Version classiqueVersion mobile

Microfinance challenges: empowerment or disempowerment of the poor?

Isabelle Guérin
Jane Palier

Part III - Assessing microfinance

13. Microfinance, rural livelihoods and women’s empowerment – a participatory learning system to assess and enhance impact

Helzi Noponen

Texte intégral

I wish to thank PRADAN participants, staff and managers, especially Nivedita Narain, D. Narendranath and Neelam Maheshwari for their contributions and support in the PRADAN adaptation of ILS.

1Proving the impact of microfinance programmes for poverty alleviation and sustainable livelihoods development to external audiences of funders and policy makers is an important objective for impact assessment. There are other impact assessment objectives that focus on “internal learning” by field staff and programme managers about what is or is not working, and the reasons for it, in order to improve programme operations. Since the success of many development interventions, including microfinance and livelihoods programmes, partly depends on participant responses, building their understanding and analysis skills is also essential. If this skill building includes training that reinforces programme values and also empowers participants to overcome other obstacles in their path, then it may be possible to enhance intended outcomes.

  • 168 See Simanowitz (2001) for an excellent discussion of multiple objectives in impact assessment for m (...)

2This paper describes a participatory impact assessment and planning system for community development programmes called the Internal Learning System (ILS) that can meet multiple objectives in impact assessment. ILS is designed primarily to meet the learning needs of programme participants, village groups, field staff and managers. This emphasis on the impact assessment objectives of “internal learning” and “improving” programme operations is the strength of ILS. The system was designed, however, with unique participatory features that fulfil additional objectives of “strengthening stakeholder relationships” and “building participant understanding and analysis skills”168.

3In this paper I describe how ILS works as tool for impact assessment and participant learning through a case study of PRADAN, Professional Assistance for Development Action. PRADAN has adapted ILS for use in its rural microfinance and livelihoods programme.

1. A brief overview of the internal learning system169

  • 169 This section is abstracted from Noponen (2002a; 2002b; 2003).
  • 170 The ILS project was initiated and funded by the Ford Foundation, New Delhi. I wish to thank Dr. Rek (...)
  • 171 Past and present NGO partners pioneering different versions of ILS include HLWDS, FWWB (I), SEWA, D (...)

4The initial aim of the ILS project was to create a participatory monitoring and impact evaluation system that would be “internally-driven” in response to the ongoing needs of development organisations and their participants, to learn what is or is not working, so that changes could be made in a timely manner170. The system was created and refined by the author in partnership with several development non-governmental organisations (NGOs) in South Asia171. PRADAN has been an important partner in the design of one of the most advanced and challenging versions of ILS discussed in this paper.

5ILS is a simple, on-going system used by all participants in a group-based microfinance or livelihoods programme. The medium is multi-year pictorial diaries suited to the illiteracy and poverty conditions of participants and to longitudinal perspectives of the process of development change. Using pictures that represent impact indicators, poor, illiterate women keep a record of change over time by noting their responses by drawing lines and making simple tick marks. These markings denote quantities, yes/no responses, multiple choice answers and satisfaction scale ratings. For impact assessment purposes, the diaries can be used on a total programme population for the purposes of participant learning, and analysed statistically on the basis of a sample. This yields a quantitative panel dataset that contains information on changes in the lives of participants in a baseline period, with periodic summary assessment intervals over a multi-year period. The veracity of the data entries is crosschecked by fellow members in a mutual learning process at the village group level.

6Other elements in the system include village group diaries designed to improve the functioning of self-help groups (SHGs) or to track wider impact issues such as collective action to improve area conditions or change social practices. Staff-diaries are designed to help field officers identify lagging and excelling performance among SHGs, reflect on the possible underlying causal reasons for the performance and plan appropriate remedies.

  • 172 See Noponen (2002b) for a more detailed description of how ILS works at each level.

7ILS is truly participatory as the diaries are used by participants at several programme levels in contrast to methods that are steered by managers from the top or by outside investigators. To ensure that participation is even throughout, the system has been designed so that all users, especially the women members, carry out the same five tasks of the ILS (albeit to varying degrees of sophistication). These include: 1) collecting data, 2) assessing change, 3) analysing causes of change or troubleshooting, 4) planning and training, and 5) documenting, sharing and reinforcing programme values. At each programme level, participants reflect upon their findings, summon user-driven training inputs, make plans, and document their experiences in their learning diaries. There is a direct and immediate link between impact results or the real life changes of participants, and planning and training responses172.

8ILS is flexible in terms of its structure, content and processes. Each of these can be shaped to the learning needs of the programme, human resource capabilities, and financial constraints of different organisations. The structure can be varied according to the programme levels using ILS diaries. The content or the development indicators chosen for inclusion in the diary are determined through the inputs of all users, including poor members, in a participatory stakeholder analysis. ILS content has varied greatly across NGO adapters with emphasis ranging from microfinance, land-based rural livelihoods, Dalit and Adivasi human rights issues, HIV/AIDS awareness and prevention, and sector-specific production diaries in handloom weaving, plantations, watershed, embroidery, gum collection, and salt farming. The ILS process is also varied, ranging from more streamlined versions emphasising data collection for impact purposes to more enriched versions emphasising participant learning and planning activities.

2. PRADAN – Professional assistance for development action173

  • 173 Adapted from Noponen (2002b).

9PRADAN’s approach to poverty alleviation is to assist the poor in strengthening their livelihood base in rural communities through the provision of professional technical services. PRADAN considers microfinance through village SHGs as one means for the rural poor to make strategic investments in improving their livelihoods over time. Other activities include technological assistance in subsistence cultivation, market-based agriculture, forestry, animal husbandry, watershed improvements and the development of non-farm individual and group enterprises. Microfinance is not an end in itself, but a means to strengthen individual livelihood efforts and increase the feasibility and effectiveness of PRADAN-initiated rural livelihood activities.

10PRADAN has a contrasting approach to microfinance service delivery in India to that of setting up parallel microfinance banking institutions. Its alternative approach is to intervene from two directions. PRADAN applies pressure and incentives from the top on the existing banking industry to overcome its reluctance to lend to the rural poor. From the bottom, PRADAN promotes the formation of village SHGs and their successful linkage with local banks by building capacities for independent functioning. Unlike other microfinance models in which the NGO develops itself as the alternative microfinance institution (MFI), PRADAN seeks to develop the SHG as the MFI. PRADAN is not the MFI, but rather the field worker or promoter (Narendranath 2001).

11PRADAN conceptualises the following three realms for SHGs (Ibid):

  1. An SHG for mutual support;

  2. A viable unit for external financial intermediation leading to livelihood development; and,

  3. A vehicle for economic empowerment of the poor and marginalised households in the economy and for gender empowerment of women at home, at work, in the marketplace and in the wider community.

12As SHGs become viable and sustainable on their own as mutual support groups, successfully linked to financial service providers, and able to engage in a process of securing their strategic interests of overcoming structural constraints, PRADAN seeks to ultimately withdraw. Promotion of self-help savings and credit groups is only the first step. PRADAN helps to build the economic capabilities of members through livelihoods interventions. PRADAN promoters analyse the local economic base and identify potential economic activities that have forward or backward linkages for groups of producers.

3. PRADAN’s approach to ILS adaptation: PRADAN's “boat of Life –the family’s oar”

13PRADAN’s focus on strengthening household livelihoods and promoting independently functioning SHGs shapes its approach to ILS adaptation. PRADAN needed a set of user-driven assessment, analysis, planning and training aids to enable SHGs to achieve higher levels of functioning or sustainable progress in each realm, so that it could ultimately withdraw and start the process over again in new areas. The objective has been to adapt ILS as a tool that enables SHGs to assume charge, first identify their development and empowerment needs and then assess how well they achieve them over time. The system must, however, go beyond identification of initial needs and ongoing assessment of progress. It must actively involve participants in charting their own path of development planning and change. The same system must also inform PRADAN about how well groups are progressing toward higher levels of group functioning and sustainability in each of the three realms.

14PRADAN’s ILS diary had been guided not by a primary need for data collection for impact assessment but by a need for a tool to guide participants through the process of analysing their livelihood situation, so that they can make more strategic decisions about the use of scarce resources including credit. The aim was to create simple analysis and planning formats that encourage participants to better understand their changing situation and alter their own individual and group plans or behaviour, summon needed training inputs and demand services, negotiate with financial intermediaries, and challenge inequitable structures and practices.

15This was a shift away from the notion of an impact diary to a “life and livelihood workbook” concept. The overall theme for PRADAN’s ILS “workbook” is “the boat of life–the family’s oar,” with the workbook representing the oar or tool with which households can steer toward a better life.

16PRADAN has organised their ILS workbook according to their conceptualisation of the three realms of SHGs. Throughout the ILS workbook they have woven two themes common to Indian culture, “boat of life” and “seven rivers to cross” to reach a good life. The “seven rivers to cross” concept is used as a seven point self-assessment rating scale in which members rate their overall social and economic progress. The “boat of life” concept is used in a series of “bad scene/good scene” pictures to introduce and teach the values in each of the major workbook parts. At the member level, the scenes illustrate positive and negative aspects of living conditions, diversified livelihoods, burden of debt versus savings, household dependency ratios and good or bad gender relations. These bad scene/good scene pictures have proved to be very popular with participants, who use them for reflection and amusement, and with field staff who use them as effective ice breakers and discussion starters. This has prompted the addition of a panorama scene of “gender benders” in work activities to illustrate nontraditional gender division of work activities.

17The PRADAN ILS workbook also contains “dream scenes” of prosperous economic activities in four areas of forest products collection, agriculture, livestock rearing and wage labour or small enterprise activities. The scenes help motivate women to think about making improvements in their livelihood base. In addition, a set of six-panel pictorial stories is included in each of the four livelihood areas of forests, land, livestock and labour that show step-by-step how women can use credit to improve their livelihood activities in each of these areas.

18At the heart of the PRADAN workbook is a finances and a livelihood module. Participants are first guided through a process of thinking about the health of their current financial situation by reflecting on the pattern of normal household income and expenditure patterns by gender using an ILS version of a PRA exercise, the “income and expenditure tree”. The strength of the household’s earning position and expenditure burdens will have an impact on the woman’s savings and debt levels. The woman then records her current debt and savings levels by type of saving or source of debt. This sets the stage for improving household financial situation through improvement in livelihood activities.

19In the livelihood module, participants in simple pictorial formats describe their total livelihood “availabilities” (in forests, land, livestock and labour) and how they are currently being utilised. They take note of and reflect on their stock of forest, land, livestock and labour assets, the improvements to these assets or accompanying work inputs, conditions and good practices. They track the utilisation of the asset over the year and make decisions regarding a change in their use strategy. In a synthesis part they complete a livelihood production plan that prompts them to consider their total set of livelihood resources and options and the competing use of resources and production inputs for their chosen mix. This is followed by a credit investment plan that ties the infusion of credit to the livelihood production plan. The goal is to help participants learn and plan their way out of debt and vulnerability by strengthening their livelihood base in a yearly set of linked exercises over a multi-year period.

20The remaining modules address practical needs of living conditions, material welfare and strategic interests of women’s empowerment issues in the home and community, in a similar manner that stresses analysis and planning options. The workbook concludes with a synthesis part that guides participants through reflection of their individual role in the SHG, including satisfaction with their attendance, participation, knowledge of group loan details, repayment behaviour and problems, satisfaction with treatment by the group, bank official and the PRADAN organiser.

21Each of the parts of the workbook are carefully sequenced and linked to each other to produce a logical whole. A woman first reflects on her living conditions and material welfare and ranks her position on the seven rivers scale. She then investigates why she is at this level by examining her financial situation. The participant is prompted to see the role of debt reduction, savings, and livelihood improvements in how her household can progress over time. The livelihood module that follows systematically guides her through analysis of her total “availabilities” and prompts her to make strategic use of credit and other scarce resources in improving them. The next module focuses on the enhancing effects of better gender relations and women’s fuller participation in decision-making in the home and mobility in the public on livelihood and welfare improvement. The impact of the role of the woman and her participation in her SHG and PRADAN activities in her progress over time is explored in the concluding synthesis module. This linked set of modules, analysis and planning exercises, each building upon the lessons from the previous one, is akin to a pictorial rural livelihoods curriculum for very poor illiterate women and their households.

22For impact assessment purposes, PRADAN can capture the same information, which participants record and track in their workbooks, on a random sample basis through a special semi-extractive interview event. Field officers sit together with the respondents and review and crosscheck their diary entries. They ‘capture’ the data recorded by the participant in her own workbook in a similar pictorial workbook that is more complex containing prompts for probing and cross checks, precise variable definitions, response codes and skip patterns. The responses that participants make in their pictorial ILS workbooks yield quantitative data in the form of nominal, categorical, ordinal and continuous variables. This data can be analysed on a longitudinal basis, comparing the results for the same panel of women over time. The organisation, however, need not wait for a period of years to obtain impact results. The data can also be analysed on a cross-sectional basis, comparing the results for long-term members with that of an appropriate sample of non-members and (or) with newly joined members who have similar characteristics as long-term members at the start of joining the programme.


168 See Simanowitz (2001) for an excellent discussion of multiple objectives in impact assessment for microfinance programmes.

169 This section is abstracted from Noponen (2002a; 2002b; 2003).

170 The ILS project was initiated and funded by the Ford Foundation, New Delhi. I wish to thank Dr. Rekha Mehra for her funding support and critical feedback. The PRADAN adaptation of ILS was funded by the Ford Foundation-funded Imp-Act programme, anchored at the Institute of Development Studies, University of Sussex and the Universities of Bath and Sheffield in the United Kingdom.

171 Past and present NGO partners pioneering different versions of ILS include HLWDS, FWWB (I), SEWA, DHAN Foundation, ASA, NESA, KROSS, BRAC, and PRADAN.

172 See Noponen (2002b) for a more detailed description of how ILS works at each level.

173 Adapted from Noponen (2002b).


PhD in City and Regional Planning, Consultant expert in Microfinance, Gender and Sustainable Development Policies in South-Asia

© Institut Français de Pondichéry, 2005

Conditions d’utilisation :


Rechercher dans OpenEdition Search

Vous allez être redirigé vers OpenEdition Search