SHG MOVEMENT: NEED FOR A NEW SURGE Dr. Kalpana Sankar CEO Hand in Hand Tamil Nadu MICRO FINANCE INDIA SUMMIT 2010, New Delhi

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit The Scenario 1.02 billion people, 26.10% below poverty line Literacy rate (%) total: male: female: HDI rank 119 Gender Inequality Index: rank 122, value: million poor not served by institutional credit

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit SHGs to fulfill development needs All dimensions of poverty need to be addressed through programmes that involve partnerships, coalitions & team work Need to : Build human capital through human development & empowerment Raise social capital through community development & empowerment In particular: Engender women in the given context where institutions are gender blind perpetuating women’s position as second class citizens in the house, community, society, religion, politics and culture. Women form half the population, but have only half the chance

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Why focus on women? Women in Asia GIIs - a sorry tale Skewed sex ratios Where are the women entrepreneurs? Multiplier effect Women have proven to be the best poverty fighters. Experience and studies have shown that they use the profits from their businesses to send their children to school, expand their businesses, improve their families’ living conditions & nutrition. “Education and empowerment of women is the greatest weapon in the war against poverty.'' -Kofi Annan, Seventh Secretary General of the United Nations

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Microfinance: The Inverted Pyramid Skewness in credit flow What really was the reason ? What were the mismatches ?? Banks Rural Population

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Savings, credit products did not meet needs of poor Complicated and cumbersome procedures High transaction costs, for the poor and banks System did not provide for anything to fall back on Govt. schemes for poor do not recognise their small and occasional savings Resources handled were often larger than the poor’s capacity The poor not involved in decision making for themselves Research Showed

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit What the poor needed ? Simple and easy ways to keep safe thrift and tiny surpluses Credit to meet emergencies Credit for microenterprises ( needed later) Hence mechanisms needed to:  Provide outreach of microfinance services on a sustainable basis  Create products,systems in tune with needs and capacities of poor  Create delivery mechanism which reduces transaction costs

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit members come together due to felt need, on platform of affinity and commonality of problems savings led, acts as adhesive participation & collective wisdom near zero transaction cost interface with the banking network interface with non-financial inputs platform for women’s empowerment gives ‘face’ and ‘voice’ to those who craved for them economic empowerment SHGs, microcredit to the rescue

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit FOUR IN ONE ROLE OF SHGs SHG A MONEY LENDER A DEVELOPMENT BANK A VOLUNATARY AGENCY A CO-OPERATIVE

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit NGO Role  Social mobilisation and SHG formation  Awareness generation among SHG Women  Regular visits by NGO field staff to SHGs  Quality training for SHGs  Motivation for collective action  Facilitating linkages with local institutions  Ensuring sustainability of SHGs

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Why NGOs?  Continuity of support and policy  Greater commitment to service  Community base and confidence  Flexible as per people’s need  More holistic support  More participatory Hence more likely to lead to sustainability.

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit A story of growth  Meet Bakiya, Lakshmi, and Amudha  Formerly homemakers and goatherds.  Started a canteen in 2008 with INR 80,000 (USD 1,725) loan  Today they make INR 12,000 (USD 260) per day “One day soon, we will be able to afford to send our children to this college, that’s our aim.”

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Many women, many lives…  These women are just three of the 617,584 women with whom we work today.  They are members of the 42,770 self-help groups that Hand in Hand has created. (TN, MP, Kar, Pondi)  Through micro-credit and training we have helped create/strengthen 565,244 enterprises & have disbursed INR million of total credit.

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Our Strength: Social Mobilization Education & child labour elimination Health, hygiene, sanitation Low-cost health clinics IT training & jobs Access to information Solid waste management Natural Resource development Development SupportEnterprise Support Group dynamics and leadership Numeracy / accountancy training Enterprise and skills development Vocational training Credit linkages Market linkages Business up scaling support Skill development Training inputs Enterprise & development support Credit infusion by Belstar SELF-HELP GROUPS Women mobilised Mobilised and developed by Hand in Hand

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit 15 Salaried Employment Family Based Enterprises Credit Enterprise Support Credit SHG Formation HiH Scaled up Micro Enterprises Impact on SHG women: -Increase in income, assets -Incremental income invested in children’s education - Reduction in vulnerability Our credit plus model Skill Training Spl. Training SHG Capacity Building Basic Training Training is must before a loan

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Our core values Focus on women Pro poor and bottom up approach Local ownership and participation Working in tandem with government to avoid duplication Information and strengthening grass root level democracy Every child out of school is a child labourer Health and environment key to development Complete transparency and accountability

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Journey of growth One district in India Four States in India India, Afghanistan, Sri Lanka, Brazil South Africa and Kenya

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit The Afghanistan Experience Creating pilot projects Mass Mobilisation into Entrepreneurship (MME) Supplying practical know how to Afghanistan Rural Enterprise Development Programme Training SHG leaders, cluster coordinators

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit The Afghanistan Experience Our achievements: In Balkh Province: over 4,600 enterprises job opportunities for 6,200 people over 4,894 beneficiaries Promoting small and medium-sized horticultural enterprises:  7 times increase in melon export volumes  8 tonnes of almonds expected to be exported In Badakhshan Province: Working in association with Afghan Aid and Community Development Councils 332 enterprises, Jobs for 820 people 98 self-help groups with 1,655 members.

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Challenges Adapting the model to the local context The Afghanistan Experience

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Challenges we and other NGOs face  Reduction in grants for building capacity of SHG members  Rising costs of promoting groups (more than Rs.10,000 per SHG, NABARD promotional grant only Rs.4,500)  Multiple lending to SHGs  Lending to Panchayat Level Federations delinks NGOs  Sensitizing bankers to deepen reach to SHGs  Lack of an enabling eco system  Gaps in backward & forward linkages

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit Self Help Groups: the critique The SHG movement and microcredit cannot be the single case solution to achieve poverty eradication or women’s empowerment. From feminization of poverty to feminization of microcredit: women preferred clients as they can be persuaded to operate on gendered notions of shame and discipline; SHGs function as policing and delivery agents

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit The future: Need for a new surge

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit New surge: Role of NGOs Sustainability of people’s institutions to get primacy over sustainability of NGO itself Facilitate linkages with all bodies/instns that benefit the local community with focus on govt Influence and facilitate attitudinal changes in the development bureaucracy NGO-mFIs to enable opening of all windows to credit (and not hinder) as development is about widening choices Build capacity in facilitation of entrepreneurship and linkages of SHGs with technology suppliers & external markets

SHG Movement: Need for a New Surge 16 Nov, 2010/ Microfinance India Summit New surge: government role  Empower PRIs and the local community  Clamp down on corruption  Sensitization of the development bureaucracy : participatory & gender-aware  Break down compartmental walls within government  Build partnerships outside government  Participatory policy making & implementation Facilitate capacity building of NGOs which in turn can facilitate sustainable enterprises Facilitate networking of NGOs, markets and technology suppliers

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