The Value of Group Savings and Lending to the Poorest People

This is a guest post from Sudarshan Behera, Field Executive for our Livelihood Pathways for the Poorest project in Gaya, India.

Sugia Devi was a changed woman on November 7, 2011. She had just left the free cataract clinic in Bodhgaya in India’s northern state of Bihar and was grateful for her improved eyesight. She couldn’t wait to thank the people who had made it possible: the members of her adapted self-help group (ASHG).

Sugia Devi and her husband.

The group is part of Livelihood Pathways for the Poorest, a joint project of Grameen Foundation’s Solutions for the Poorest group and BASIX/The Livelihood School that is designed to enhance the skills of the ultra-poor, link them to income-generating activities and build their savings habits.

Sugia lives in Khaneta village with her husband and her son, and his family. When she first heard about the ASHG in August, her husband did not want her to join the program because of mistrust and a lack of understanding about the benefits of participation. She persisted and began attending meetings and saving a small amount each week. Starting with an initial deposit of 10 rupees (about 2 cents), by November she had saved 130 rupees (about $2.40). But it still wasn’t enough to pay her fare to get to the free clinic in Bodhgaya some 30 kilometres (19 miles) away.

That’s when Sugia turned to the members of her ASHG. In addition to providing a safe place to save, the groups also provide its members with quick access to short-term loans. Sugia’s group members approved her loan of 100 rupees, enabling her to cover her transportation costs for her operation.

Today, Sugia’s husband has a better appreciation for the value of the self-help groups, while she knows that her family can rely on the group when they need help. As her husband noted, before the ASHG, the family would have had to borrow from moneylenders who typically don’t lend less than 500 rupees (about $9), at very high interest rates.

Sugia has recovered from her operation, and now Friday – the day her ASHG meets – has a special importance in her life.

Building Skills, Building Confidence: How Ultra-Poor Women in India Are Taking a Step Toward Self-Reliance

This is a guest post by Avinash Kumar, a staff member of The Livelihood School of BASIX who is working with Grameen Foundation as the project manager for the Livelihood Pathways for the Poorest project in Gaya, India.

Asha Devi’s eyes sparkled as she rolled agarbatti (“incense sticks” in Hindi) for the first time. Asha is a member of an adapted self help-group (ASHG) in Pali, a village in India’s Bihar state, where the Livelihood Pathways for the Poorest, a joint project of Grameen Foundation’s Solutions for the Poorest group and BASIX/The Livelihood School, is being implemented. The sparkle in Asha’s eyes reflects newfound self-confidence and pride that by selling handmade agarbatti, she will be able to supplement her family’s income.

Women from the program hold up their newly-rolled agarbatti (incense sticks) during training

Nearly 100 women from six village ASHGs participated in our week long training. Agarbatti rolling, which is a common activity in almost all of the villages in the Gaya district of Bihar, is one of two income-generating activities being promoted through the project. These activities require simple skills and provide modest increases in income to help households meet their immediate consumption needs. As the clients’ confidence levels and skills increase, the project team will transition them into entrepreneurial income-generating activities, such as poultry farming and goat rearing, which require higher initial capital investment and skill sets but can significantly help fill income gaps throughout the year.

The agarbatti rolling training was unique not only because it was the first time women from the poorest families were receiving it, but also because it was the first time local women were given a leadership role to train their fellow community members. The experience of having a local woman train them in this skill helped increase the participants’ confidence, leaving them optimistic about their prospects and ability to contribute to their families’ income. While agarbatti rolling is common in the region, many of the households participating in our project had never done it because they live in relative isolation, making it more difficult for them to access agarbatti agents and vice-versa. Instead, they have depended largely on wage labor from agriculture production, construction work and road building.

Faced with very unpredictable and insecure income sources, these families have not had the luxury of time nor the opportunity to experiment with an entrepreneurial activity. In fact, these households often lack the necessary self-confidence to take up and learn a new activity, even such low-skill ones as agarbatti rolling. One of the aspects of the project is building the self-confidence of the members and, which, thus far, has been successful.

This training is the beginning of a change in this aspect of these women’s lives. As their self-confidence grows and they see their income rise, this positive change cycle will encourage them to seek out other opportunities. As they move forward, our team will work with them to continue on this path.

Seeing Is Believing

Luckshmi Sivalingam is a program officer in Grameen Foundation’s Solutions for the Poorest initiative, where she is managing a pilot program to expand income opportunities for the very poorest people in India.

After what seemed would be a third year of dry spells during the critical monsoon season, the rains have finally come in Gaya district of Bihar, India. Agriculture is one of the primary revenue sources for both farmers and wage earners like the 200 households that Grameen Foundation is reaching through the Integrated Livelihoods Model for the Poorest (ILM) pilot project being implemented in partnership with BASIX/The Livelihood School. The rains bring increased wage-earning opportunities, which translates into enhanced income and food security for most poor rural households.

The rains have finally come in the Gaya district of Bihar, India

To lessen the risks that come with erratic income-generating opportunities, Grameen Foundation’s Solutions for the Poorest (SfP) team is trying to gradually enhance the skills of the primary breadwinners of the households participating in the initiative, and connect them to more stable livelihood activities. These activities include supplementary income-generating opportunities that are often seasonal and low-skill, as well as entrepreneurial or productive activities that have a higher income-generating potential and often require increased skill sets and start-up capital.

Through our project, we are promoting livelihoods by first enhancing existing supplementary income-generating activities or introducing new ones that can rapidly increase household income and enhance our clients’ self-confidence and trust in our project team and partners. Next, we will introduce new, entrepreneurial livelihoods that generate higher incomes and can sufficiently fill the gaps in income that the rural poor often experience throughout the year. Examples include rearing goats, poultry farming and selling vegetables. By using this approach, we move away from creating an immediate dependency on credit to meet daily consumption needs and avoid disrupting clients’ existing livelihoods.

Over the past month in Gaya, we’ve held “exposure visits” for our clients to enhance their understanding of both the supplemental income-generating and entrepreneurial livelihood activities. These visits enable clients to visit another location to observe and learn from the other community’s activities and experience. Most importantly, they are able to see the various processes and participants involved in the entire chain of activities we will link households to. This deepens their understanding of the benefits and challenges of each activity and better informs their decision to commit to the “right” livelihoods for themselves and their households.

Two weeks ago, our clients visited the neighboring village of Orr, where they met with women of the same socio-economic background who have successfully engaged in “kitchen gardening.” This method of small-scale vegetable production involves very little or no land, and mostly organic inputs. Home-grown vegetables significantly increase nutritional levels while also contributing to income, as families can sell excess produce. Our clients also received a demonstration on gunny-bag gardening, which is essentially a garden in a bag that grows along creepers against the walls and roof of the house.

Before the visit, our clients doubted whether they had the capacity to start new activities, but after seeing how successful their peers have been, they said, “Now that we have seen them do it, we know we can do it too! And, we are ready to start!” Seeing really is believing.