- Pattern Languages
- Liberating Voices
- Civic Intelligence
- Digital Resources
Pattern number within this pattern set:624
The Public Sphere Project & St. Mary's University
Individual capacity among poor peoples in the developing world, particularly women to establish credit and develop self-sufficient businesses is problematic. Lack of assets, and stable employment lends a view that these peoples are not credit worthy, thus they are barred from a variety of economic opportunities.
Organizing groups to support collective and individual credit acquisition, as well as formal and informal skills training can assist peoples in accessing the capital necessary to initiate small businesses and ultimately help build livelihoods for families and communities.
A very basic description of the Self-Help Group (SHG) has been summarized by the Rural Finance Learning Center. According to their definition: " Self-help groups are usually informal clubs or associations of people who choose to come together to find ways to improve their life situations. One of the most useful roles for a self-help group is to provide its members with opportunities to save and borrow and it can act as a conduit for formal banking services to reach their members. Such groups can provide a guarantee system for members who borrow or they may develop into small village banks in their own right. In rural areas self-help groups may be the only way for people to access financial services " (2006).
The structure of the SHG is meant to provide mutual support to the participants by assisting one another in saving money, opening up cooperative banking accounts that help women and other peoples to build credit with a lending institution. The SHG also functions to support members through maintaining consistent contact among group members to aid the individuals savings goals, to help support the creation of these micro-enterprises. Often the SHG helps in the conception of these businesses and even the implementation of these enterprises upon receipt of the micro-loan.
The SHG also supports accountability for ensuring that the loans are paid back and the SHG can continue to include other members and support greater access to credit and capital to those within their community. SHGs also provide a space which facilitates the discussion of many issues pertaining to the communitys socio-economic, educational and health status. Thus, the formation of this group provides a forum to initiate many participatory activities (including training and awareness camps).
This process has also shown to increase confidence among participants, and help support greater levels of decision-making status in their society, particularly within South Asia. This hopefully will encourage members to participate and contribute in general social and political matters in their respective villages.
As peoples are supported in building their credit they in turn are able to apply for micro-loans geared towards a number of self-sufficiency based business ventures. Many of the business commonly financed consist of seamstress shops, beautician parlors, and in the rural areas these business can be as diverse as natural healing clinics, chicken farms and aqua-culture projects, to silk weaving or any number of handcraft based ventures.
While a great number of SHGs have been initiated by communities themselves, many of the SHGs are implemented through the help of an NGO that can provide the initial information and support to establish these groups. Such information and support often consists of training people on how to manage bank accounts to include deposits, withdrawals and balancing of the cooperative and individual accounts. Similarly informal education regarding a number of possible trades can take place in order to build up the capabilities of the participants to function as business owners.
But the SHG has some instances shown problems that must be addressed when considering their use as a pattern of community empowerment. For instance, many of these people are in absolute poverty and the little that they do save can put a family in an already precarious financial situation in a worse of place. It can force them to make tough choices as whether to purchase necessary goods such as food, clothing, fuel etc. and risk defaluting on their micro-loans, or in the case of SHGs hurting the entire group's ability to take out small loans as these are dependent upon the entire group's ability to save and collectively support each other through generating credit.
Other issues revolve around the nature of work and the family in developing countries where the women are often the primary householder while the male is involved in work outside the house. The creation of these businesses often adds greater levels of work upon women as they are committed to the SHG and the creation of their business to support their income and yet their household duties are still expected to be met by their husbands. In these situations the pressures can be immense to juggle the business, household chores and the rearing of children.
However, in response to some of these problems many NGOs have sought to play a critical role in lessening that burden by offering school to children and thereby giving women members the ability to pursue their career goals by providing a place for their children to go while simultaneously providing education to those children that would otherwise be working at home. Despite some of the draw backs the role of the SHG is still a vital and growing component of bottom-up development, and hopefully eventuating self-designed development in the future
Despite the problems some of the participants have faced due to the changing nature of their socio-economic status; the SHGs offer one approach to create associations of support for some of the most economically marginalized groups within society. Through the desire of women and other members of the community these SHGs can provide an organized structure for providing employability and ownership for peoples otherwise left out.
Overall, communities themselves can act to develop similar groups (or with the aid of NGOs working in the area), as these programs can be realized with relatively little resources from the outside.
It should also be noted that the SHG is not a panacea to social and economic development, and should only be one part of a larger solution to addressing poverty in communities. Other patterns must be called in to address some of the social consequences that can arise from the creation of an SHG.
Careful attention must be paid particularly to women as they are often the primary benefactors of the SHG and yet the amount of work involved is no less stressful and difficult for them. Other steps might also be taken to addresses these issues to pursue and integrated approach to supporting development.
For an in-depth guide to SHGs see: A handbook for trainers on participatory local development: The Panchayati Raj model in India.