SELF HELP GROUPS – THE CONCEPT

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SELF HELP GROUPS – THE CONCEPT

ALOYSIUS P. FERNANDEZ
March 29, 1995

PART I

SELF HELP GROUPS – THE CONCEPT

The basis of the self help group exists prior to any intervention. The members are linked by a common bond like caste, sub-caste, blood, community, place of origin or activity. The intervenors, whether from the NGO, Bank, or Government must have the experience to identify these natural groups which are commonly called “affinity groups”. Even when group members are engaged in a similar traditional activity, like basket weaving, the basis of the group’s affinity is a common caste or origin.

MYRADA has adopted the self help group as the appropriate people’s institution which provides the poor with the space and support necessary to take effective steps towards greater control of their lives in private and in society.

The self help group is not a static institution, it grows on the resources and management skills of its members and theirincreasing confidence to get involved in issues and programmes that require their involvement in the public and private spheres.

The SHGs provide the benefits of economies of scale reducing costs in certain areas of the production process which the members may decide to undertake as a common action. The group also provides a cost effective credit delivery system, as the transaction costs of lending decrease sharply both to the banks and the borrowers. The groups provide a forum for collective learning which rural people find more “friendly” and which is consequently more effective than the individual or classroom approach that is commonlyadopted. The groups promote a democratic culture and provide the members with opportunities to imbibe norms of behaviour that are based on mutual respect. The SHGs foster an” intrapreneurial”(1) culture where each member realises that while she/he needs the support of the group to achieve her/his objectives, the group also in turn requires her/his support in adequate measure. The groups provide a firm base for dialogue and cooperation in programmes with other institutions like Government departments, cooperatives, financial and Panchayat Raj institutions; if the groups are functioning well, they have the credibility and the power to ensure their participation in identifying, planning, budgeting, and implementation of Panchayat Raj programmes for theempowerment of the poor. The groups provide the individual member with the support required to exercise control over the pace, timing, size and schedules of loans and programmes, to broaden the pattern of asset provision to include a package which would help the individual to cover risk rather than to provide a single asset; it also helps to assess the individual member’s management capacity which may fall short of what a “viable” investment package requires for optimum returns, as prescribed under regular IRDP norms.

The strategy therefore evolves around the potential of the SHG to provide space andsupport so that each of its members can identify and use opportunities for her/his empowerment both in private and public life, and the capacity of the SHG to relate effectively with other institutions.

It is, therefore, necessary that SHGs are promoted in a way that facilitates the development of a participatory and empowering culture. This in turn makes it crucial forall intervenors to empathise and be familiar with participatorymanagement practices in their own organisations before using participatory methods to identify and form SHGs.

The means used by the intervenors to identify these affinity groups are several; a few popular ones are:

– regular visits to the village, meeting with informal groups gathered around tea shops, temples, water spots, markets, provision shops, milk collection centres; special care should be given to visit and interact in areas where the scheduled castes and tribes live and where women tend to gather;

– involvement in a common action like desilting a pond, or building a road also helps to identify these groups, provided people organise the action themselves; it is noticed that in such cases they tend to work in affinity groups;

– participatory appraisal methods are useful since they too involve all the people in various exercises which helps to identify the various groups in the village, the assets and resources of each family, the people’s perceptions of who is poor, their credit needs and seasonal variations in the requirement of credit, etc.

There are however, several constraints to the proper identification of affinity groups,for example :

– There are several programmes in operation which describe the functional units at the field level as “groups”; these are not self help groups in most cases: examples of such programmes are DWCRA, Literacy Groups, Mahila Samakhya and Milk Societies:

i> DWCRA groups are functioning well in several cases but have several constraints in becoming an SHG; for example:

– there is a strong, almost exclusive, focus on economic activity; those groups which are described as functioning are those which are engaged in an economic activity; the most common feature of functioning is a “group” activity in which all the members are engaged in the same activity though at times in various segments of the production process;

-there is no initiative to foster regular savings and investment.

-there is no provision for regular meetings to discuss credit needs, to establish priorities and to acquire the skills necessary to build and manage an institution.

– those groups which are functioning usually produce a product which is purchased by the Government, or where this is not the case, marketing is a major problem leaving goods unsold, with members losing confidence. In very few cases is the group taking the initiative to tap the open market; as a result, self help and self reliance is not the guiding culture of these groups;

– in many cases women in DWCRA groups are brought together from several neighbouring hamlets or villages; there is no common underlying bond on which trust can be built;

– many women leave the DWCRA group due to several reasons, many of them personal; no one, however, is asked to leave by the group because she is not abiding by its norms and culture; in a word, there are no effective sanctions operating within the group. In general, the groups have not developed a culture of their own; those norms that guide the group derive from and are limited to an activity, and are imposed from without.

The question raised repeatedly is whether a DWCRA group can become a SHG; it can, provided:

– the group is an affinity group, is small (less than 20) and is willing to save and invest in the activity it has chosen to pursue;

– is willing to allow a few of its members to form SHGs; there could be several affinity groups within a DWCRA unit;

– is prepared to explore possibilities of gradually catering to the open market;

– is willing to allow individual members to borrow for their own purposes whether for consumption, trading, small business or other economic activities;

– is open to expanding its agenda beyond economic activities to include women’s issues.

ii> Literacy groups and Mahila Samakhya: these groups can be considered together, though they may not have the same objectives; they are similar to the extent that the groups are large, often heterogenous, including members from different castes and economic strata and even from different hamlets and villages; these are major constraints to their emergence as SHGs. On the other hand, theyprovide the opportunity for women to improve the skills they require to manage and maintain an institution; examples of suchskills are literacy and numeracy; they also build the confidence of women by organising them to lobby for their rights. These are all qualities that members of theSHGs require for the SHGs to develop into an institution. Every member must be able to participate effectively in the proceedings; they need to understand the Minutes of their meetings and figures in their pass books and have the confidence to organise common action.

It was reported in many areas that attendance tends to fall in programmes which focus only on literacy and awareness raising. The reasons are many but the main ones that emerge from discussions with groups are : (1) People want to go beyond literacy to programmes from which they derive some immediate benefit; after all – what is the point in going to school if one cannot get a job? (2) It is often assumed that those who fail to attend are not interested; enquiries have shown that in many cases absentees are willing to participate in the programme but not with the existing groups; they prefer to form another group of their own; in most cases this is an “affinity group”. The skills of literacy and numeracy together with the self confidence that grows through common action especially in some of the Mahila Samakhya groups are good building blocks for SHGs. SHGs therefore can emerge from these groups provided that small affinity groups are allowed to form after the concept of the SHG is explained and discussed thoroughly; visits to functioning SHGs have proved to be very effective in explaining the SHG concept to newer groups of women.Discussions with such groups indicate that women are quick to see the benefits of building up a common fund over which they have control and ready access. The major motivating factors are:-

– the desire to go beyond “literacy” to tangible and immediate investments in income generating projects, to manage which they feel more confident after participating in the literacy and awareness programmes,

– their need for consumption loans and the high interest rates charged by local money lenders ranging from 5% to 10% per month.

iii> Milk Societies : these societies at the village level are examples of a group structure which is appropriate for the collection and handling of milk but is inappropriate for the management of credit. The milk society requires the larger producer to make the route viable; the small supplier (normally belonging to the poorer sections of society) rides on the back of the large farmer; it is this heterogeneity that makes the system viable. In an SHG, on the contrary, if larger farmers and members of rich families are included with the poor, their interests will collide; often the families of the richer women are the very money lenders against whose interests the SHG now operates both in terms of loans as well as in other areas like the demand for fair wages and payment for services which the poor sectors have traditionally rendered free of cost to the dominant families in the village. It is, however, quite feasible for the poor members of a milk society, if they have affinity linkages and are homogeneous in terms of incomes, to form an SHG. Experience with such groups of the smaller farmers and landless people owning dairy animals has shown that these members can borrow from the SHGs to meet expenses on animal health care, breeding and feed.

Groups of “eligible beneficiaries” : In the IFAD project several groups were formed of “eligible” beneficiaries under pressure to meet annual targets. The pressure to organise such groups arose because several members of the self help groups were not eligible for bank loans because of previous defaults on the part of their husbands, while others did not wish to take large loans. As a result, in order to target 10,000 beneficiaries in each District, over 20,000 members had to be organised into SHGs. This was considered to be a waste of time and effort resulting in the need for extra staff and failure to meet with annual targets. Therefore, the solution was to exclude the above categories and organise groups of only “eligible” women. A similar situation arises in PLAN projects where eligible families are first chosen on the basis of a child for sponsorship; these families are then formed into a group. If the groups are genuine SHGs they will function notbecause the members have joined a group as a condition to receive loans but because women have taken the initiative to build an institution on the basis of their own efforts; if, on the other hand, “eligibility” to receive benefits of some kind from an external source becomes the only basis for group formation, the group will probably dissolve once the benefits are received. In a genuine SHG, the group continues to grow and function even after the project period is over. If groups are to sustain their efforts, they need to be affinity groups as well as small and homogeneous, besides which they must have the freedom to develop their own rules and regulations and to include and exclude members according to norms which they lay down. Women who are brought together because they are eligible for loans perceive the formation of a group as a precondition to receiving loans; seldom do they go any further either in terms of building increasing self confidence or empowerment in social and private life.

PART II

THE PROCESS OF FORMING SHGs

The process of SHG formation has features which could be separated into three phases for the sake of clarity. Who intervenes in each phase, how, and where, are questions which do not elicit answers which are common to all project areas; they cannot be standardised. A few guidelines, however, are useful, together with a few indicators regarding the features of the SHGs at the end of each phase which will help to provide a backdrop against which their progress can be assessed.

Phase I – Identification and Formation of SHGs : 0 – 4 months

This is a critical function on which depends all further progress of the group. MYRADA staff with experience in these areas have to take the lead in identifying an affinity group which develops into an SHG; inexperienced staff will not be equipped to perform the role of group identification. Care should be taken to ensure that MYRADA places experienced staff at middle management level to play a key role during this phase.

Identification and formation of SHGs involves collection of information regarding credit needs, incomes and their seasonality, the availability of natural resources, skills and markets, people’s perceptions of poverty and of intervenors, and the identification of social groupings in society. Participatory Rural Appraisal methods have been useful in this area. The people are involved in collecting and correcting data in a manner in which all can participate using instruments to which they are accustomed like sticks, stones, seeds and coloured powders.

During this phase, if the SHGs are entirely composed by women, it has been found necessary to meet with men and to explain what is going on, especially the benefits that will accrue to the family through SHGs.

 Group formation is not complete with the first meeting. It takes several meetings over a period of 2 to 4 months for the group to have definite membership. During this period members may leave and others may join if the group agrees.

The meetings held during this period are not only social gatherings; the members also raise issues concerning the family and the village. Matters regarding savings and lending are also debated thoroughly as this is the major common function of the group. Agreement to save and to lend and the willingness to abide by group decisions without breaking bonds and confidence in the group indicate a degree of trust in one another; these are the building blocks of effective SHGs.

Critical Features of the SHG at the End of Phase I

The group is identifiable; it is not a place where people can walk in and out at will. The members have agreed to save regularly, to create a habit of thrift and to establish a culture of self help. Some groups may have started savings. Basic records like (i) Attendance Register; (ii) Minutes Book; and (iii) Members Savings Ledgers and Individual Savings Pass books -if savings have started – should be maintained.

The date, time and place of meetings must be decided on by the members and meetings held regularly according to the schedule. Two members of the group should be elected/selected who function as chairman and secretary. Many groups prefer to call them representatives since the titles of Chairman and Secretary tend to be interpreted as positions of power. The groups are encouraged by the intervenors to change the representatives every year and to elect/select the following year’s representatives six months in advance so that they can be adequately prepared and trained. The group has given itself a name. If savings have begun, the group opens an account in the nearest Bank or Post Office. The account has two signatories, either one from the SHG and the other from the NGO intervenor or both from the SHG.

Phase II – Group Stabilisation : From 4 months to 15 months

MYRADA continues to play a key role in this phase as well; our staff attend all meetings and ensure that adequate support is provided so that:

– Savings are regular and lending operations gather strength. This provides the members of the SHG with an opportunity to acquire the skills to manage its resources. The group decides on the rate of savings, on the timing of the loans, on the schedule of payments and repayments, and on the interest rates; it assesses when and whether the member needs a loan and whether she/he is able to use the loan effectively and to repay according to the schedule decided on.

– Meetings are held regularly, preferably every week; attendance is maintained and averages over 80% and repayments over 90%; sanctions for default on repayment and for deviant behaviour (smoking at meetings, arriving late for meetings, etc.) are imposed and accepted.

– The following books are maintained either by a literate member of the group or by the NGO staff or preferably by someone from the village who is paid for such services. (Admission Book, Attendance Register, Minutes Book, Members Savings Ledger, Members Pass Book, Receipt Voucher, Payment Voucher, Cash Book, General Ledger, Loan Ledger, Stock Book.)

– Gender issues concerning women in private and public life are raised and discussed.

– Literacy and numeracy classes are conducted and attended by all members.

– Common Action programmes are organised by the group.

– They begin to interact with other groups, Government and private institutions.

Group training is held regularly – at least 3 modules each of 2 days – during this phase to enable all to participate effectively, especially the weaker members (in some cases special modules may have to be conducted for them), to build group culture and to raise the level of commitment to mutual support and acceptance of group decisions, to develop self confidence in private and public life, to help members acquire the skills of conflict resolution, etc.

Training of SHG Representatives : The two representatives who have been elected need to be trained to conduct meetings, to help the group to establish a supportive culture, to establish priorities in lending, and to impose and accept sanctions. They need to equip themselves with the skills of numeracy and literacy to enable them to keep a check on what is recorded in the Minutes and pass books. They need to develop leadership qualities and the confidence to relate with institutions like Government Departments and Banks as well as to provide leadership in organising common action programmes. It is important that the group selects/elects the representatives for the following year at least six months in advance to enable them to build up these skills and confidence. If the group representatives are not changed every year, there is a danger that power will accumulate in the hands of a few which will in turn prevent the effective participation ofall members. Rotation of representatives provides all the members with an opportunity to acquire the skills of group leadership. Once the first set of representatives have handed over responsibilities they could play the role of group animators, after the groups have been in operation for 12 – 15 months, provided they have had at least 3-4 modules of training and exposure to operating SHGs.

Experience in several MYRADA projects proves that there is no need to have animators at the village level. The responsibilities of conducting a group meeting, relating with the banks and with MYRADA can be carried out by the group representatives provided they receive training. Other group maintenance activities like keeping of accounts and records can be done by local people who are paid by the group on a job-by-job basis. The funds can come initially from MYRADA, but the group should select the person and fix the amount; it should be made clear to the group from the very beginning that MYRADA will only reimburse this amount for a period of 1-1/2 to 2 years.

Training of bare foot specialists in animal husbandry, agriculture and horticulture should be carried out intensively by MYRADA’s Subject Matter Specialists or by contract services during Phase II. This will build up a cadre of field technicians. Training in animal care and breeding should also be given to women who own and manage animals.

Common Action : One or two small common action programmes in the village are planned and implemented preferably in collaboration with other SHGs if they exist in the village.

Gender Issues : Gender issues concerning women and the girl child are raised at meetings and form an important part of training. Men are invited to participate in common action programmes and occasionally to SHG meetings.

Negative reactions from men to women’s absence from home when they attend meetings or are involved in common action or even to the increasing presence and profile of women in public life is a common feature during this period. MYRADA has to play a direct role to cope with this problem, even offering counselling services at the family level when the problem threatens to escalate.

Support to the Common Fund of the SHG : After 6 – 9 months, if the SHG is progressing according to the indicators mentioned above, grants in installments matching the savings or in a higher ratio depending on the performance of the group are credited directly to the common fund. This helps to build up available capital, enabling members to access larger loans for business, trading and other small income generating activities.

Features of the SHGs at the End of Phase II

All the members are engaged in savings. Loans are provided to all. All transactions are supported with documentation; a summary of loans and recoveries is posted in a public place and regularly updated. The common fund is steadily increasing through interest, savings and fund raising by the group. The common fund is revolving; bank balance is low or nil. The recovery rate is consistently over 90%; attendance is consistently over 80%. The members have acquired the skills to conduct meetings and to resolve conflicts; perhaps, they have acquired skills in literacy and numeracy as well. Their confidence to act in public life has increased; they are able to relate with other institutions and Government as a group. Initial steps are taken to relate with the Bank and to negotiate a loan to the group. The group has the experience of organising and being involved in one or two common action programmes and in conflict resolution. The members of women groups have begun to address gender issues and to take small though significant actions both in public and at home.

To summarise : in Phase II, MYRADA plays a key role in training of groups and group representatives, as well as in gender sensitisation. However, MYRADA moves away from direct intervention, to support the process of group growth by attending all meetings of SHGs and intervening when required. The Subject Matter Specialists play a direct role in training asset owners and village technicians.

Phase III – Withdrawal : from 15 to 36 months

Though intervenors need to integrate withdrawal in their strategy from the beginning of the process in order that interventions will support the growth of self reliant people’s institutions and not increase their dependency, yet withdrawal becomes more tangible and acceptable after the major interventions required to build up the groups taper off.

MYRADA expects withdrawal to be visible 15 months after the groups exhibit the features listed at the end of Phase II, which is about 15 to 20 months after the groups are identified. As the groups take on the major role in organisational maintenance, the intervenors gradually withdraw. To begin with, the intervenors reduce their attendance at weekly group meetings. Next the groups begin to pay for those maintenance services which they require. For example, a group would pay one person for writing the Minutes and for keeping accounts. MYRADA would still have to provide the services of its accountants for an annual audit, towards which service the group should be asked to contribute until it is capable of hiring these services on its own. The NGO also responds to requests to intervene in the event of a crisis situation which the group on its own cannot resolve.

Major interventions during this period would be technical services for asset management and productivity, all round support for off-farm activities, especially for design, quality and marketing. These services could be provided partly by trained local bare foot specialists as in the case of animal husbandry, agriculture, sericulture and horticulture (for whose services the members of the group have capacity to pay either from their savings or by taking loans from the group) and partly by MYRADA staff or consultants. During this period MYRADA and the SHGs could also foster the emergence of apex bodies but the need for such bodies and their functions should be decided by the group.

Experience with apex bodies has also shown that they are vulnerable to political influences or are used as steps towards political positions. Politicisation of apex bodies weakens and eventually destroys the self help groups. Care should be taken that the groups are strong enough to control the functioning of the Apex bodies before they are formed. In some projects, groups have restricted the roles of apex bodies to supervising the groups and to assist in problem solving; they have refused to give apex bodies any funds or the power to control resources. Where the Apex bodies have funds, care should be taken to audit them regularly.

During this period the supportive role of MYRADA decreases. We need, however, to ensure that regular feedback and analysis of data is available in order to identify trends in financial management of the SHGs. The guidelines given in the “Blue Book” relating to the management of savings, the group’s common fund, loans, book-keeping and audit help to identify important indicators of the SHGs’ performance and should be applied regularly to groups in all MYRADA projects in order to assess over all performance of each group and to focus on those that are weak.

(1) As distinct from “entrepreneurial” which implies a strong element of competition.