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Help Yourself to Help Others

by Sally Midgelow

The Salvation Army Australia Development Office (SAADO) is encouraging donors to provide funds to help set up self-help micro-finance groups which provide some of the world’s poorest people with the opportunity to start businesses and borrow small amounts of money without needing to pay the extortionate interest rates charged by many unscrupulous people. Sally Midgelow reports how self-help groups are working in India and explains that the benefits go far beyond simple economics.
Gordon Knowles (SAADO) with self-help group members. The musical instruments in the photo were purchased using self-help group finance. Four members play at weddings and receive income from this activity.
A self-help group meeting
The owner of this bicycle repair shop – which has five employees – and his wife started their business with a loan from the self-help group in their village
The rice grinder pictured here was purchased with a loan from a self-help group and generates income for the family, which charges a fee to anyone who needs to use it
A self-help group gathers with Overseas Development Consultant Gordon Knowles (SAADO) to discuss its achievements during the past year
FOR the past few years the country of India has achieved high levels of economic growth – between eight and nine per cent. Despite this improvement in the country’s economy, a significant part of the population still lives below the poverty line. It is estimated that more than 400 million people, especially in rural areas, live below the poverty line, earning less than US$2 a day. This is almost one in three Indians. Studies show that women make up a large proportion of people on low incomes.

Women in India are economically vulnerable because many work in the lowest-paid jobs, often as day labourers in the fields. They put in long hours in difficult, labour-intensive jobs but various middle-men and sellers along the production chain are the main beneficiaries of their hard work.

The feminisation of poverty is a well-established phenomenon and most economists forecast that the incidence of poverty among women will grow faster than for men.

Over the past decade, self-help groups (SHGs) have been found to be a useful tool to help women escape the poverty trap. The groups – usually consisting of between 15 to 20 women – have surfaced as a mechanism to link women with micro-finance. They are also relatively cheap to set up, costing less than US$400 for all the original administration and running costs.

Women have demonstrated excellent repayment records, enabling them to be seen as a low-risk lending opportunity for banks. Estimates suggest that some 24 million poor households have been connected with formal banking services and more than 1.5 million SHGs operate across India. At least 90 per cent of these groups are led and operated by women.

The Salvation Army has established self-help groups in all of its six Indian territories. The groups have proved to be an entry point to spread vital information on different subjects which enhance the social and political status of women. A holistic strategy has been put in place and micro-finance has been combined with other activities that seek to reduce the subordination of women in Indian society.

Non-financial interventions that are offered alongside the financial and economic discussions of self-help groups include training in various health and education areas. So while the practical finance training provides skill development, market knowledge and accounting practice, knowledge is also shared about domestic violence prevention, anti-human trafficking awareness and health training in such areas as malaria, tuberculosis, HIV, malnutrition prevention, family planning, immunisation, water, sanitation, human rights and literacy.

In many groups this has also led to opportunities to develop spiritual conversations, creating the opportunity for Salvation Army workers to provide spiritual nourishment to group members.

Throughout India, up to 1,000 women’s SHGs are currently operated through The Salvation Army. In addition to this, some 750 small businesses have started because women in various parts of India have obtained business loans through the operation of a Salvation Army-initiated SHG. Some of these small businesses employ four or five other people and this has in turn been the means of generating employment opportunities and skill development for other people in rural communities. At least 15,000 women are now members of SHGs in India. They have total savings of approximately US$250,000 with revolving loan funding in the vicinity of US$750,000.

So successful have women’s SHGs become that 20 men’s groups have been formed in southern India in the hope that they will benefit men – and their communities – in the same way the all-women SHGs have.

The men’s groups operate in the same way as the women’s groups – participants save a small amount of money each week, hold a weekly meeting, discuss various community problems, band together to attempt to solve those problems, open new businesses and employ people within the community, thus creating a focus on poverty reduction and community welfare enhancement.

Discussions are taking place to see if it is possible to set up a micro-finance institution as part of The Salvation Army’s administration in India. This will enhance the way self-help groups link to the banking world and will also create new opportunities for skill development and greater access to safe lending.

Other new initiatives being contemplated include life insurance and health insurance as an option for giving poorer members of society access to financial services people in many developed nations take for granted.

Many groups have found that becoming financially viable has led to a new sense of confidence and a willingness to seek ways to solve problems in their communities such as the supply of water, sanitation, the reduction of abuse by men and the improvement of health systems.

In recent times the self-help group has become a useful mechanism for making people think about human trafficking and its prevention. At its root it is a financial problem as much as a cultural one. It is common knowledge throughout India that some poor people in rural parts of the country sell children – especially young girls – to wealthier visitors from the city. They do this so they do not have to pay for the child to be educated and it also means they no longer have to worry about finding a dowry when their daughter gets married.

Conversations in self-help groups and within the wider community on the subject of human trafficking and selling of girl children generate an awareness and a greater appreciation of the value of girls’ lives. These conversations also highlight the tricks that are employed by those who offer jobs as maids, restaurant workers or factory hands in the cities. In many cases, there are no such jobs and the girls are abused and forced into prostitution, working in one of the many brothels found in India’s big cities.

There is a well-known saying: ‘Give a man a fish and you’ll feed him for a day; give him a fishing rod and he can feed himself for life.’ Perhaps the next line should be: ‘Set up women in a self-help group and they can change the lives of their whole community.’

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