In Kenya, there are millions of microcredit borrowers, many of whom are poor, uneducated women running their own businesses to support a better life for their children. Even though microfinance programs are no doubt well intentioned, unethical and marginalizing practices are commonly used. Just as high suicide rates among microcredit borrowers in India are linked to increased stress from the combined use of high interest rates with short payment cycles, over-indebtedness, and the application of high pressure repayment tactics by microcredit lenders, Kenya has the potential to witness such travesties if action is not taken.
While working to create a microcredit program within several rural communities in Kenya during the summer of 2010 and winter of 2011, I learned of the many challenges of women microcredit borrowers. It was one borrower, Mary who taught me the repercussions that unethical microcredit practices can have on the lives of borrowers. Mary runs a tailoring business out of her home in a small village in Kenya with one sewing machine working to pay for her children’s education with the hope that they may have a life with better economic prospects than her own. Mary took a microcredit loan to purchase materials for her business. However, one month after enrolling in the microcredit program, Mary became very ill and required extensive medical treatment. With medical bills climbing and her inability to work due to illness, Mary began losing clients. Soon afterward her business failed.
Despite these hardships, Mary continued to make regular payments on her loan. When I asked her why she did not postpone her payments, an option explicitly included in her contract in case of financial emergency, she stated that she thought she had to honor the contract that she signed. She wanted to avoid the various repercussions that other women borrowers she knew experienced when they defaulted on their microcredit loans, including social tension, physical abuse from husbands, loss of friends, and loss of household items.
Based on my knowledge, I still ask myself why the microcredit staff did not protect their client and participant by deferring her payments and why Mary did not enforce her contractual rights as a participant in this program. I describe Mary’s story because it is illustrative of a serious problem in the provision of microcredit in Kenya. There exists a great deficiency in the realm of consumer education and legal protection for microcredit borrowers that results in the marginalization of women.
While working to create a microcredit program within several rural communities in Kenya during the summer of 2010 and winter of 2011, I learned of the many challenges of women microcredit borrowers. It was one borrower, Mary who taught me the repercussions that unethical microcredit practices can have on the lives of borrowers. Mary runs a tailoring business out of her home in a small village in Kenya with one sewing machine working to pay for her children’s education with the hope that they may have a life with better economic prospects than her own. Mary took a microcredit loan to purchase materials for her business. However, one month after enrolling in the microcredit program, Mary became very ill and required extensive medical treatment. With medical bills climbing and her inability to work due to illness, Mary began losing clients. Soon afterward her business failed.
Despite these hardships, Mary continued to make regular payments on her loan. When I asked her why she did not postpone her payments, an option explicitly included in her contract in case of financial emergency, she stated that she thought she had to honor the contract that she signed. She wanted to avoid the various repercussions that other women borrowers she knew experienced when they defaulted on their microcredit loans, including social tension, physical abuse from husbands, loss of friends, and loss of household items.
Based on my knowledge, I still ask myself why the microcredit staff did not protect their client and participant by deferring her payments and why Mary did not enforce her contractual rights as a participant in this program. I describe Mary’s story because it is illustrative of a serious problem in the provision of microcredit in Kenya. There exists a great deficiency in the realm of consumer education and legal protection for microcredit borrowers that results in the marginalization of women.
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