Avida's Story

Access to credit is not a new concept in the urban slums in India. Women borrow money from 'money lenders' who usually charge a rate of 10-15% per month or 120% annually. These exorbitant rates not only make repayment next to impossible but creates an environment where families become more and more entrenched in debt as they borrow money to pay back old loans. Money-lenders exploit women unable to make timely payments through the use of sexual and physical violence that sometimes even extends to the family.

From an economic point of view, NGOs are creating a more efficient money-lending market. Critics of microfinance point out the high interest rates - averaging about 24% per year. However, comparing 24% to the 120% the money lenders charge, the rate is much more reasonable. And that's where the comparisons should end. True, the 24% rate would never fly in the States, and in the same vein, no one would take out a loan for just $50. What seems like an insignificant amount of money to us can really make a difference in the ability of poor people around the globe to create and sustain livelihoods.

For example, listen to the story of Avida. Married at 9 years old she had her first child at 14. Only educated through the second grade, when her husband died of a heart attack she was left along to care for her four children. Through a friend, Avida learned of microfinance and joined a Self Help Group (SHG) to gain access to savings and credit. Ten years later, Avida has taken out three separate loans to expand her business of selling bangles and tailoring saris. So far she has borrowed and repaid 50,000 Rupees (about $1,100). She is currently repaying her third loan and then plans to take another to build a second floor on her house to rent. This will provide her with a stable source of income in addition to her other businesses.

Avida attributes her success as a business woman to the network she's built through the SHG group and her perseverance and patience. She takes great pride in the quality of her work and most of her business referrals come through word of mouth. At 34 Avida already has grandsons, but she hopes to educate her two children still living at home. One day she dreams of having a shop of her very own.

After spending an afternoon in Avida's 1-room home in the Pune slums listening to her story, I was struck by her confidence and the great strength she gains from the other members of her SHG. Joining the group has given her access to credit and savings, but along the way she and the other women have created a support structure for each other. Together they have taken on sanitation issues with the municipal government, successfully reported a man of domestic violence, and organized a day of clean up to impact the overall health of the community. Women came together for a tangible thing: money, and through the process became leaders and in their community.

As I continue to write this blog and delve into the specifics of how microfinance works please keep one thing in your mind:

Microfinance is a tool used for the end goal of empowering women.

Yes, microfinance is profitable.
Yes, microfinance institutions can be self-sustaining.
...but microfinance practiced for the sake of making profits is a misguided approach.

In the next few entries I will describe a few methods of microfinance I have witnessed and how it contributes to women's empowerment.

Sorry, no pictures today! Having some technology issues... Hope all is well!

Communicating in India

English and Hindi are the national languages in India, but that doesn't mean that everyone speaks one or both of those! And even if people do speak English, the cadence, vocabulary and inflection is so difficult to understand to my American-English ears that they may as well be speaking a different language!

India is huge, and every state speaks a different language.



For example, when major corporations are running a national marketing campaign in India there is always the question of what languages to run it in and where...and it can lead to really costly marketing in multiple languages. When Indians travel between states, they aren't always able to communicate with each other.

We are able to get by with English, most people speak basics in the cities for shopping and other things. However, in the slums and rural areas we are working through translators.

Another really interesting thing is the head waggle. The best I can describe it is as a bobble head doll, when you ask a yes or no question the head moves from side to side in sort of a figure eight motion...I'll demonstrate it for you when I get back! It can mean yes or no or anything in between. It's hilarious.

Thanks, Stacy for the questions! Yes, in the first group meeting we went to they had us sit in chairs while they sit on the floor. In most meetings people sit on the floor...but since we were guests at the meeting they had set up their chairs for us. It was awkward sitting there, but if we were to refuse it might be even more awkward.

I've learned that in India there is a saying, "athithi devo bhava" which means something like "treat the guest as God." Perhaps some of you who are more familiar with Indian culture can shed more light on this...but the bottom line is guests are treated very well. Everywhere we go we have been served tea and biscuits (another tradition likely inherited from the English colonization) and we have been treated very well. Even in the slums, we were served hot chai!

And, since I'm a firm believer that every blog entry should have pictures, I'll leave you with a few.

Field Excursions with DST

The last two days we spent at an NGO called Development Support Team (DST). The organization began in 1984 as what I liken to a consulting firm - they provided support to other non profit organizations in proposal writing, monitoring, capacity building and evaluation. After a time they became direct practitioners in the field because they felt it would inform their theory. Since 1992 they have been practicing microfinance as a tool for women's empowerment.

In the mornings, DST gave a presentation on their model of microfinance and how it's a tool used for women's empowerment. I found these presentations to be extremely useful and fascinating - and we had a lot of really great discussions about the model, the practice and how it all translates into the end goal. I feel like this direct experience has really answered a lot of my own questions on how microfinance actually works and I feel so lucky to be here. I can't wait for the coming weeks and to learn about other models.

DST has developed a microfinance framework based on Self Help Groups (SHG). Each group is between 10 and 20 women in size, and to be in the group you must commit to save a small amount every month. After 6 months of the formation of the group, the group can start lending to each other using the money they have collected. Each group establishes their own rules, regulations, loans to approve, etc. DST aids the group in creating these formal structures but the groups are completely run by the women, DST only aids in further training and development through connecting them with resources or facilitating workshops. Each group is also supported by a community worker, a social worker and DST staff maintains in contact with the groups on a regular basis. I want to go into the details but I think I'll save it for another post - only 10 minutes left at the internet cafe! I'll write a post soon about their model, how it works and why it works.

In the afternoons DST took us to the field to visit with the women's groups and with a translator we were able to engage in direct Q&A with the groups. Here is a picture as everyone is getting seated and filing in - there were 20 women there when the meeting started.



It was set up so that for 2 hours were were able to ask any question we wanted. I didn't expect that we would have such free reign and direct interaction! After the first hour, the group really started to liven up and come out of their shells, their reactions were much more boisterous and they started to tell more of their experiences. I was struck by how confident the women are. It's obvious they have a strong sense-of-self despite the challenges they've faced. The SHG serves two purposes: 1) to give the woman a safe place to save, and access to loans if needed, and 2) to set up a social support group the women can turn to. The individuals have benefited in so many ways - it goes so far beyond access to money, yet the microfinance is the tangible tool that brings them all together and allows them to build community and support each other. The groups not only uplift the members economically, they also tackle social issues and give the women a platform with which to approach authorities when they need to report a crime or demand municipal services when they need something done for the community.

I only have pictures from the first day, unfortunately. I let the kids handle the camera and they had a great time taking photos. Here's one they took:



Other images from the day:







Today we split into smaller groups and were given a tour of the slums and visited a few microenterprises that the women had set up in their homes.



One woman was doing some sewing, selling saris (traditional dress) and bangles (bracelets). Others were selling grain, others had set up small vegetable stands. Their stories were incredible and they were so gracious. This group of women were more focused on enterprise as opposed to savings like the first group we visited...and their groups were much more mature than the first group, 10 years as opposed to 2 years old. In this community, there were also four or five men's SHGs that had formed - and it was great to hear that it was becoming a community wide phenomenon and men were being taken into the mix as well.

I have so much to share and convey, but I'm running out of time. I'll go into more details on my next posts. This is an amazing experience and I'm so excited for the next few weeks. Hope all is well!