Collectives Help Rural Women ‘Lean In’
Thursday, October 1, 2015
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.