March 8, 2007—Fifteen years ago, poor women in the Indian state of Andhra Pradesh were powerless to change their lives, or to improve the lives of their children.
Even as India’s star was rising in the world economy, many rural women remained unlettered and financially illiterate, held back by deeply entrenched discrimination, child marriage, the dowry system, girl child labor, and domestic violence.
Nearly 90 years since International Women’s Day was first observed, some 8 million women in the rural Indian state can truly celebrate. They’ve found a way to build incomes, dreams, and even political influence by banding together.
They defied tradition and often (initially) their husbands and in-laws by joining self-help groups of 10 to 15 women in their villages. The groups used seed money from the state government and the World Bank to pool resources and make small loans to each other every week to help pay for education, medical treatment, food or other small but important needs.
Unlike the local money lenders, who charged nearly 100 percent interest, the self-help groups’ 24 percent interest was manageable. Women faithfully paid back the money they’d borrowed, and the groups began to finance small businesses and rural assets like livestock and land.
The self-help groups formed federations, leveraged their finances and influence, and even began to deliver insurance, ambulance, extension, commercial and government services.
That’s when “the whole impression of the household and society changed toward them—because they were dealing with economic assets,” says Parmesh Shah, who heads up World Bank projects that provided seed money and training to the groups
Now some 629,870 self-help groups are leveraging US$2.6 billion, according to Shah. Savings of poor households grew to US$292 million in 2006. And the number of households with access to credit grew to more than 6 million in 2006 from less than 500,000 in 2000.
Incomes increased for close to 90 percent of poor rural households, and in Andhra Pradesh per capita income increased three-fold for many households. Banks are also lending 20 times more to the poor in rural Andhra Pradesh than before the project.
“The poverty numbers are getting significantly reduced in Andhra Pradesh and a lot of it has to do with this project, as well as the overall increase in growth rate,” says Shah.
“We are creating more ideal conditions for inclusive growth to take place. And now women are part of the economic space, from which they were excluded for a very long time. We have 50 percent women in society and their per capita contribution was considered insignificant. As of now I would say in their households they are bigger economic contributors than the men, at least in the 8 million households..”
The Andhra Pradesh District Poverty Initiatives Project and the Andhra Pradesh Rural Poverty Reduction Project scaled up an existing Andhra Pradesh indigenous effort to empower women. The projects were financed with US$261 million from the International Development Association, the arm of the bank that provides interest-free loans and grants, along with US$7 million from the state of Andhra Pradesh.
The projects aided the self-help groups and trained women in a number of skills needed to run various businesses.
The groups are very competitive in terms of efficiency and effectiveness, especially in reaching the poorest customers, “because they belong to that segment and they know their customers well,” says Shah.
For that reason, the government has tapped their services to deliver old age pensions door to door, and even to respond to the tsunami emergency of December 2004 by replacing fishing boats and other assets more quickly than any other similar effort in the country, says Shah..
Their success has inspired women to try to change the odds for their children, especially their daughters, by sending them to “bridge” schools, which help them catch up, and then residential (boarding) schools far away from landowners seeking girl child laborers.
“They are investing heavily in education,” Shah says. “A landless woman does not want her child to be landless again.”
He adds the groups are seeking ever more innovative ways of improving lives at the grass-roots level, such as investing in educational savings accounts or academic boosters for schools—even community run schools—and their aspiration levels for the next generation are higher..
The project’s success means it will likely be duplicated elsewhere. The Bank is tapping women in the Andhra Pradesh self help groups to help set up a similar program and train women in the eastern State of Bihar, India’s poorest state. And several countries, including Cambodia, Vietnam and China, have expressed interest in the program, says Shah.
The number and growing economic clout of the Andhra Pradesh self-help groups has lent them political influence, he adds.
“No political party can ignore these people, because they’re organized, they have 160,000 grassroots leaders, and they’re handling significant amounts of money.
“The journey is long. It starts with social empowerment and goes to economic empowerment, and then political empowerment. It’s not as if these women are not facing some kinds of societal pressures, but I think they know how to overcome it. That is the main thing.”