Monday, August 13, 2012

Linking the Triad: We Tried!

Micro-credit has evolved as a powerful mechanism to reach out financial services (particularly credit) to sections of the community that have been excluded from the services of the mainstream institutions such as co-operatives and banks. Over the past few decades micro-credit evolved and represents certain patterns of delivery of financial services – two aspects stand out when we talk about micro-credit – one is that it usually deals with the poor and two it has mostly evolved around women. Therefore it is but natural for any institution or researcher interested in micro-credit to look at the linkages between these three aspects. While it is easy to find the linkages – that there is a certain element of self-selection in the poor getting involved in micro-credit and the numbers clearly indicate the deep involvement of women, the tougher part comes when one tries to establish causality which originates in micro-credit and leads to empowerment.
Before we can discuss the book which looks at six institutions to understand the linkages, it would be better to put upfront some concluding lines from the book – the editors in the conclusions say “Therefore, there is no linear link between micro-credit, poverty reduction and women's empowerment” (p.352). This is stating the obvious, considering that there are several intervening variables before such a link can be established. While one could be at peace with the above conclusion because it is not counter-intuitive, there are problems in either of the conclusions coming out of the studies. This is because one has to engage with the editors on both the methodological rigour and the commonality of framework. Possibly the book fails to establish both these. At the same time one would like to engage with several of the issues raised in the book because they are both interesting and important.
I will first list out the problems I have with the book and get them out of the way before we come into the actual content and look at the findings/observations of the various authors. The first issue we need to deal with – not only in this book – but in general, in most of the recent literature on micro-credit is that of conflict of interest. For instance, the first paper on South Asia Poverty Allieviation Programme (SAPAP) is co-authored by K Raju, who was the Chief Executive of the Society for Elimination of Rural Poverty (SERP) that implemented the programme and was deeply involved in implementation of the phase that has been taken up for evaluation. In the case study of Share Microfin Limited (SML), the author indicates that the study area was finalised in consultation with SML, the staff helped in translation and identification of locally relevant issues, in the absence of a budget for hiring and training of field investigators, help was sought from SML personnel, and focus group discussions were held with staff members (in addition to members) (p.118 and 119). In case of Swayam Shikshan Prayog, the investigation team comprised of the team members of the host organisation and was done as a “participatory exercise”. Irrespective of the rigour employed by these “host” organisations we need to ask the question on whether the couclusions or data leading to the conclusions would not be coloured by convictions of the interested parties. However, involvement of the host organisation seems to be an accepted norm these days and raising questions on such aspects is seen as being unreasonable.
There are six micro-credit programmes that have been studied. All these institutions actively seek the poorer segments of the society as their clients, and work exclusively with women. Of the six programmes one is run by the government, one programme is run by a for-profit company and the rest are run by non-governmental organisations (NGO). The quest of the book is to see whether there is an active link between micro-credit, poverty and empowerment of women. Except for one organisation – Swayam Shikshan Prayag (SSP) which claims women's empowerment as its overall objective, all other institutions claim poverty reduction as the basic objective (p.54).
How does one find out whether the programmes have had an impact on poverty or on empowerment? One, there has to be a clear definition of what we would mean by poverty, and how one could measure impact on the ex-ante state of poverty. Similar is the case with empowerment. The editors try to place both these in a context. However, when it comes to defining poverty, we find that while all the secondary data quoted is on the poverty as defined by the government, the studies largely depend on wealth ranking and housing index to justify the movement in and out of poverty. Therefore there is a danger of inconsistency between the micro measures used against the macro benchmarks. Empowerment similarly is a nebulous term and the authors have found various surrogates to justify or question the level of empowerment. Anecdotally what each of the authors state makes great sense, but it would not be appropriate to draw common conclusions across the studies because the measures used are quite diverse. Therefore it would be good to look at each of these chapters as stand-alone chapters, incidentally stitched into a book, rather than look at a common theme that can be used to undertake inter-organisational or inter-geographical comparisons.
The first of the studies pertains to SAPAP programme being implemented by the government of Andhra Pradesh. The portion on methodology indicates that fairly rigorous tools were used. The paper is also placed in a broad theoretical framework that seems to make sense. The data collected from the members of micro-credit groups is compared against non-members – for instance the authors say that the members of SHGs have better access than non-members with respect to every basic need (p.70). Even the subjective perception of members seem to indicate that there is a substantial reduction in poverty and also the programme has had an impact on the causes of poverty as well – the access to productive and other assets. However, while the paper is sprinkled with data and everything represented in percentage terms, it is difficult to make sense on what basis the authors claim any of these effects because except for an occasional footnote, we are not presented with absolute numbers or tables. Therefore it is difficult to figure out whether the basic sample sizes between members and non-members were significant enough for us to take the conclusions seriously. Indeed, while the authors do refer to significant amount of literature on various other aspect, there is hardly any reference to the large methodological debates that are going on in the area of impact assessment. For instance, a portion of the chapter runs as follows: “Seventy one percent of the SHGs reported having motivated some of the member families to send female children to school and 16 percent extended support to widows to get married. Fifty one percent of the SHGs reported having intervened in members' families to prevent child marriages, 18 percent to prevent dowry harassement, 17 percent to prevent temple prostitution, 31 percent to prevent male alcoholism and 16 percent to prevent sex-selective abortion. (p.94)”  So, what does the reader conclude out of such a sentence?
The second study looks at SML a for-profit micro-credit institution. Unlike the first study, this hardly has numbers, but is broadly based on description of the internal processes of the organisation, profile of leadership and the process in which leadership emerges. These processes certainly provide some insights into how “empowerment” could potentially happen. It is clear that the parameters used in the second chapter are different from the first. The study on SML talks about linkage of savings and credit, it talks about sustainability and internal rules. Obviously these are the parameters with which the organisation is constantly engaging itself. When one makes a point about the issue of conflict of interest, it is evident in this particular case as to how the parameters used by SML itself has dictated the parameters by the external researcher. In addition, one instance where the researcher's objectivity could have been compromised by influences from employees participating in the research is evident in this statement “Weekly payments were not considered a problem as it reduced their interest burden and eased repayments (p.136).” This statement is factually incorrect in the context of SML. SML charges interest to its borrowers on a flat basis and the interest rate is fairly high compared to the alternatives from the formal systems. However the author makes some interesting observations which possibly indicate some level of livelihood diversification and reduction of vulnerability – that the borrowers have moved away from traditional activities to new enterprises such as petty shops, bicycle rentals and other activities that fetch regular cash flows. What is interesting to note in the study is that the moneylender interest rates have not reduced as they are lending to the poor among non-members and non-poor households. This is a small indication that SML might not have made as much impact in reaching out or grabbing the moneylender market share.
The study of Dhan Foundation follows a similar pattern – there is some detailed documentation of the internal processes and later it looks at the impacts on empowerment. The author admits that it was difficult to undertake a structured sample survey, but by all indications seems to have gone about the study fairly independently. Unlike SML where most of the processes are driven externally by the organisation, in case of Dhan, most of the groups are expected to be autonomous and also are encouraged to deal with the bank and other agencies. Relatively speaking it appears that this approach is more empowering – and the author also cites instances where the older groups nurture the new SHGs.
The study of SSP tries to make a difference between the savings and credit groups and self-help groups. Since this was the only institution that had listed “empowerment” as its major objective, it is important to look at it from that perspective. The methodology adopted by the author is to have a participatory approach. Unlike the other studies, here the author takes enough pain to explain to the reader how objectivity has been achieved in the particular study. However there is one anecdotal piece of information which uses “access to information” as one of the surrogates of empowerment – where the women got access to the information on PDS so that they could monitor the availability , quantities and quality of rations and other stocks (p.. Well a good surrogate, till we come to the anti-climax when we learn that this privilege to information was lost soon after the chief executive officer of the district council changed. If this post script was not there, one would have assumed with this surrogate measure that the women were more empowered because of micro-credit. A clear limitation of even the anecdotal approach that has been clearly brought out.
The study of Lokdrusti is different from the rest of the studies. Here the author seems to take a position that before one can look at the larger impact of micro-credit, it is important to look at how the host entity is, as an institution for the basic purpose that has been ascribed to it. The line taken is that - if you are a micro-credit institution, much before you are evaluated on anything else, it is important that you are a good micro-credit institution first. This is similar to the issue of sustainability examined in the case of SML. The author genuinely tries to generate tables, brings in hard data and then tries to look at the issues fairly objectively. (I should admit to a conflict of interest from my side as I worked closely under this author during the early part of my career and the opinion might be coloured by the interactions I have had with her over all these years).
The last study pertains to ASA, Tamilnadu. The methods used are softer and participatory. Therefore the conclusions and interpretations drawn are from the subjective observations. However the author has many insightful observations that help us to engage with the topic for a longer time. There are statements that indicate the possibility that micro-credit clients had greater incomes to meet emergency health needs, the data cited is “it was observed that six infants had died in non-member households in the five villages studied, but only two had died in the case of member households. (p.311)”. Such interpretation of data could be tenuous unless we are able to establish the significance of the sample size and its statistical importance. However, there are other interesting bits of information on which one would like to take issues with the author who claims that one of the measures of inclusion of empowerment is that a dalit woman has been accepted as a group leader. What is most interesting in this chapter is the author does try to pry open the strong ring fencing that is there in Grameen type of micro-credit institutions by suggesting that the groups should build linkages with the external world, including banks and PRIs (p.319). When this happens in a Grameen type of operation, one really could possibly term this as the empowerment of the group if not of the women who are a part of it.
As a student I recall having heard Dr.V Kurien talk about the Operation Flood when he had said “Is it not a slap on the caste system when a brahmin has to stand behind a harijan in the queue for pouring milk?” and one really thought yes, it was, till one realised that but for this act of following the rules of the milk society, nothing in the village had altered the traditional caste relations. Thus, when social scientists raised the issue of the impact of Operation Flood programme, the usual defence of the National Dairy Development Board was that Operation Flood was a programme of economic and not social intervention. Just as well, except that the protagonists themselves had claimed social impacts. The dalit being elected as a leader might be just one such instances that may need to be objectively verified in the case of ASA.
The editors in their introduction argue that the critical mass of SHGs while being empowering could also be usurped by larger economic interests to promote their own mandates by which women become instruments and further become disempowered (p.46) and in extending this argument take the example of Hindustan Lever “using” groups to sell their brand of shampoos. The editors have to realise that very much the way outside researchers have expectations of empowerment and poverty eradication it is not uncommon for others also to have other expectations. Irrespective of the expectations it is for the groups to decide what they want to do with their own collective, and if they are happy selling shampoos as a collective we possibly should respect that call and understand the entrepreneural spirit behind it rather than take an ideological view that the “hope” I sell is better than the “soap” you sell.

 The above comments notwithstanding, I do believe that this is a very useful book for understanding the various pulls and pressures under which micro-credit operates in this country. While one can take an argument that the entire edifice of micro-credit is a response to market failure – failure of the institutions to reach the smaller client, the expectations seem to be that this should work as a transformational magic wand. While several people have indeed delved into the developmental aspects of micro-credit (including this author), it would be difficult to attribute causality unless we have all the parameters under absolute control and put them in measurable formats.
On the whole the book is very well written and is engaging. It invites the reader to take up issues with the authors and the editors and opens up several issues for debate. In a sector, where most of the work that happens remains in spiral bound reports, it is important that more and more books come out and open up larger debates not only on the nature of the micro-credit programmes, but also on the methodological issues and on overall impacts. The book is really a very useful addition to and helps to extend the debate to a higher intellectual plane and is thus a very welcome addition. It is also an important book for the practitioners to possess, so that they also understand the burden of expectations laid out on them by the world at large.
Micro-Credit, Poverty and Empowerment
Linking the Triad

Editors: Neera Burra, Joy Deshmukh-Ranadive and Ranjani K Murthy
Sage Publications), New Delhi 2005
Price: Rs.395 (Paper)
ISBN 0-7619-3366-2

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