Do Women Value Microfinance Group Membership for Its Own Sake?

Is attendance at microfinance group meetings solely a cost some people, especially women, are willing to pay just to gain access to services?  Or do the women value the group, its members, and its meetings for their own sake?  Is this a benefit over and above the value of the financial or other services made available through the group?  Is this benefit real?  Is it substantial?

You would think that Freedom from Hunger must have solid evidence of this group value after years of experience and formal research.  The odd thing is that we don’t.  We, like so many others in microfinance, were not looking for it.  We just have what we have stumbled over in pursuit of other questions.

For example, Lynne Davidson Jarrell, the lead author of Freedom from Hunger’s Human Faces of Microfinance Impact: What We Can Learn from Freedom from Hunger’s “Impact Stories” Methodology, has reviewed the 274 stories from randomly selected women clients in several countries to see what the women say about the value of the group itself.  Here is her report for this post:

Of the 230 that we classified as having experienced improvement, 64 (28%) identified benefits that went beyond the loan and the education. 12 discussed other costs. A majority of those “other” benefits were something like “the support I get from other members of the group.” This was a common theme, especially in Mali, and to some extent in Bolivia and Peru. Of the 44 of those who had not yet experienced a significant improvement in their lives, 4 of those still bothered to identify specific beneficial aspects of the program (outside of the loan itself or the educational program), and 10 spoke of specific costs.

Of the 68 people who identified other sorts of benefits, 48 made comments that fall into a category that we can summarize as “socializing and support.” Examples include:

  • Peru: the group is a great source of “mutual support, friendship, and understanding.”
  • Mali: “The members all laugh together and have fun. . . . The members clap and sing.”
  • Bolivia: likes the opportunity to “socialize with other members.”
  • Mali: says that the women in her group “have become family.”

Of the 22 individuals who make reference to specific problems (outside of simply paying what is owed), only six people mentioned the frequency and length of meetings as being problematic. The rest complained about the constraints imposed by having to limit the number of participants and the requirement that loans start small.

These data come from open-ended interviewing of randomly selected clients by students trained in qualitative research techniques.  Many, more casual, observers have a lot to say about the women enjoying the meetings.  The more the “credit officers” (a.k.a. field agents, promoters, animators) enjoy the meetings, the more the women enjoy the meetings, or vice versa!  Which comes first?

Group dynamics seem to be very important.  Of course, the culture and personalities of group members must be huge factors.  However, the recruitment, training, supervision and incentives for frontline staff seem to be key precursors for healthy and happy group dynamics.

Additional evidence may be found in conversations with microfinance institution leaders.  For example, Freedom from Hunger has introduced to at least 150 microfinance providers the systematic training of field agents to be non-formal educators and equipped them to apply this general skill to specific education objectives ranging from induction training of clients, to skill development for microenterprise management, to training for better health and nutrition and financial capability.  The leaders of CARD in the Philippines and SEF in South Africa have quite spontaneously and independently reported their great satisfaction.  Not just because their clients were getting good-quality education, the original objective for inviting us in.  More striking (and surprising) to them and to us was that their field agents had become better field agents.  Not just better educators.  Better at doing the job they had been doing before, which was supporting and overseeing their groups of women clients.

Logic indicates that the training as facilitators of a learner-centered process (suited to adult learners with considerable life experience to share with each other) had taught the field agents to interact with their clients in more respectful, supportive and mutually satisfying ways.  The leader of CARD seemed convinced they had actual evidence that the clients themselves were performing better in terms of repayment and loyalty than before the field agents were trained.  Caught off-guard and focused on other matters, we didn’t pursue the opportunity to verify this assertion, but given CARD’s own research capacity, they may be able to provide solid data to support a correlation between field agent training as adult educators, quality of performance as field agents, and the performance of clients.

The role and performance of the field agents might have dramatic effects on the fate of the microfinance business itself.  A “natural experiment” occurred in Bolivia during the 1999 debtors’ revolt, when microfinance clients throughout Bolivia were organized and encouraged by political opportunists to default on their loans en masse.  All the major microfinance providers were hit extremely hard by this collective action—except for CRECER and Pro Mujer, the only two that provided good-quality adult education to client groups.  We asked several of the CRECER clients why they did not join the revolt and default on their CRECER loans.  The typical answer was, “Because we can tell that CRECER cares about us.”  Why this perception of a caring institution?

Logic indicates that frontline staff engaging their clients in education have a much more personal and respectful relationship with their clients than those who solely perform as loan officers and collection agents.  Once again, we were too busy with other matters to pursue this inquiry and really document the results of the natural experiment.  Alas!

It is tempting to cite evidence of women’s empowerment as corroborating this line of reasoning that the groups can have substantial value to clients when the field agents are trained to be supportive of healthy group dynamics.  However, it is difficult to tease apart the influence of success in taking and repaying a loan, earning more income, and having savings safely on deposit from the effects of the group dynamics.  I will return to explore evidence of empowerment in Theme Five (Increased Social Capital & Improved Self-Confidence?).  For now, I’ll just say that healthy group dynamics and a “trusted intermediary” (to borrow Grameen Foundation’s excellent label) as field agent are hypothesized to be key ingredients of satisfaction with group membership.

Clearly, this hypothesis needs to be articulated better and tested by new, more rigorous field research but also with existing evidence in various stories and studies.  I’ll bet you could offer some in a comment!