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Collectives help rural women ‘Lean In’ -Nachiket Mor
-The Hindu

Women build social capital through the process of regular group meetings and this directly results in a change in their status, both within the home and community

In the world of microfinance, women’s collectives have acquired a great deal of prominence globally and are known by various names such as Self Help Groups (SHGs), Joint Liability Groups (JLG), or Village Saving and Loan Associations (VSLA). There is a strongly held belief that the formation of these groups has transformed the lives of women, improving their financial status due to the direct links between the microcredit, obtained through the group, and the livelihood activities financed by this credit.

While there is some evidence that the women’s collective movements have had a broadly positive impact on women, rigorous research did not find any evidence that the standardised micro-credit product, at least in the short-run, produced any measurable impact on levels of poverty.If indeed the principal impact is financial well-being, then the collective may represent a weak solution. Retail financial services in general, and not just for low-income women, suffer from being sold in standardised packets called “products” which are commoditised. Financial services offered through groups also suffer from this “productisation” with the added unethical feature that women face complete denial of services if they do not approach the provider in groups or are unable to fit into one or the other standardised group models. There is also the concern that when a member defaults, since the entire group faces a complete denial of credit, she experiences extreme social ostracism and severe harassment, sometimes leading to suicide.

A standardised, product-led approach is completely inconsistent with the power of finance which, at its core, is a service that is capable of infinite customisation and reducing the volatility that is unique to each customer’s life. This is exactly the kind of service that bankers even today offer companies and ultra-rich individuals, but for some reason a product-led Fast Moving Consumer Goods (FMCG) approach pervades the retail financial services industry. Fortunately, there are challengers to this world view (such as the Kshetriya Gramin Financial Services [KGFS] literally, “Regional Rural Financial Services”) that are emerging, and expectations are that, with refinement, they will become the dominant model of retail financial services.

Power of together

So then, why collectivise? The real and sustained benefit of women’s collectives and their impact could instead lie in the improvement in the status of women that they could catalyse. The principal benefit of the association with the microcredit movement may simply have been to provide an acceptable, even if high cost, raison d’être and compulsion for these women to form collectives and meet regularly. This phenomenon of “regular meetings” appears to be an important enabling force which gives the woman courage to “lean in”, in multiple household and community settings.

Researchers find that woman’s groups, practising “participatory learning and action” in settings as varied as Bangladesh, India, Malawi, and Nepal, showed a 49 per cent reduction in maternal mortality and a 33 per cent reduction in neonatal mortality. Yet another randomised control trial found that, after just two years of an intervention, which combined a group-based microfinance programme with participatory training on understanding HIV infection, gender norms, domestic violence, and sexuality, the risk of past-year physical or sexual violence by an intimate partner was reduced by more than half. Women who had gone through the programme were able “to challenge the acceptability of violence, expect and receive better treatment from partners, leave abusive relationships, and raise public awareness about intimate partner violence”.

An examination of the factors that generate this impact finds that women do not come with a ready-made stock of social capital but instead build it through the process of regular group meetings and it is this social capital that directly results in their change of status, both within the home and community. A field experiment in urban India found that groups in which women met more often and therefore had greater social interaction, showed persistent “improvements in informal risk-sharing and reductions in default” relative to groups that met less frequently. Research suggests that groups tend to generate social capital through the “focussed” interactions that occur in “encounters”, i.e., group meetings, which have a number of features, including: (i) a single focus of attention; (ii) intense and open discussions among group members; (iii) the huddle of the group meeting around the group leader with frequent eye contact; (iv) peer monitoring; and (v) the rituals of song and dress that surround the group meetings, all of which produce a strong feeling of “solidarity and corresponding flow of emotions”. This is a very different understanding of social capital and how it is generated among women and suggests why the manner in which groups actually operate is far more important than the original purpose for which they were formed or even perhaps the manner in which they are created.

This aspect of collectives and groups merits greater attention and understanding in our quest to find robust pathways for empowerment of women.

(Nachiket Mor is a Chennai-based economist. He can be reached at nachiket@nachiketmor.net)