Micro Credit, Poverty and Empowerment
Volume 18, Number 3 Article by V Prameela and Smita Premchander September, 2006
Micro Credit, Poverty and Empowerment : Edited by Neera Burra, Joy Deshmukh-Ranadive and Ranjani K Murthy, 2005, Sage, pp 369, :
Micro credit programmes have gained prominence as a tool of poverty reduction and empowerment of women in India. Having started as ‘micro credit’ which relates to provision of loans, many programmes have now expanded to ‘microfinance’, which includes the provision of savings, credit and insurance facilities to the poor in rural and urban areas. Though microfinance (MF) has proliferated a great deal and has been incorporated in the government’s mainstream programmes over the past 15 years in India, the evidence of its impact on poverty alleviation is very thin. Microfinance programmes have been evaluated largely only through donor initiatives, and it is only over the past three or four years that several programmes in India have been evaluated. These programmes are largely implemented through women’s self help groups (SHGs). Some researchers believe that this is largely because women are good repayers1 and that many of these programmes do not address gender concerns2. On the other hand, there is also a belief that the SHGs go beyond being credit forums, and empower women.
There are several models of microfinance delivery in India, those that have been developed within the country through its history of development banking over the past fifty years, e.g. the SHG-bank linkage and cooperatives, and those that have been imported, like the Grameen Bank model, which has been replicated by several Indian MF organisations.
In this context, the book edited by Burra, Deshmukh-Ranadive and Murthy is a welcome addition to current literature examining the impact of microfinance, especially on poverty reduction and women’s empowerment. The book provides insights, consolidated by different authors, into the social mobilisation strategies as well as the women’s empowerment efforts of six microfinance projects, located in four different states. These include SAPAP, a UNDP supported government programme run on the SHG-Bank linkage model; SML, a for profit organisation providing microfinance, started as a Grameen replicator; DHAN, SSP and Lokadrusti, all NGO facilitators; and ASA, a microfinance institution (MFI) formed on the Grameen model.
It is necessary to distinguish between those who are ‘providers’ of microfinance, and those who are ‘facilitators’. The former channel the money through the mediating organisation and usually keep a part of the interest earnings from lending; the latter do not engage in financing but link SHGs to banks and other providers of microfinance3. Two of these organisations (SML and ASA) are MFIs or ‘providers’ (of which SML is for-profit), while the others are NGOs, or facilitators who link women’s organisations with finance providers. The selection provides good evidence on the impact of different models, different types of organisations and different locations of the projects.
The book opens with the conceptualisation of poverty as a mismatch between responsibilities and entitlements and it links these with micro credit and its impact on poverty alleviation and women’s empowerment. The opening chapter also draws common indicators for poverty alleviation and women’s empowerment interventions. After details of each experience, the last chapter brings together the overall conclusions from the six case studies.
All the case studies showed that to reach the ultra poor there is a need to select the right target groups and to combine micro credit with welfare programmes and strategies of wage employment, land rights and collectiveness in labour commodity markets. It is also essential to emphasise the different dimensions (such as economic, social, political) of empowerment and poverty equally. The combination of micro credit progammes, grain banks, watershed programmes and women’s own banks had a greater impact than organisations (SML and ASA) that have focused only on microfinance.
The studies showed that poverty reduction and women’s empowerment are better achieved through organisations that are non-profit or autonomous in nature, whether government or non government, and that these should function autonomously and in a non bureaucratic way. The book advocates the formation and strengthening of women-owned institutions through capacity building.
The book emphasises the need to give special attention to gender and social issues, through training of staff, and through good monitoring and evaluation systems that track not only delivery inputs but also check whether inputs have led to desired outputs and impacts. The suggestion to go beyond incentives for staff on the basis of financial indicators, to link staff salaries to gender/social sensitivity and group performance is particularly valuable. The need for involving women in the process of selection of indicators is also well-endorsed.
The studies cover not only positive aspects of impacts, but also highlight some negative impacts. Some of the externalities pointed out are those that relate to technology (the loss of work for some women when others introduced rice mills or harvesting machines). Another example is that poverty reduction programmes need to not only enhance access of basic needs and means to meet it, but also arrest social expenditure such as dowry and alcohol consumption which are constant drains on rural poor households. Further, women are not only more numerous among the poor but also face poverty more intensively. In terms of needs, the ASA and SAPAP experiences show that women’s specific needs as expressed by them are different from those expressed by men, e.g. gas and toilets are defined as a basic need by women but not by men.
The studies are a result of rigorous research, yet there is a need to ensure that in representing the women’s voice, researcher orientations do not take precedence over the women’s own feelings and statements. Women lamented that increased workload through groups and new enterprises resulted in reduced visits to parental homes. When the researcher qualifies this to bring in another possible reason, e.g. increased emotional and moral support from women’s groups, there is a need to distinguish clearly between external supposition and the women’s own perceptions and articulations.
The book reflects positively, overall, on the poverty reduction and women’s empowerment impacts of microfinance. It provides useful insights on the relationship between the types of organisations that deliver microfinance and the types of impacts. It highlights the need for assessing not only financial performance but also social performance, endorsing the current paradigm stated by programmes like IMPAct4. It is a very illuminating and useful book for policy makers, development practitioners and researchers, and fills a much-needed gap in terms of evidence from practice on how microfinance contributes to poverty reduction and women’s empowerment.
References
- Harper, Malcolm, 1998, Profit for the Poor: Cases in Microfinance, New Delhi: Oxford and IBH Publishing.
- Johnson, Susan, 2003, ‘Gender Relations, Empowerment and Micro credit: Moving On from a Lost Decade’, Extract of IA of FINCA, completed for DFID UK: University of Bath.
- Premchander, Smita, 2003, ‘NGOs and Local MFIs – How to Increase Poverty Reduction through Women’s Small and Micro-enterprises’, Futures, Vol 35, pp 361-378.
- Sinmanowitz, Anton, 2004, ‘Communication and Development Research: Realising the Potential of Microfinance’, Insights, No 51.
Reprint No