1. 1 Presentation for Micro Credit Summit 16 November, 2010 By Shaheel Rafique, Implementation Support Specialist, IFAD Transformation of the role of SHGs from mobilising savings and credit for consumption smoothening and income generation to managing aggregated businesses- An IFAD experience in India

2. 2 Formation and Mobilization of Affinity Groups Elements of Institution Building Support to Affinity Groups Book Keeping and Auditing Savings and Credit Bank Linkage Collective Actions

3. Tejaswini Project Maharastra Example of SHG Loan Purpose 3

4. Transformation Process Microenterprise Development Formation and Institution Building for Federations Formalization for Aggregated Business Capacity Building During Transformation 4

5. SHGs and Types of Federated Organizations SI.NO. Name of Projects Total Number of SHGS SHG Federation s Producer Companies Self- Reliant Cooperativ es Block Level Producer Associatio n Total Federated Organisati ons 1MLIPH1704741 75 2ULIPH355243 75 118 3PTSLP7130114 4 Tejaswini MP 120153 3 5 Tejaswini Maharastra 55000250 6MPOWER472 7JTDP1455 1 1 8OTELP382112 214 9 NERCOMP -II 3168103 206 88317599275105781 5

6. Factors Contributing to Transformation Learning to respond to markets Innovations for IGA and microenterprises as design features Saturation Approach Innovative financing for and by SHGs and CBOs 6

7. Costs associated with Federated Organizations 7 Cost of formation of SHGs vary from INR 4800 to 6200 Cost of formation and establishing FO /PC is INR 4.5 to 6.2 lakhs Cost of facilitation per FO/PC–INR 150000 to 200000 Cost per producer is Rs 1243 to 2000 (including cost of facilitation) Cost of transportation /collection of produce -3-4% of total sale value Uttarakhand Initial Cost of Spices processing and branding by 600 producers is INR4 lakh Annual cost in INR 200,000 for providing support price to members and promotion cost 50,000 Dairy collective marketing 436 farmers is INR3,60,000 ; income /member/year INR 6190 Jharkhand Collection and value addition Producer company in Jharkhand cost of establishment INR 618,000- First year done business up to INR2,50,000. Meghalaya: Transportation business, Tea Manufacturing, Termuric value add

8. Support to Federated Organizations 8 Service Providing Company as substitute of the PMU Skill Training-Bylaws, Value Addition, Marketing& promotion, Management and Accounting, Leadership Marketing –Maximum support price declaration –Payment at collection point –Branding –Linkage with Private sector-Mega mart, Patanjali, Sarash (for spice)

9. Impact of Transformation Empowerment of Rural Communities particularly Women to participate in Economic Development 9

10. Key Outcome Indicators-(2009 ) Indicators% % persons reporting increased income54 Empowerment of women (%feeling of personal empowerment)54 % persons reporting increased in Assets (Households)58 %Persons receiving project services74 %Active borrowers51 % women having access to credit80 %Persons trained in crop & livestock production & development27 % of farmers adopting technology recommended by project44 % of farmers reporting production or yield increased/herd size187 % households reporting improved food security62 % of active savers94 Number of Government Schemes Covered6 % of households covered under NREGA28 10

11. Challenges in the Transformation Process Low literacy rate, lack of access to financial institution, low access to markets Improving Business and Transaction Capacity Business Development Services Empowerment and Capacity building during the transformation process Financial Services Governance of second-level institutions/federations/producer companies/self-reliant cooperatives Leadership 11

12. 12 Thank you! Questions?