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Peter Burgess
Dear practitioners,
I represent a NGO involved in the SHG promotion for the last 7 years. In some of our project areas, the SHGs are more matured now and they may need little handholding support only from NGO.
We promoted the Federations of SHGs last year as an umbrella body for these SHGs.
We would like to delegate the NGO functions (to start with the implementation work) to federations and over a time, we would like to see a facilitating / strategic role for the NGO and the federations should be functioning with its own staff and resources.
I have seen in India, many great NGOs like MYRADA, DHAN, ASSEFA has evolved
their own models in this regard and there were some lessons out of their experiences.
I would like to hear from the practitioners on their experiences on the above. I would like to hear both the successes and failures. So, that for failures, we can think of some risk mitigation measures, to avoid such things in our intiatives.
Members shall share any documents on this also.
Thanks and regards,
N.Jeyaseelan.
Dr.N.Jeyaseelan,Ph.D,
Director-Transformation,
Hand in Hand India,
12/26, coats road, T.Nagar,
Chennai, Tamilnadu, 600 017.
INDIA.
www.hihindia.org
Mobile:+00-91- / 09244865356
Email: jeyaseelan.n@hihseed.org
vijayjeyaseelan@yahoo.co.in
Skype: vijayjeyaseelan
Dear Jeyaseelan,
Sampark has promoted 10 federations in Koppal district, which are registered now as 8 cooperatives (two federations have joined together for registration, though they continue to operate separately). They do independent audit, and now have managed to raise finance from NABFINS as well. You will find a summarised story in the following link:
http://www.microfinancefocus.com/empowerment-versus-finance-challenges-implementing-gender-sensitive-approaches
Some lessons which can bear repetition:
1. Let the women debate and decide the form of the institution. For credit operations, cooperatives are useful. For raising external donor funds and engaging with social development beyond credit, a Society is better. Sampark supported cooperatives engage mostly in credit.
2. Training is a long term cost and time intensive process. YOu will need funds much beyond what can be generated through NABARD or any other schemes from development banks or government.
3. Selection and training of leaders is extremely important, and having systems by which the leaders can also be held accountable. The women will ensure they select leaders who can negotiate with the NGO and banks, and the NGO has to ensure that the leaders do not misappropriate or corner an undue proportion of the total savings of women.
4. Auditing of SHGs and cooperatives is important. Sampark has established an Annual auditing process that is very rigorous and has also trained the women in the statutory audit obligations under the Sowharda (MACS) Act of Karnataka.
5.Finding the right staff for women's cooperatives, and training them is critical. The cooperatives have to build the capacity to select, and manage the staff.
6. It is important to make the financial links... so that when the cooperatives are ready with demand for funds, the loans are forthcoming, from some source. Otherwise the entire effort of creating these community based organisations will go to waste.
7. Finally, have a clear time line by which the cooperatives will be self sustaining. Make clear milestones and monitor them, so that dependence is not created.
Hope this helps.
Best wishes,
Smita Premchander, Chidambaranathan and Ishita,
Sampark, Bangalore (www.sampark.org)
Smita Premchander,
Secretary, Sampark, and Development Consultant
smitapremchander@gmail.com
www.sampark.org
asksmita.qhub.com
Thank you Smita, and Dr Jeyaseelan for posing these important questions.
I am all in favour of co-operative banking (which is what your cooperative SHG federations are aiming to do); if you observe the banking mess in Europe you will see that the main exceptions are the co-operative and other community banks, most notably RABO Bank but hundreds of other much smaller banks. In Germany they account for over half of all retail banking business, and elsewhere in Europe (sadly not here in UK) they are similarly strong.
But, India already has one of the world's biggest cooperative banking systems, the PACSs and DCCBs and so on, as well as the urban banks. It has been misused by political and other vested interests more or less since 1904 when it was started (by the British; why didn't we do the same at home ?), but there are still large numbers of strong and flourishing institutions among the one lakh or more of cooperatives, and they are slowly being reformed. Why start yet another system ?
More important, as you note says, it is very expensive to build a federation. A single SHG's aggregated savings and loan requirements are large enough to constitute a viable customer for a bank, and linkage to a bank offers SHG members the chance to 'graduate' to an individual bank account, such as you and I enjoy.
And as Dr Jeyaseelan's note implies, it is very difficult for the NGO or other institutions which have promoted the federation to 'exit', to hand over management to the members. Indeed, some NGOs, unconsciously or otherwise, perpetuate their own survival by making it even harder for the members to take over, such as by promoting higher level apex bodies, or adding new services.
So should we not do our best to make ourselves redundant, by helping SHGs to manage their own affairs (not easy), by encouraging banks to work effectively with their SHG customers, and by discouraging governments from using SHGs as patronage distribution channels ?
And is the task not all the more urgent, given the problems of India's MFIs ? Most of these MFIs have focused almost entirely on pushing out more and more debt, and until recently they have been very successful at this. Is this not the time for SHGs to reassert their place as the 'natural' microfinance intermediary for India ?
Malcolm Harper
Dear Malcolm,
I have heard you say this before, and I appreciate where you are coming from: if NGOs do ot have the resources to organise second level collectivs of women, why not do one level well? if the financial earnings have to be divided between two levels, SHGs and federations, why not stay with just one level? Sure. I agree. It is important to build a strong first layer, and to find the resources to do this, to give it first priority.
But not to the exclusion of second layer collectives of women. Why? Because collectives empower. And larger collectives empower more. Higher representation equals higher voice. When a group of 20 women go to the bank to ask for loans, they may or may not be heard, but when a leader from a federation of 300, or 1000 women goes to the bank, she is given a chair to sit, tea to sip, and eventually, a large loan for the SHGs who are members.
Such voice and representation is also valuable in the equation between women and the facilitating NGO. When women's collectives are larger, the NGO has to listen and give their opinions and preferences serious consideration and respect.
So, I would say, let us find the funds for creating strong SHGs. And let us find the funds for creating strong federations/ cooperatives.
If there are a few less private profit making MFIs, and more women's federations and cooperatives, the cause of women's empowerment will be better served.
Best regards,
Smita
Dear Malcolm,
The Self-Help Groups of India with perhaps 100,000,000 members trained largely by thousands of Indian NGOs with 65,000,000 of these customers linked to banks through NABARD through the SHG Bank Linkage Program represent the largest microfinance initiative in the world by far. Sure the quality is uneven and there are many problems but I have always thought that the brilliance of the model where NGOs train the groups and banks provide the loans (to say nothing of the incredible number of banks). NGOs are good at training and bad at being banks, banks are bad at being NGOs. This model combines the best of both worlds.
Jeff
Jeffrey Ashe
Director of Community Finance
Oxfam America
One small submission to the point made here. If one really looks at the who the SHPI has been, the
biggest and most obvious one in the model is the 'Govt'. the department could be any, that has the
right field functionaries. One another learning 'it’s the individual who matter, not the institution
that they function in'
Rds
Suran
B.S.Suran
Dear Colleagues
I cannot pretend to be a practitioner any more in the microfinance space, but I am a long time
observer of microfinance and the performance of the humanitarian relief and development assistance
sector.
As far as I am concerned, one of the 'lessons learned' should be that the microfinance success is
as much about human capital than it is about money capital. Modern capital market financing of microfinance has little interest in the human capital dimension, and without this, in my view, microfinance will fail. The human capital improvement process which includes functioning self help groups (SHGs) takes time and time costs money ... but without it, the core purpose is lost.
Another lesson to learn is the role of scale. Some things work better when they are big, some are better when they are small. Modern big banks make profit from scale, and microfinance generates valueadd from its focus at the individual and small group level. Accordingly there need to be structures that combine scale to deal with the big banks and smallness to be effective at functioning at small scale. There are different legal/organizational structures that can get at a desirable result ... but both big scale and small scale have to be in the total structure. I liked what Jeff Ashe had to say about banks being bad at being NGOs and NGOs being bad at being banks ... I could not agree more.
A final lesson that guides me is that there needs to be appropriate accounts and reporting ... and
enough people who understand the data. Though I am a money accountant, I believe the data should
include something about impact that is more than just money, and there should also be a lot more
in the data about the 'context'. Something that works in one community may not work in another
community because the context is different ... external factors that are frequently bigger than
the internal performance elements. A market economy that ignores the value dimension is going to
fail sooner rather than later.
Peter Burgess
@truevaluemetric
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