Enhancing Islamic Financial Services for Microenterprises

World Bank (2001) documents state that society, which discriminates based on gender, pays the cost of greater poverty, slower economic growth, weaker governance, and lower living standards for its people. Women play a great role in social and economic development. Development efforts will only have partial effects if women are not empowered to participate alongside men in the development process (Oxaal and Baden, 1997). Therefore, development studies put much emphasis on gender equity as a critical component for successful development strategies.

If we look back at the history of microfinance, we would observe that microfinance has been designed for the poor and marginalized societies to help them get out of poverty and to empower them. Although there is no general agreement on the definition of women’s empowerment, many studies have been made on the topic based on different definitions of women’s empowerment. The perception of women’s empowerment varied according to the development paradigm as perceived by scholars. The feminist empowerment paradigm focuses on the transformation of power relations throughout society. The poverty alleviation paradigm focuses on increased well-being, community development, and sufficiency, while the financial sustainability approach focuses on economic empowerment, expansion of individual choice, and capacity for self-reliance.