows, it is women in the field who call for
programs for men. Their demands for lending mechanisms for their unemployed male relatives -
husbands, sons, or brothers -show that gender is a relational construct and that women cannot be
targeted in isolation from their households. Top-down development approaches generally result in
failure. Listening to these women's demands is a bottom-up developmental solution that has to be
acknowledged by donors and program providers.
This paper aims to highlight the gap in the microfinance market in Egypt. Urban poor men,
particularly mobile merchants without documentation, who are a significant proportion of the
vulnerable urban poor, remain a population excluded from the provision of microfinance.While the
microfinance experience rightfully started with the impetus to include women in the economic
realm, the sole focus on women remains a narrow-minded poverty alleviation approach. The gender
division of programs providing microfinance has a negative impact on women. It also excludes a
significant proportion of the poor: the majority of urban poor males. The major recommendation of
this study is to support programs and mechanisms that would provide lending channels to include
poorer men operating within the rubrics of the informal economy. These programs should bypass
the usual obstacles of seeking documentation and a fixed business and take into consideration the
economic development potential of borrowers rather than solely focus on repayment and profitabil-
ity, which ultimately strips microfinance of its social agenda.

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