Investing in women: Myths and realities of micro-credit programs in Peru

The dissertation analyzes how groups of low-income women in Lima and in Amazonian cities, apply for small loans to local Non-Governmental Organizations (NGOs) to establish small-enterprises in the sectors of commerce and services. I look at the conditions, possibilities, and limitations imposed by two different micro-lending methodologies---Communal Banks and Solidarity Groups---that are based on the joint liability capacity of women to guarantee each other's loans.; I stress on the importance of the social embeddedness of women's economic decisions to establish economic ventures. Women's economic decisions look for profit maximization but they are deeply constrained and framed by the socioeconomic conditions of their communities and their household arrangements. Participation in Communal Kitchens---a food-survival grassroots organization---provide them with knowledge of social skills, expands their social networks and social capital. I argue that participation in these grassroots organizations, coupled with family arrangements in which partners negotiate and discuss economic decisions, and a secure economic base play far more critical roles to establish successful enterprises than merely due to the injection of a small loan.; Micro-lending services for women have become a transnational phenomenon. These programs, however, ignore the specific local conditions of each country and apply a homogenizing model without considering the different demands and needs of different groups of women.; Even though the programs show high rates of repayment of loans, regularity and frequency of repayment does not automatically mean that women are getting out of poverty. Many women who are unable to repay their loans turn to local loan sharks in order to repay them, incurring in a vicious cycle of indebtedness. By the same token, female participation cannot be treated as a direct indicator of female empowerment, especially when women cannot control the use of loans. The pervasive presence of micro-finance institutions offers an alibi for donors as well as governments to withdraw from broader policies for poverty reduction. While micro-credit programs can help alleviate poverty among a very select group of women, who are not the poorest ones, significant poverty reduction is dependent on economic and social changes well beyond the reach of these projects.