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Federating Self Help Groups as Vehicles of Empowerment
SHGs as Building Blocks Throughout history, people have formed collaborations with others who have something in common with them, and oppressed people have joined together to improve upon their living conditions.The Project A Self Help Group (SHG) is a self-governed, peer-controlled, small and informal association of the poor (10-20 members), usually from socio-economically homogeneous families, and is organized around savings and credit activities. Funds for credit activities come in through regular savings deposited by all of its members on a weekly or fortnightly basis and other financial institutions based on the groups' need for production as well as consumption purposes. In the meetings, the members discuss common village problems and plan solutions, share information; and make efforts to improve their health and literacy skills. The knowledge base of self-help mutual support groups is empirical, indigenous, and rooted in the wisdom that comes from struggling with problems in concrete, shared ways. Self-help groups build on the strengths of their members. SHGs have another very important role to play, particularly in the transfer of technology to the user group population. It has been found that the members of SHGs are in a position to offer an organizational base, large resources, and access to modern technology, all leading to employment and income generation. Thus, the SHG movement among the rural poor in different parts of the country is emerging as an extremely reliable and efficient mode for technology transfer. Subsequently, SHGS have served as a platform for NGOs and other development agencies to implement their development programmes for social and economic empowerment. In 1992, SHGs emerged as important players in the microfinance sector when National Bank for Agriculture and Rural Development (NABARD) introduced a pilot programme linking SHGs and banks to enable poor households access the mainstream banking network in order to meet their financial needs. The phenomenal success of the SHG model in terms of outreach and repayment rate has encouraged the central and state government to use these institutions as a part of poverty reduction progra-mmes. Today, SHGs are increasingly being implemented as an important vehicle for social and economic empowerment of marginalized communities, especially women. Need for Consolidation of SHGs: Federation and Related Concerns
The primary purpose of federating SHGs is to ensure the sustainability of groups. The federations help SHGs internalize all operational costs and reduce the cost of promoting new SHGs. The federations also build solidarity among SHG members as part of a larger organization. This helps build up the member stake in the SHGs. Economies of Scale SHGs require several essential services from the promoting institution or federation to increase their capacity. Most of these services are initially provided by the promoter organizations, but this is not sustainable since providing this service is neither the core activity nor is it among the core competency of the promoter organizations. Federations make sustained availability of these services more likely as they provide the necessary scale at which the services can be offered and the possibility of it being designed to suit the requirements of the SHGs. Recovering the costs is easier because SHGs do not confuse service provision with the promotional process. Account management of the SHGs is one such service that the federation manages. So is capacity building of SHGs, which involves training the SHG members, leaders, and SHG accountants. By providing a common forum for review of SHG performance and enabling them to plan for further development, federations also create space for internal learning. The federations help resolve conflicts, including those between SHG members, between SHGs and village leaders, and also between SHGs and banks. Reduction in Transaction Costs By consolidating SHGs into federations, the cost of operation and transaction reduces due to less paper work and staff time of the promoting institution and other service providers. Federating of SHGs appears to be an important tool for overcoming the constraints emanating from the small size of SHGs and this, in some cases, appeared to be the main motivation for a group to come together. Federating the groups at cluster and apex levels provides an intermediary between the promoting institution and the new groups, while the SHGs serve as the primary units. However, this social collateral federation appears to fulfill this role better as they are nearer to SHGs and have better information on SHG performance. The federation offers a level of aggregation that makes it financially viable for the companies to deal with this clientele. The federation also diminishes the probability of fraudulent claims because of their better local knowledge.
The federations provide services either on their own or in collaboration with other stakeholders so as to empower the community groups. The information advantage of a member-owned entity and an established service and delivery point helps the groups to leverage resources in a timely manner. The federation offers many services as desired by its members. The quality and quantity of the services increase with improved federation resources and their capacity to manage the same. There is likely to be a significant demand for these services, especially in rural areas where their availability is scarce. Services that the federations support include supply of essential food commodities, Fair Price Shops, childcare services for preschool children and supply of agricultural inputs and marketing of produce in places where private market organizations are absent or weak. Reduction of Promotional Costs In all the federations, the leaders perceive promotional activity as one of their key responsibilities. Since federations possess better local information and have greater legitimacy because of their being based in the community, they are able to form groups faster and at a cheaper cost when this increased outreach also contributes to the viability of the federations by helping them increase their membership to levels necessary to maximize economies of scale. Empowerment Federations expand empowerment beyond that achieved by SHGs in various ways. First, federations provide an identity to the SHG members, making them a part of a large organization. This builds solidarity among the members of different SHGs. Second, a SHG federation requires human resources of much higher capacity than that required by individual SHGs because of the variety of the tasks that they perform. In addition, federations provide enhanced opportunities for the local youth, recruited as staff, to increase their skills and knowledge. Both of these measures build local human capital, a significant contribution to long-term community capacity. Third, while SHGs provide an opportunity for the poor to save money, obtain loans, and interact with the promoter organizations and banks, federations also have the potential to produce leaders. The scale of the federation also creates opportunities for the leaders to deal with mainstream institutions of the society on more equal terms. Issues and Challenges Illiteracy and insufficient
organizational experience of most SHG federation members constrains the
governance capacity to manage this institution. This constraint,
inherent to an organization of poor women, affects the ability of the
federation to effectively perform oversight functions. Enhancing the Shailendra Nath Pandey
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The
proven capability of SHGs in terms of outreach and the growing NGO
experience has speeded up the pace of SHG formation. As the numbers
grow, with the addition of new groups, the involvement of promoting
institution in terms of sustaining the guidance and capacity building
inputs that they have been providing earlier diminishes greatly. The
promoting institutions are unable to provide quality inputs in the right
manner. Further, it is imperative to build people institutions that can
eventually carry forward the social and economic empowerment agenda
integrated in the SHGs model.
Providing
Value-added Services
capacity of federation members, especially due to their ability to
perform oversight functions, is crucial. There is also a need for
federation leaders to have increased interaction at the local level,
with the Panchayats (local governments), with the block/mandal
administration, and with local business leaders. In the federation, it
is essential to improve the SHGs’ systems and processes. Risk
management, repayment monitoring, and financial management are some of
the systems that need increased attention. The promoter agencies
facilitate these processes and promote enhanced mutual learning among
the SHG federation. Accountability in a member-owned organization
primarily depends on the ability of the members to hold the organization
accountable. One of the major factors influencing this ability is the
awareness of SHG members of their rights and duties as members as well
as their capacity to use this awareness. Limited organizational capacity
of promoter agencies is perhaps the most crucial constraint in
developing sustainable federations. Promotion of federations requires
institution-building skills beyond that required in promoting SHGs.