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Microfinance challenges: empowerment or disempowerment of the poor?

Isabelle Guérin
Jane Palier

Part III - Assessing microfinance

17. Findings from the mid-term impact assessment study of the CASHE programme in Orissa, carried out by Sampark, Bangalore

Prabhat Labh

Texte intégral

1This paper is based on the findings of the Mid-term impact assessment study of CASHE, carried out by Sampark. The author is part of the microfinance programme team of CARE India and has substantial experience working with development organisations in the sectors of livelihoods, micro-enterprise development and microfinance. He has authored a number of papers and case studies. He can be contacted at

1. Introduction to CARE India and the CASHE project

2CARE is an international relief and development organisation reaching out to improve the lives of more than 27 million people in 69 countries across the globe. In India, CARE helps over 6.5 million individuals across 10 States. CARE started the 7-year project “Credit and Savings for Household Enterprise” (CASHE) in 1999 with support from the Department for International Development (DFID). CASHE is a poverty-focused programme designed to address the fundamental problem of low income among poor rural women, and their limited control over that income. The programme aims at increasing significantly the incomes and economic security of poor women and their households.

3CASHE is operational in Andhra Pradesh, Orissa and West Bengal. The project proposes to increase the number of microfinance service providers by working in partnership with non-governmental organisations (NGOs) to establish and support savings and credit groups at the community level, and to organise “federations” representing these groups. These federations in turn are assisted to support self-help groups (SHGs) and to act as financial intermediaries. Through 25 partner NGOs in the three States, the programme reaches out to about 2,48,000 rural women clients. At the community level, over 18,000 SHGs have been formed and the majority of them are federated in the form of cooperative or community federations.

1.1. Minimalist approach and empowerment

4Historically, credit programmes offered by NGOs were part of a larger development initiative and were linked to income-generation (Sabharwal undated). Over the past decade there has been an undeniable trend for NGOs to get onto the microfinance bandwagon and move towards minimalism, while balancing sustainability and outreach.

5Microfinance agencies operating on the minimalist model of poverty alleviation are concerned with setting up viable, financially sustainable credit delivery mechanisms (Edgcomb and Barton 1998). Herein the delivery of microcredit enables the programme to meet the operational costs of the intervention. The control and management of programme delivery remains with the microfinance institution, with a progressive movement towards diversification of financial operations.

6Since ensuring a good financial performance remains a key concern, the social inter-mediation agenda often takes a back seat. The control and usage of the financial services made available to microfinance clients, and their status in households and social fora do not factor-in the management decision as long as the microcredit operations remain financially viable. This results in the dilution of the focus of microfinance programmes, from being a powerful tool for economic empowerment, to a mere delivery of financial services. It is assumed that access to savings and avenues of credit would enable the clients to initiate income-generating activities, leading to their empowerment. Women’s empowerment is essentially conceptualised in individual economic terms, with the ultimate aim being the expansion of individual choices and capacities for self-reliance.

7However, a number of organisations have realised that as long as the root causes of poverty such as unequal power relations, women’s participation in household decisions, disadvantages and vulnerabilities and gender and caste based discriminations are not addressed, bringing about lasting changes in the lives of people will remain a distant dream. CASHE has been grappling with this issue of “minimalist” versus “credit-plus” approach. While the programme intends to nurture good and efficient microfinance institutions (MFIs), at the same time, it is also attempting to ingrain some of these concerns in the microfinance programming. Investing in building community-owned and community-managed institutions is one step in this direction, wherein CASHE invests in the building capacities of community based organisations (CBOs).

1.2. Impact assessment study of CASHE in Orissa

8CARE commissioned an impact assessment study of CASHE in Orissa in 2003. The study attempts to find out the impact of the programme at different levels, i.e. economic impacts, asset creation, changes on the health and education front, status of women within the households and society and impact on vulnerabilities. This paper presents some of the key learning from the study and focuses on changes in the programme’s goal level indicators (mostly non-financial).

9The objective of the impact assessment was to document impacts accrued from CASHE at individual, household, group, and community levels. The different dimensions of changes studied include economic, social and gender, governance and sustainability. The methodology adopted for the study involved questionnaire surveys, group discussions and participatory rural appraisals (PRAs). It involved the use of control and experimental groups as well as “Before-After” comparisons, covering over 1,300 respondents.

2. Major findings of the impact assessment study

10The impact on project participants has several dimensions. The process of impact envisaged was that when poor women begin to save small amounts, they gain access to reasonably priced credit. This is then invested in agriculture and micro-enterprises, resulting in augmented earning that has a positive impact on the quality of the lives of women and their families. This impact is measured in terms of increased expenditure at the household level. The other indicators include the social and political participation of women, their ability to influence household economic decisions, the impact on gender relations, and reduced vulnerability of project participants. These impacts are detailed in the following parts.

2.1. Increase in income levels

11The findings of the study revealed that the overall income level of the programme participants had gone up, compared to the control group. The average income earned by the experimental group was Rs. 21,742 per annum, as against an average of Rs. 18,894 by the control group. Casual labour was the major source of income for the respondents, contributing to 25% of the income for the experimental group, and 40% for the control group. Other important sources of income included business, agriculture and salaries. More than the increase in income levels, the diversification in income sources is of significant importance. This diversification not only gave people a wider choice of livelihood options, but also acted as a risk mitigation strategy, of not depending on only one or a few income sources.

2.2. Changes in consumption patterns

12In rural economies, measuring income is always difficult, since it does not come from any one source, and much of it is not monetised. The impact study thus relied more on consumption levels and patterns to get a better sense of the overall well being of the clientele.

13The findings of the study revealed that the total average annual expenditure of the experimental group, at Rs.22,698, was higher than that of the control group at Rs.17,331. Another parameter used to distinguish between the subsistence levels of experimental and control groups was the ratio of overall expenditure spent on food consumption. The average household in the experimental group spent 38% of their overall expenditure on food, compared to 49% by the control group.

14The percentage of household expenditure spent on medical expenses, agriculture, businesses, travel, shelter and festivals, was similar in both groups. However, households in the experimental group spent a larger proportion of their money on marriages (14%, compared to 4% by the control group), and a lower percentage on addictions (3% as compared to 8% by the control group).

15There was a gradual increase in the expenditure pattern with the age of the group. Average expenditure of the one-year-old groups was around Rs.20,490, increasing to Rs.22,773 and Rs.25,399 respectively for two-and three-year-old groups. The absolute amount spent on expenses for food in the experimental group (Rs.8,888) remained higher than that of the control group (Rs.8,607). This increased spending was mostly on food items associated with better nutrition.

2.3. Expenses on healthcare

16The study revealed that most women stated emergency medical expenses as a need and used savings from the group for this purpose. Over 80% of the households from the experimental group and 75% of those from the control group needed to spend money for emergency medical purposes during the previous year.

17Health and medical expenses formed 7% of the total expenditure of the households in the project districts. The average annual healthcare expenditure for the experimental group at Rs.1,770 was significantly higher than the control group average of Rs.1,238. Access to small loans from groups made it possible for women to attend to their medical needs.

2.4. Expenditure on education

18The study analysed expenditure on education, as well as the percentage of children in school. In addition, attendance in adult literacy classes and skill training were covered during the study. The experimental group spent an average of Rs.426 on education, more than double that of the average of Rs.189 spent by the control group.

2.5. Ownership of house and assets

19It was found that over 90% of all the respondents in both the groups live in their own houses. A lower percentage of households in the experimental groups have Kutcha (mud) houses (68, compared to 71 in the control group). A comparison with the baseline data confirmed a movement in the positive direction. The percentage of households with kutcha houses was reduced by 15%, and those of partially pucca (brick) and pucca houses increased by 10% and 6%. This analysis was supplemented by an analysis of expenditure on different assets, especially on the house. The experimental group spent an average of Rs.795 on housing and house repair, compared to Rs.444 spent by the control group.

20The average value of assets in the experimental group was Rs.2,025, compared to the average of the control group, which was Rs.1,805. The average value of assets of one-year-old groups was Rs.1,511, increasing to Rs.1,533 and Rs.2,452 for two-and three-year-old groups. The difference in asset holding between the two groups was largely due to the difference in value of livestock holding, which was Rs.2,547 for the experimental group and Rs.1,630 for the control group.

2.6. Reduced vulnerability

21The higher expenditure level of project participants indicates that their ability to withstand shocks would also have increased. Loans from groups for medical expenses were a major factor in reducing the vulnerability of group members, especially to the common seasonal illnesses in the region (i.e. malaria, water-borne diseases, and diarrhoea). Women who are group members reported this as a major benefit of group savings. The use of savings for food consumption was also quite high. Women have an easy avenue to borrow for meeting their food expenditure during times of crisis.

2.7. Participation of women in household decision-making

22The study found that in addition to an improvement in the quality of life, the woman’s position within and outside the household had also improved. There have been marked improvements in the ratio of women reporting access to household cash and their role in household decision making on aspects such as expenditure on food and education. With the age of the group, more women took decisions either themselves or jointly with their spouses, and the ratio of spouses or other family members taking decisions on their own was reducing. A similar trend was also visible with regard to decisions regarding taking a loan, its usage and cropping pattern. A positive trend was also seen in taking decisions regarding the building and repair of houses, commensurate with the age of the group.

23The difference in the role of women in experimental and control groups was not significant, when it came to spending money in general, but the difference by age of groups was quite significant. In most cases, the positive change towards increased control of women over cash was endorsed and supported by the men. Women are now seen as equal partners in decision-making, and men involve them in decisions about taking loans.

24The positive changes applied mostly to smaller amounts of money. Decisions about the purchase of large assets and investments in agriculture are still largely taken by men. However, women are consulted more often and are aware of the risks that the couple now takes on a joint basis.

25A major reason for the positive change is that women have begun to bring in financial resources and contribute a higher proportion of the family income. This has resulted in greater respect, consultation and greater independence for women in household economic decision-making.

2.8. Participation in social and political processes

26The study analysed the participation of women in social and political processes and found that their participation at community fora had increased. This change was facilitated not only by the project but also by the government policy of giving preference to women’s groups in bids invited for community work such as pisciculture, orchards, godowns, and community centres. This has led to perceptible change in the access and control of women over natural resources, as women’s groups have begun to obtain contracts for such activities.

27They also participate in work committees formed by the village panchayat to supervise the work done by contractors in tank renovation/desilting and in the District Risk Management Committees. Other activities taken up by the groups include road and hand-pump repair, tank cleaning, construction of community centres, demanding road and bus connections and shramdaan (contributing labour for common purposes). Participation of women in the palli sabha and gram sabha meetings has increased and a number of programme participants have also been elected to these bodies. It also indicates greater leadership skills and a change in the perception of local self-governance bodies about women’s participation and involvement.


28Overall, the study shows that gradual but remarkable changes are taking place with regard to the status of women within households and in society. Women now have increasingly more say in matters relating to the usage of household cash, decisions on education, house repair and availing loans.

29There is an increasing trend in most of these parameters commensurate with the age of the groups. One of the most important impacts is the greater awareness that women now have due to their increased mobility and interaction with outsiders. This is building greater confidence among the women. Besides, the access to savings and credit in the group gives them a fair amount of bargaining power within the household. The positive impact on social aspects is also visible. The women now feel more empowered and are aware of their rights. Their collective bargaining power gives them more confidence to fight against injustices and for their rights.


Technical Project Coordinator, Credit and Savings for Household Enterprises (CASHE)-CARE India, New Delhi (India)

© Institut Français de Pondichéry, 2005

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