The impact of microfinance on climate action and women empowerment : a case study of Koperasi Mitra Dhuafa (Komida)

Abstract

Climate action has been the global talk lately as the constant rise in temperatures causes a serious threat to the existence of some nations. Low and middle-income countries like Indonesia have not been spared from the effects. Moreover, women are already vulnerable in society and climate changes have added to the disaster. Microfinance has been known to alleviate poverty and promote economic growth and development in addition to empowering women especially those in rural areas. The aim of this study is to assess the impact of microfinance from KOMIDA on climate action and women empowerment. Four indicators were used to measure each variable. Women empowerment was measured through Decision making, political participation, freedom of movement and self-worth. Three types of decision were taken into consideration which are household economic decisions, personal decisions and family decision. On the other hand, climate action was measured through Climate awareness, use of renewable energy appliances, climate action willingness and reuse of products. A mixed approach was deployed and qualitative data was collected from semi structured interviews with six clients while quantitative data was collected through a questionnaire with 283 participants. 211 were clients and 72 non- clients. Twenty-six questions were measured through a five-point Likert scale. Factor analysis using the principal component analysis was used for data reduction. Quantitative results indicated that only 5 factors can be used to explain all the twenty-six items which represented a total variance of 73%. Further results were that microfinance has no significant impact on decision making, self-worth, climate action willingness and use of renewable energy. Meanwhile, microfinance positively impacts climate awareness. On the contrary, qualitative results reveal that microfinance has provided very little awareness of climate change but has positively influenced self-worth, climate action willingness and use of renewable energy appliances. The study recommends that the government must establish a legislative framework and strategy to protect women's rights in key areas including inheritance and property ownership as it influences women empowerment. In addition, policymakers must keep women's demands in mind while developing economic policy, infrastructure, and other projects. Likewise, KOMIDA must focus on training and capacity development of its members as well as include components of climate knowledge in its non-financial initiatives that can be implemented by low literacy individuals at household level. Future studies must look into other indicators of empowerment and climate action as well as get a perspective of other microfinance institutions and government authorities in charge of climate action.