Women's collectives are vehicles for female empowerment

The empowerment of rural women and girls is essential to building a prosperous, equitable and peaceful future for all on a healthy planet.
—António Guterres, UN Secretary-General

Every woman, regardless of her marital status, needs education, a good job and support with household duties Society needs to abandon culturally entrenched practices, marital or otherwise, that degrades and commodifies women. Women also need legal immunity from debts accrued by the husbands. Changing long-held beliefs, practices and laws may be difficult, but it is the only way to keep price tags off women and ensure them dignity and financial independence.

Empowering women is the solution to many problems on a global level, right from poverty. Societies that take the effort to empower women show better development indices, are better governed, more stable, and are less prone to violence. On the other hand, societies that limit women’s educational and employment opportunities and where women’s political voices are poorer, are more prone to corruption.

In India, the most popular model for empowering village women through financial access and provision of other services is the self-help group mechanism. It is in practice for more than two decades and has transformed the lives of millions of women, several of whom now occupy important positions in village administration.

A typical Indian self-help group consists of 10-20 poor women from similar socio-economic backgrounds who band together for financial services and sometimes social services. SHGs typically begin with periodic, compulsory savings, gradually increasing the pot of money available to the group. Once there’s enough, the group can start lending portions of the money back to individual group members — at interest. SHGs are managed by their members with varying degrees of external support. The groups offer both financial and social support, empowering women with a strong network of allies. Their initiatives have been diverse: some groups have helped women consolidate their savings, others have addressed domestic violence, alcoholism and caste-related issues in the public sphere. The common characteristics are: Self-selected and unrelated members, small size, and regular attendance at meetings, regular savings by members, peer pressure to enforce repayment of loans and simple and transparent procedures. SHGs typically begin with periodic, compulsory savings and then move on to making loans. Every member contributes a fixed predetermined amount to the self help group’s bank account to build a shared pool of resources.

Once the basic structure of the savings group model is introduced to a rural community by an outside agency — usually a local non-profit — the groups do virtually everything, including training more groups. Once the groups have mastered the mechanics of savings and lending, they begin to ask: What’s next? When the group has a fair amount of capital, it starts making small loans to its members. They dispense small and unsecured loans at varying costs to group members on the basis of need. Women have the drive, ambition, and capability to create streams of income for themselves, but they often need a lump sum to get started. Through the group all manner of self-employment — sewing, delivering small items, making handicrafts — could be facilitated with a small amount of capital for a sewing machine, a bicycle, or tools. The members cross guarantee each other’s debts. The prime security is trust and a social contract that holds the members accountable to each other.

They have sophisticated credit algorithms: “Does the woman own a buffalo? Some chickens? Does she have a toilet in her home? What kind of roofing material does her home have? Does she bring a shawl to the village meeting? Does she come barefoot to the meeting, or does she wear slippers? Do her children come to the school properly washed and dressed?”

The needs may vary from business expenses to paying school fees or healthcare costs, purchasing animals, or investing in start-up capital for undertaking cattle rearing and livestock breeding or tailoring. In this way they make money “work” because small amounts can be contributed and made available to everyone to use for their emergency needs. With education of children and running the household being their priority, the women utilise the borrowed money to pay for their children’s educational needs, household repairs and even monthly food ration. Through the group mechanism, the funds become a collective asset enabling upliftment of the community. With help for starting businesses, impoverished women can earn money and support their communities as well as their families. They represent, perhaps, the best hope for fighting global poverty.

Women act as their own bankers, create their own loan fund, and approve small loans to each other as savings accumulate and making sure loans are repaid. The women guarantee each other’s loans astonishingly, only a few default. The repayments proceed like clockwork. By transferring tasks normally done by well-paid bankers to poor people, the cost of administration comes down drastically. Although the value for members is not just in finance, credit remains an important element. You can’t change social dynamics without women’s involvement in the economy.

A vast majority of women leaders in Panchayati Raj institutions have come from SGHs and most successful sarpanches have had their grooming in these collectives. It is not that women are purer than men or immune to the pull of greed. But there is almost a certainty that women will channel money into solving more fundamental issues.

By providing a space where members can build relationships and develop a strong sense of identity and belongingness, they create a unique set of relationships and values. They show how managing money involves more than financial management, the creation of significant social value. These groups impart training in areas such as healthcare, nutrition, and domestic problem solving. These social services help clients profit from their loans and also aid in the development of human capital — an important contributor to poverty alleviation.

Like termites, they have furrowed the male-dominated power-grid in villages and are pulverising the whole patriarchal foundation. Where once participation of women in public meetings was an anathema, it has now become a ritual. SHGs have become powerful economic locomotives and have enabled women to found new confidence, agency and purpose. Transcending their ascribed roles, they have dispelled the myth that women are good just for homes. These groups have become the main locomotives of economic growth in rural areas. SHGs are seen as an entry point for other social activities — school committees to watershed councils. As they mature, the group sparks and spearheads meaningful and enduring changes by addressing community issues such as abuse of women, the dowry system, alcohol, educational quality, inadequate infrastructure.

Beginning in the benign area of health, women slowly gained confidence and moved on to other social areas. They began asking for change from the bus conductor, introducing new farming practices, saving enough money to engage banks and acquire simple irrigation equipment like water tanks, agitating for an improved road (and getting it) mapping village land and rethinking what’s planted to produce year-round yields and income, demanding the presence of the schoolteacher, negotiating with local officials for providing services to which they were entitled.

Men may fret that they lose when women win, but history tells us that when women advance, humanity advances. This lesson is best embodied in the words of Nirmala, a self-help group member for well over two decades and the current sarpanch of Wanoja in Central India, which she keeps repeating whenever I visit her: “My father always believed that it would have been far better if I were born a son. But today he realises how lucky he is to have me as a daughter.”

For poor women, it is a journey towards the second freedom or the real freedom, as Mahatma Gandhi said when he talked of the unfinished agenda at the time of Independence.

The writer is Member of Niti Aayog’s National Committee on Financial Literacy and Inclusion for Women