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Microfinance challenges: empowerment or disempowerment of the poor?

 | 
Isabelle Guérin
, 
Jane Palier

Part III - Assessing microfinance

15. Self-help groups and the empowerment of Women – a study on Community Development Society in Alleppey, Kerala

Binitha V. Thampi

Texte intégral

1The concepts of civil society, empowerment and community participation have become part of the liberal discourse of non-party formations such as non-governmental organisations (NGOs), and the Welfare State in recent years. As a result, the State came out with many welfare policies for poverty alleviation and the decentralisation of power. NGOs, on their part started many local-level economic development programmes such as microcredit to uplift the poor, particularly women, from their economic and social dependence on male breadwinners. It has been asserted by various studies, particularly on the Grameen Bank experiment in Bangladesh, that microcredit activities significantly enhance the empowerment process of women by providing them access to and control over major household resources (Hashemi et al. 1996).

2Hence, in the context of enhanced significance for self-help groups (SHGs) in addressing poverty eradication and women’s empowerment, the Community Development Society (CDS), a confederation of SHGs in Alleppey, Kerala, assumes significance. The CDS has gained recognition for its innovative participatory approach to poverty alleviation, which focuses on the women in poor, neighbourhood families.

3The CDS programme, which originated in 1993, selected nine risk factors to identify the poor: (i) kutcha (mud) houses (ii) no access to safe drinking water (iii) no sanitary latrine (iv) illiterate adult in the family (v) only one or none employed (vi) family eating two or less meals a day (vii) children below five years in the family (viii) alcoholic or drug addict in the family (ix) Scheduled Caste (SC) or Scheduled Tribe (ST). A family with four or more risk factors was identified as poor and accordingly, out of 32,000 households, 10,304 were found to be at high risk. The CDS has a bottom-up organisational structure. 15-20 families constitute a neighbourhood group (NHG), and they federate at the ward level as Area Development Society (ADS). There are 350 NHGs now existing, under 24 ADS. The ADSs are federated into a town-level body, the CDS, which is registered under the Charitable Societies Act. The main focus of the CDS is thrift savings and loans. In addition, it conducts development activities such as various training programmes on accounts keeping, immunisation, nutrition, sanitation and so on. The CDS also undertakes income-generating activities such as diary farming, coir spinning, garment-making, cover-making, vegetable shops, firewood sales, bakery, mat-making, vegetable cultivation and so on by setting up micro-enterprises.

4Since the CDS has been a successful programme, the State government replicated it as a Statewide programme. It is in this context that the Kerala State Planning Board approved and funded the research proposal that this writer submitted for an evaluation study of the CDS under their “Evaluation of Innovative Schemes” programme. The evaluation study was carried out with the main objective of analysing the status of the programme and understanding the group dynamics that made the programme a success. The report of the study was submitted to the State Planning Board. The data used in the present paper to analyse the effect of CDS on the poverty reduction and empowerment of women is drawn from this evaluation study. A primary survey was carried out in 2000 among a sample of 96 members of the CDS programme. In addition, qualitative methods such as discussions with key informants and focus group discussions were employed to understand the quality of functioning of the programme.

5The objective of the present paper is to examine whether the microcredit activities have significantly enhanced the economic status of poor women and to understand the process of empowerment through these activities. The paper is divided into two parts followed by a conclusion. The first part makes an assessment of the economic impact of CDS on women members and the second part deals with the process of empowerment in the programme.

1. Impact of the CDS programme on economic status of women

6The main objective of the programme is to reduce poverty and provide economic security to poor women. In order to understand whether the CDS programme has improved the economic status of the members over the six-year period of its functioning, the pattern of thrift savings, the availing and utilisation of loans for income generation, enhancement in income etc. have been assessed and discussed below.

Table 1. Change in the thrift savings

Change in the savings

Frequency

Percentage

Increased

17

17.7

Decreased

60

62.5

Remain same

19

19.8

Total

96

100

7One of the main objectives of the CDS, to provide economic security to women, is realised through thrift savings because it can be taken to meet the emergency needs. But, the table shows that 62.5% of the respondents reported that their savings decreased over a period of six years. This is not a desired outcome. In the initial years of the programme, the rate of savings was quite high, which was quoted as a success of the programme. However, it was high because the women were contributing to the savings mainly to reach the minimum amount required, which the beneficiaries’ contribution, to avail of a loan from the banks through the CDS. Once they availed of the loan for income generation, the contribution to the thrift savings decreased substantially or stopped.

Table 2. Status of loan repayment

Repayment status

Frequency

Percentage distribution

Repaid in time

59

77.7

Not repaid in time

17

22.3

Total

76

100

8Of the 96 respondents, 76 availed small loans for income generating activities. The rate of loan repayment is quite high in the CDS programme and the table shows that it was 78% among the sample respondents. Earlier studies on CDS lauded the high rate of loan repayment as an indicator of the success of the programme. A further probe into this aspect reveals a different picture. The loan repayment in time does not indicate the high generation of income, but on the contrary, points to the group pressure of the neighbourhood members to repay the loan on time. In general it was repaid not from the high income as a result of their economic activities, but from various other sources including husband’s income.

Table 3. Loan requirement met before and after joining the programme

Types of lenders

Frequency

Percentage distribution

Sources before joining the programme

Money lenders
Friends and relatives
Other institutions
Total

76
13
7
96

79.1
13.6
7.3
100

Any loans availed after joining the programme

Yes
No
Total

72
24
96

75
25
100

Sources after joining the programme

Money lenders
Friends and relatives
Other institutions
Total

54
11
7
72

56.2
11.5
7.3
75

9A combination of factors, such as lack of sufficient collateral and market failure, has prevented the poor women from accessing credit from formal financial institutions. This has forced them to depend on moneylenders. The above table shows that around 80% of the respondents were dependent on moneylenders before joining the CDS programme. The main objective of the CDS is to relieve the urban poor women from the clutches of moneylenders but even after becoming beneficiaries of the programme, borrowing from money lenders continues to be very high.

10The probable reasons for this high rate of dependency on moneylenders are (1) the inability to sustain their small enterprises with the initially borrowed amount (2) meeting emergency consumption needs. It has been found that many of the neighbourhood groups stopped lending thrift loans to meet immediate consumption needs, because, their earlier experiences showed that it is difficult to simultaneously repay both consumption loans and the loans availed for economic activities. But this stoppage in lending is against the principle of thrift saving.

Table 4. Earning steady income from productive activities

Income earning

Frequency

Percentage

Getting steady income

32

42.1

Not getting steady income

44

57.9

Total

76

100

Table 5. Substantial improvement in income from productive activities

Improvement in income

Frequency

Percentage

Improved

8

25

Not improved

24

75

Total

32

100

11Of those who have availed loans, the reported figure 58% of “not getting steady income” defeats the main objective of the CDS, i.e. “eradicating poverty through improving the income of the members”. However, 42% could make use of the loans.

12Even though 42% of respondents are getting a steady income from the economic activities they set up with the help of the loans, only 25% of the beneficiaries have seen a real improvement in their income. Generally, while the formal lending institutions provide loans to individuals for income generating purposes, the viability of the proposed project has been evaluated rigorously. This is because the loan amount has to be repaid from the income earned. Nevertheless, such a consideration of project viability is absent in the case of lending to the SHGs due to the “group pressure” that assures repayment of the loans. This is one of the major reasons for the failure of income generating schemes initiated by the majority of women.

13A further inquiry has been made to analyse the expenditure pattern of the enhanced income through the income generating activities of 25% of the respondents. The major share of income of women is spent on household needs such as food, medical care of the children and their education. This reaffirms the existing empirical findings (Mencher 1988; Kumar 1977) that more of women’s income is used for household maintenance than that of men.

14The above analysis reveals that the impact of the CDS programme in terms of enhancement of steady income is limited only to a quarter of the respondents and it has major drawbacks as a programme for income generation and poverty reduction.

2. Impact of the programme on the empowerment of women

15Empowerment of women is the other stated objective of the CDS programme. Let us first examine the concept of empowerment and second, the process of empowerment within the CDS programme.

16Empowerment is defined as a process by which the powerless gain greater control over the circumstances of their lives. It includes control over ideology (beliefs, values and attitudes (Batliwala 1994). It means not only greater extrinsic control, but also a greater intrinsic capability – greater self-confidence, and an inner transformation of one’s consciousness that enables one to overcome external barriers to accessing resources or changing traditional ideology (Sen and Batliwala 2000). Sen and Batliwala identify the four levels at which the unequal power relation operates. They are (1) the household/family (2) the community/society (3) the market (4) the state. These different levels of power relations operate as a closely woven mesh of power, and imply that the unequal relations at one level may get reinforced by the same at other levels. Also, even if the relations are eased at one level, it may continue to operate at another level.

17A major change that the CDS programme has brought into the lives of women is their enhanced mobility. Their participation in the neighbourhood meetings is also satisfactory. However, interestingly, only 30% of the respondents say that they have a major say in the household decision-making process. Again, from the analysis in the above part, it was found that the major share of women’s income is spent on household needs such as food, medical care of children and their education. These expenditures do not indicate merely the expenditure pattern but also indicate the culturally constructed role of the mother and hence the reproduction of patriarchal values. These evidences indicate the phenomenon of “contextual empowerment”. The CDS programme context might be an empowering experience for women in term of their enhanced mobility, participation and discussion of various aspects of its functioning and collective action in setting up income generating activities, but it does not mean that the same could be the case in other spaces of their lives, particularly in the domestic domain. The other domains may not be conducive for the same level of empowerment, due to various hindering factors. This has to be understood and addressed properly.

18Realisation of the phenomenon of intra-family inequality has resulted in orienting programmes directly towards women instead of family welfare programmes such as organising SHGs. However, there has been a failure in seeing the social context in which women take up these economic activities. Invariably, all these income-generating activities are highly gendered. For instance, activities such as dairy, poultry farming, coir spinning and garment-making are female gendered. By taking up these highly gendered activities, the existing gendered division of labour has hardly been challenged. Rather, it reinforces the same. Since empowerment also implies control over ideology and an inner transformation of one’s consciousness that enables one to change traditional ideology, these gendered activities have significant adverse consequences over the empowerment process of poor women.

Conclusion

19The study shows that the CDS programme, as an effort in the direction of poverty reduction, has had only a very limited impact during the six years of its functioning. Further, it reveals the drawback in employing conventional measurers used by formal financial institutions, such as high loan repayment rate and high thrift savings (initial years), to assess the success of SHGs. Hence, new impact assessment criteria has to be evolved for informal lending institutions such as the CDS.

20The use of a high proportion of the enhanced income for children and the highly gendered income-generating activities undertaken by women were found to be disempowering factors. Also, due to various hindering factors, the empowerment in the programme context may not get automatically translated into other domains of the women’s lives. Again, the impact of self-help activities on the empowerment process has to be viewed in terms of their participation in various domains of the public sphere.

21However, in the context of viewing self-help groups and microfinance activities as a nostrum for both poverty reduction and empowering women, the most important question that needs to be addressed is whether poverty reduction and economic independence lead to empowerment and the de-subordination of women. Rather than accepting it uncritically, the conceptualisation of empowerment as a by-product of poverty reduction has to be critically examined.

Auteur

Research Affiliate, Population Research Center, Institute for Social and Economic Change, Bangalore (India)

© Institut Français de Pondichéry, 2005

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