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Microfinance challenges: empowerment or disempowerment of the poor?

Isabelle Guérin
Jane Palier

Part III - Assessing microfinance

19. SHGs and their place and role in civil society

Prakash Louis

Texte intégral

1Self-help groups (SHGs) have emerged in order to help the rural poor, particularly women, in securing credit and other services. SHGs lay the foundation of self-reliance through the building up of an institution, which has the capacity to begin the development and empowerment process for women. Along with poverty eradication, empowerment of women has for a long time been a stated aim of many microfinance programmes. The assumption behind this perception is that empowerment of women leads to the development of the family and the community at large. SHGs provide opportunities to women to interact among themselves and within the wider social context. In a special way, being a part of an SHG helps women to understand their status in the family and society, their access over resources, local governance and so on. This paper presents the methodology, objectives and major findings of an impact study undertaken by the Indian Social Institute, New Delhi.

1. Objectives of the study and methodology

1.1. Objectives

2This study focused on the extent to which SHGs build up confidence and mutual support for women striving for development and change by establishing SHG units in which the women can critically analyse their situation and devise collective strategies to solve their problems. This main objective had the following subsidiary objectives:

  • To study the functioning and management aspects of the SHGs;
  • To assess the role that SHGs play in the provision of different types of facilities, specially the health and educational facilities for women at the village level, and studying the impact that women SHGs have made in ‘local politics’ in terms of influencing decision-making at the gram sabha and gram panchayat level;
  • To find out the nature of the impact that women from these SHGs are trying to build at the personal, family and community level;
  • To evaluate the nature of the contribution of the SHGs in making its women members economically independent and secure, and the extent to which the economic benefits drawn from the SHGs have contributed to improving their social status;
  • And to analyse the role of the facilitators in the formation and running of the SHGs and in making them the instruments to fight for women’s rights.

1.2. Methodology

3Bihar, Chattisgarh, Madhya Pradesh and Uttar Pradesh were selected for the study. From each of these States, data was collected from three districts. West Champaran, Madhubani and Nawada districts were selected from Bihar. The districts chosen in Madhya Pradesh were Gwalior, having a mixed population, i.e. tribals in some parts, Ujjain, also with tribals in good proportion and Jabalpur, which is a developed district. The districts selected in Uttar Pradesh were Meerut, Jhansi and Varanasi. The districts selected in Chattisgarh include Raipur, Jashpur and Rajnandgaon.

4From each districts, 50 SHGs were covered. Five members from each SHG were selected for data collection. Care was taken that at least one of them should be an office-bearer. Information was collected from the facilitators of the selected SHGs. A target of 20 facilitators was fixed for each district. Since the same facilitator helped many groups, at places those facilitators were included whose groups were not in the study. For a district, the sample size was 50 SHGs, 250 women members and 20 facilitators. Overall, the sample size for the study was 600 SHGs, 3,000 women members and 250 facilitators. Three schedules were used for data collection: for SHGs, for the members of SHGs and for the facilitators. Information was also gathered from SHGs through focused group discussions and from members and facilitators with the help of an interview schedule.

2. Major findings of the study

5This baseline study about the place and role of women in civil society through SHGs highlights the fact that the formation of SHGs by women has led to a change in identity, or at least has the potential to introduce a change in the negative identity imposed on women. Even though many of the SHGs were not constituted with this stated objective, in the long run they provide scope for this.

6Managing the financial situation of the household well is a yardstick of the successful functioning of SHGs. Before becoming a member of an SHG only 9% of women could arrange money in a sudden crisis, whereas after becoming members, 38% found it easy to arrange money in a crisis situation. The difference of 28% clearly reflects the “difference in situation”.

7Women constitute the central locus of every family, though they may not be invested with all the powers necessary for this task. SHGs contribute not only in economic terms but also by providing status to women in family. The indicators used to analyse the impact of the SHGs on the status of women in the family focused on the role of women in the following matters:

  • Running the house and managing the expenses;
  • Deciding about the number of children;
  • Deciding about the future of daughters in terms of education, age for marriage and so on;
  • Keeping control of income earned.

8The number of women who are actively involved in running the house and managing the expenses increased from 15% before joining an SHG to 54% after joining and the number of those not at all involved in managing the household expenses declined from 35% to 10%.

9Awareness generation programmes conducted for capacity building among women enable better functioning of SHGs and in turn lead to the enhanced status and power of the women within the family and the community. Since most of the women from the marginalised communities are illiterate too, it is such awareness and training programmes that have often opened up many possibilities before them. However, these training and awareness programmes at the pre-formation phase should be made available for the SHGs during the formation and sustaining phase too.

10Before joining the group, 60% of the women had no control over the money earned by them, but this declined to 15% after joining. The number of those who had an active say in the use of the money earned increased from 11.4% before to 31% after being in the group. Based on this preliminary data, it can be stated that while the number of women who had no say in family matters has substantially declined, the number of those who have an active role in these decisions is still limited. Most of the women have gained some role in these decisions, which under the circumstances may be considered an achievement.

11The organisational and financial sustainability of the groups are important for the continuation of SHGs. Since they are informal organisations, flexibility and freedom also has its price. In making much greater demands on members of SHGs to manage themselves, the groups become more vulnerable to collapse. As small autonomous organisations, they are exposed more to danger both from within and from outside. If SHG members can identify and resist the dangers of being used by outsiders, the movement may in time play an important role in the reduction of poverty in India and also be a vehicle for social change. If not, they will become no more than another milestone in the nation’s long list of development failures. Hence, there is an urgency to evolve some clarity among all the agents involved in SHGs. This is all the more necessary in the area of supervision and regulation. It has been observed that in the small groups, where each member knows every other member well, deposits do not appear to be in danger. But when savings are entrusted to an NGO or a federation, the need for transparency is essential. This is all the more imperative since for most of the women from marginalised communities this may be the only saving for their survival.

12There are many positive signs regarding the role played by SHGs in the area of health. Health care is an important need of the weaker sections in general and women in particular. This is also an area that is not crisis-bound in terms of organised action. Hence, many SHGs succeed in ensuring that some amount of health benefit reaches the poor from the government centres. Moreover, due to the awareness programmes, some of them also concentrate on preventive aspects of health and not just on curative.

13This study has thrown up the fear of political interference with SHGs and women’s empowerment, something that has been expressed regularly when discussing the future of SHGs. SHGs that are federated have the potential to convert themselves into a mass-based programme and organisation with the potential for expansion. This could attract political attention. While the programme has so far managed to avoid this, the challenge is to keep away from party political influences, which would reduce the programme to a vote bank. This would not just dampen the spirit of SHGs but would block the path of women’s empowerment.

14Though this area is rapidly expanding, there are not many authentic and scientific studies indicating the place and role of SHGs in the empowerment of women and in impacting change in the community. Some of the priority areas of research are: the social and economic impacts on members of the SHGs; costs, margins and profits to banks in linkage banking; roles, costs, benefits and sustainability of intermediate structures like federations; inclusion of the “excluded”, especially women from weaker sections; equitable distribution of benefits among the members; contribution of the groups towards the social fabric of the community; the role of government in the linkage banking; the possibility of SHGs providing space and scope for women to participate in Panchayati Raj institutions; in community based disaster preparedness; and finally, conflict resolution and peace building.

15It is also significant to note that the SHGs have provided a platform for the Dalit and tribal groups, which are often excluded from most of the developmental schemes, not only in terms of savings and credit but also to raise their voice effectively to highlight their concerns. Some of the Women’s Day celebrations are indicative of this emerging trend. The need of the hour is how to provide a similar platform to women from weaker sections and also to strengthen the SHGs.

16As autonomous organisations, the SHGs share the challenges and dynamics of other small and informal organisations. Government, donors, policy makers and resource-providers need to be aware of the dynamics involved in these small and informal organisations. In their enthusiasm to promote and support a large number of SHGs and in their anxiety to meet targets, they run the risk of turning these groups into “state-helped groups”, or “target depicting” groups. In the process they destroy the very foundation of self-help and autonomy. Women are already constrained by various socioeconomic, political and cultural factors. Women of weaker sections are doubly discriminated against and deprived. Any hurried and haphazard process to initiate self-help among these women would further frustrate their resolve to move away from poverty, dependence and fatalism.

17There are many success stories of both women members of SHGs and of SHGs themselves. A group of tribal women in Chhattisgarh have not only become members of SHGs but have also strengthened the gram sabhas, which are emerging as the lifeline of the tribals in many part of India. When a group of Dalit women in Benaras district of Uttar Pradesh showed their continued opposition to alcoholism, the men had to give in. It is undeniable that success stories have their own limitations. Yet, these case studies show that in favourable conditions, women can function to introduce change in their own lives and in the lives of their families, communities and society. The need of the hour is to search of mechanisms that would ensure favourable conditions for the appropriate functioning of SHGs.

18It is imperative that the women, the communities, social activists, donor and government agencies work out awareness generating exercises, capacity building programmes and perspective building trainings. Developing training resources that meet the needs of all the agencies, especially women of the SHGs, is the need of the hour. Here I want to share the following information: The Social Finance Programme of the International Labour Organisation is preparing a “training manual on social analysis for SHGs”. This is in the completion stage. The Catholic Relief Services is planning to initiate a study on the scope of SHGs in community based disaster preparedness and conflict resolution and peace building. These are tall orders but they indicate the direction the SHGs could take in the future.

Concluding remarks

19The analysis of the data gathered in this baseline study indicates that organising themselves into a group has made an impact on the lives of women. Expectedly, the extent of impact is limited and it is not apparent in all the indicators used for the study. The coming together of women itself has opened up avenues for their search for space for themselves. Many of the women found confidence and self-dependence by being in the group. Further, since women borrowed money from moneylenders, the interest payment went to an external agent, but now it goes to the common pool. In those SHGs, which have been in operation for a long time, women and their families are not at the mercy of moneylenders. Also, some of them need not mortgage their land as in the past. Political participation and empowerment are long-term objectives.

20Finally, deeper and sharper qualitative data and analysis may help in reaching some workable propositions to enhance the status and role of SHGs in civil society. The analysis presented here merely provides some pointers on the issue. Women have been found to take up challenges and to question all forms of exclusion, deprivation and exploitation. In this regard it needs to be stated that SHGs are a means in the process of empowerment of women. Thus, formation of SHGs is not the end in itself, but the means to facilitate the process of bringing positive change in the status of women in particular, and society in general. Finally, every attempt to provide the appropriate place and role to women would enhance the ability of women and this in turn would capacitate the SHGs to function for the betterment and empowerment of women.


Executive Director, Indian Social Institute, New Delhi (India)

© Institut Français de Pondichéry, 2005

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