By Moin Qazi
The empowerment of rural women and girls is essential to building a prosperous equitable and peaceful future for all on a healthy planet — UN Secretary-General, António Guterres
Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. India has a larger relative economic value at stake from advancing gender equality than any of the 10 regions analyzed in a McKinsey Global Institute report, The Power of Parity: How Advancing Women’s Equality Can add $12 Trillion to global growth. The report says that if all countries were to match the momentum towards gender parity of the fastest-improving countries in their region, $12 trillion a year could be added to global GDP. India could add $700 billion of additional GDP in 2025, boosting the annual GDP growth by 1.4 percentage points.
Empowering women is the solution to many problems. Societies that take the effort to empower women show better development indices, are better governed; more stable, and are less prone to violence.
In the new development discourse, women have come to be recognized as key participants in efforts to alleviate poverty and achieve social transformation. Effecting comprehensive change from a woman’s point of view calls for a transformation of gender relations, not merely superficial attention to “women’s needs”. Research suggests that by serving a girl at the vulnerable crossroads of adolescence, development programs can have the greatest impact not only on that girl, but can empower her to be a catalyst for change in her family and community. By ignoring them we have lost the opportunity to impact a generation. However, once that window of adolescence closes, we have opened the doors for another broken generation. One must remember that it is easier to build a healthy generation than repair a broken one. According to a Harvard Business Review study, women in emerging markets reinvest 90% of their earning into “human resources”— their families’ education, health and nutrition — compared to only 30 to 40% of earnings by men.
In India, the self-help group (SHG) mechanism remains the most popular model to empower village women through financial access and provision of other services. It is almost two decades old and has transformed the lives of millions of women, several of whom now occupy important positions in village administration.
However, the original concept of self-help groups is being stoked up from the embers and the National Rural Livelihood Mission (NRLM) is a powerful program to reposition SHGs as core to India’s approach to women empowerment and poverty alleviation. Unlike in the new microfinance paradigm, where credit is the sole function of SHGs, the emphasis of SHGs in its NRLM avatar is on savings and financial management, loans come later. Savings are integral to poor households’ risk management strategies; they constitute the first line of defense to help poor households cope with external shocks, emergencies and life-cycle events to which they are so vulnerable. The revolutionary initiative connected group members – many of whom had never had a bank account before – to formal financial services.
A typical Indian SHG consists of 10-20 poor women from similar socio-economic backgrounds who pool their savings into a fund from which they can borrow money to buy medicine, start a business, purchase animals, pay school fees, buy clothing, running a retail shop, cattle rearing, zari work, tailoring jobs, making candles, artificial jewellery. In this way they make money ‘work’ because small amounts can be contributed and made available to everyone to use for their emergency needs. Through the group mechanism, the funds become a collective asset enabling uplift of the community.
They meet once a month and discuss issues of mutual importance thereby enriching each other. The common characteristics are: Self-selected and unrelated members, small size, and regular attendance at meetings, regular savings by members, peer pressure to enforce repayment of loans and simple and transparent procedures.
Contrary to what many believe, the poor are not too poor to save, that there is enough savings potential within a group to enable people to meet the basic needs within a small community, and that small sums can make a big difference. Once the basic structure of the savings group model is introduced to a rural community by an outside agency – usually a local nonprofit – the groups do virtually everything, including training more groups.
Once the groups have mastered the mechanics of savings and lending, they begin to ask: What’s next? When they have a fair amount of capital, it starts making small loans to its members. Women cross guarantee each other’s debts. They gradually come to believe tomorrow can be different from today.
Women act as their own bankers, create their own loan fund, and approve small loans to each other as savings accumulate and making sure loans are repaid. Astonishingly, few default. By transferring tasks normally done by well-paid bankers to poor people, the cost of administration comes down drastically. Although the value for members is not just in finance, credit remains an important element. You can’t change social dynamics without women’s involvement in the economy. The phenomenon of ‘regular meetings’ is an important enabling force which gives the woman courage to ‘lean in’, in multiple household and community settings. Dialogue-based education does not require that women know how to read or write, and learning together strengthens and gives confidence to the group. Groups are also a place where people can learn from others, share their experience and seek advice. The disciplined hard work of saving every week and running a group makes them efficient money managers.
By providing a space where members can build relationships and develop a strong sense of identity and belongingness, they create a unique set of relationships and values. They show how managing money involves more than financial management, the creation of significant social value. These groups impart training in areas such as health care, nutrition, and domestic problem solving. These social services help clients profit from their loan sand also aid in the development of human capital – an important contributor to poverty alleviation.
The women act as their own bankers, creating their own loan fund, approving small loans to each other as savings accumulate, and making sure loans are repaid. Astonishingly, few default. By transferring tasks normally done by well-paid bankers to poor people, the cost of administration comes down drastically. Although the value for members is not just in finance, credit remains an important element. You can’t change social dynamics without women’s involvement in the economy. The phenomenon of “regular meetings” is an important enabling force which gives the woman courage to “lean in”, in multiple household and community settings. The dialogue-based education does not require that women know how to read or write, and learning together strengthens and gives confidence to the group. The disciplined hard work of saving every week and running a group makes them efficient money managers.
The group is linked to a public bank which supervises it and oversees its money management. Over time the bank begins to lend to the group as a unit, without collateral, relying on self-monitoring and peer pressure within the group.
The groups grow in size, they save and invest more, and they launch their own initiatives—training groups for their children, buying grain when the price is low to better survive the lean season, and launching collective enterprises as they reach out to other NGO and development programs. With their economic clout, management skills, and group solidarity, they aspire to more. Together the women create a critical mass and change the perception of what women can do. It is an amoeba model — and each group has the DNA within itself to self-replicate.
In the blitzkrieg of the new microfinance movement, these self-help groups have been overshadowed. It is a case of the stars being obscured by the moon. But the beauty of the night skies is never complete without the constellation of the twinkling stars. Despite early success, the growth of self-help groups had slowed in the last few years. The microfinance scene in the nineties was dominated entirely by these SHGs. And they became key a key armour for banks in draining the swamps of poverty before microfinance institutions (MFIs), fueled by international funding led by impact investors started swarming and courting them and made them their darlings for a purely business goal. They introduced a new idea of do-goodism and a touchy-feely morality to smokescreen a mega business of making profits off the poor. THE MFIs selectively plucked the most honeyed self-help groups to pad their portfolios and profits. These groups have actually blossomed through the efforts of public banks, government and the not for profits, and sadly no one is talking about it. Moreover, MFIs have hybridized the group mode to reduce the investment of time and manpower that was entailed in nurturing them. Their groups are now just credit groups, called joint liability groups with no place for savings, capacity building and governance.
This was the point when the original character of these self-help institutions got destroyed. It is sad that microfinance institutions used this precious social capital built by community volunteers for a narrow commercial agenda. The focus shifted from thrift to credit. It became an irresistible tale of chasing money. Barring some socially conscious players like SEWA and BASIX, most of these institutions lapped on the Bottom of Pyramid bandwagon. Here in lies the nemesis of the great microfinance crisis of Andhra Pradesh and the obituary of the original philosophy of self-help groups.
The classical Indian version of microfinance is far more empowering – it is not just lending money. The members in the group receive skills and business training, peer mentoring, technical support, on-site follow up and on-going access to basic inputs in preparing a business plan which provides a basic roadmap for the borrowers to reach economic goals. t. Group activities allow the women to understand and practice various techniques for running the business collectively. This prepares them for individual entrepreneurship. In a way, the self-help group is a basic entrepreneurial school. Women need privacy, security and control over their financial lives. Depending on the family dynamic, it would be hard to know how much a husband may be influencing or forcing a wife to sign off on something she doesn’t agree with.
The international MFI model is a different ballgame altogether. Here the sponsor is a profit-oriented venture capitalist, who sees the rural credit market as a powerful business opportunity. The MFI apparently brings great professionalism, innovation and technology to its enterprise of venturing to provide loans that banks do not. MFIs form no groups engaged in governance functions. Even when they operate through non-profits, MFIs are primarily concerned with lending and recovering what they lend to cohorts of people, at rates of interest far higher than what banks charge. Basically, the international model is consumerist in approach and is rooted in philosophy of Prahlad which argues that there is enormous wealth at the bottom of the pyramid.
SHGs owe their origin to the self-help affinity groups initiated by the Mysore Resettlement and Development Agency (MYRADA). The National Bank of Agricultural and Rural Development (NABARD) started the same model in 1992 as a pilot project, and later upgraded it to a regular banking program. Over a span of 25 years, the movement has registered tremendous growth, and has 8.5 million active SHG units across the country.
But loans of microfinance institutions to women from these groups have come in for lot of flak. Some borrowers squander money or start businesses that fail. There’s need for strong discipline. Loans can be malignant. Some businesses are too risky. And the temptation is always present to spend the loan on white goods. And the stark truism is that most loans to these women from MFIs are pipelined to their husbands.
Yet done right, microfinance can make a significant difference to the lives of impoverished women, particularly when used as a cover against sudden emergencies and for smoothening consumption.
There are still millions of self-help groups wedded to the original mission and creed. Through them, women are transforming their own lives and that of their communities. The sisterhood is so close knit and persuasive and sorority so intense that women have begun to think of themselves in a different way.
These groups have now become the main locomotives of economic growth in rural areas .SHGs are seen as an entry point for other social activities — school committees to watershed councils. As they mature, the group sparks and spearheads meaningful and enduring changes by addressing community issues such as abuse of women, the dowry system, alcohol, educational quality, inadequate infrastructure.
SHGs are the biggest generators of social capital in rural India. More than just a conduit for credit – they also act as a delivery mechanism for various other services ranging from entrepreneurial training, livelihood promotion activity and community development programs. Best practitioners in communities become community professionals (CPs) and catalysts for mobilization, health, literacy financial management, agriculture, leadership livestock and more. A vast majority of women leaders in Panchayat Raj institutions have come from SGHs and most successful sarpanches have had their grooming in these collectives. It is not that women are purer than men or immune to the pull of greed. But there is almost a certainty that women will channel money into solving more fundamental issues.
Beginning in the benign area of health, women slowly gained confidence and moved on to other social areas. They began asking for change from the bus conductor, introducing new farming practices, saving enough money to engage banks and acquire simple irrigation equipment like water tanks, agitating for an improved road (and getting it) mapping village land and rethinking what’s planted to produce year-round yields and income, demanding the presence of the school teacher, negotiating with local officials for providing services to which they were entitled.
Like termites, they have furrowed the male-dominated power-grid in villages and are pulverizing the whole patriarchal foundation. Where once participation of women in public meetings was an anathema, it has now become a ritual. SHGs have become powerful economic locomotives and have enabled women found new confidence, agency and purpose. Transcending their ascribed roles, they have dispelled the myth that women are good just for homes.
Rebuffing village hierarchies, women in many places hoisted the national flag in their villages, despite opposition from men. Women’s collectives have put an end to brewing of liquor in some villages. SHG women have enhanced their economic position in numerous ways, such as successfully bidding for contracts to fish in village ponds and developing wastelands to grow fruits and vegetables.
The loss of control that village moneylenders have suffered is a common story now in villages where SHGs have taken root. “For four months a year when there is no work, we were forced to take a loan of Rs 300 per month from money lenders at 100 % interest,” women belonging to the Scheduled Castes at Sholapur village told us – “After we formed an SHG, we don’t borrow from moneylenders, but from our own SHG.”
Mangala Dhawas, an SHG leader from Mohbala village in Chandrapur district is one such enterprising group leader. She now works as a market agent for insurance and deposit companies. Her success is manifest in her house as gadgets and improved facilities. The extension to her house has two tenants from a local power company. “My father thought it’s a bold step for a woman to start a business as people think that only men can do it,” she told us ,“He thought women should stay at home, doing domestic chores. He is eating his words today.”
“When women have the support of other women, and when they have income of their own,” say Ela Bhatt, founder of Self Employed Women’s Association (SEWA), which represents 1.2 million women working in India’s informal sector, “they are able to fight their own battles in their own way.”
Bhatt speaks of a quiet yet persistent strength particular to women: “Once a woman knows what she wants,” Bhatt says, “she’s not afraid to take risks. If we cannot break through, we just find a way around.”
Empowerment has many dimensions–social, economic, cultural, political and personal. When every part is treasured, the good unleashed is greatest. This is the unique philosophy of every self-help group. A membership of a self-help group has transformed women in ways that it has made men alter their perception of women. Men may fret that they lose when women win, but history tells us that when women advance, humanity advances. This lesson is best embodied in the words of Nirmala, a self-help group member for well over two decades and the current sarpanch of Wanoja in Central India, which she keeps repeating whenever I visit her: “My father always believed that it would have been far better if I were born a son. But today he realizes how lucky he is to have me as a daughter.”
Centuries ago, a king, while travelling through his domain came across people living in dark caves. He was horrified at the gloom and ordered every family to be given lamps and oil to fuel them. Fifty years later, he visited the area again and found the caves in darkness. The lamps had been forgotten or were broken. The oil had run out. The king ordered more oil, new lamps. But when he returned to the area the following year the caves were dark once more. The king summoned his minister, a wise old man, and asked for an explanation. ‘Ah,’ said the minister, ‘You gave the lamps to the men. You should have given them to the women.’ The king followed his minister’s advice and the lamps have kept burning ever since!
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