PACT's Women's Empowerment Program in Nepal ? A Savings and Literacy Led Alternative to Financial Institution Building
WEP had created a microfinance model based on building equity in the groups rather than incurring debt to a Microfinance Institution (MFI) and was similar in spirit to the small early credit unions. There were some important differences, however: the WEP groups were smaller (21 members on average); they operated completely below the regulatory radarscope; the model was much simpler and was based on village banking and local savings and credit group traditions; literacy training was built in; leadership was from within the group and all the members were women.
The four book literacy curriculum Pact used to train the groups dealt exclusively with the program’s objectives – group strengthening, business development, empowerment, and community activism – and provided members the essential information required for success in each of these areas and thus helped insure the success of the groups. It was also believed that the women would not revert so easily to illiteracy if they had a practical use for their literacy skills.
One of Pact’s major innovations was to use literacy volunteers, usually one of the group members, to run the classes rather than hire an instructor. This was a major cost savings. WEP was time limited: it had less than four years of funding for start-up and curriculum development and less than three years to train the groups. It was a catalyst of group development in that WEP worked through thousands of community groups – set up for literacy programs,
irrigation and many other purposes – that were recruited into WEP by 240 NGOs, cooperatives and MFIs. These 240 local organizations and WEP jointly trained and supported the groups with the local partners receiving a stipend for their assistance. Using existing community groups and developing systems to operate effectively and efficiently thrrough large numbers of local partner organizations were the hallmarks of the approach.
240 Nepali organizations were recruited, trained and enlisted as WEP partners, including NGOs, cooperatives and various MFIs.
Training and support was provided to 6,500 groups with 130,000 members in the lowland Terai region of Nepal. Of these groups 6,265 were still active as of June 2001.
Existing groups have already created over 800 new groups with no financial support from WEP (spontaneous replication) with the number of new groups created exceeding the number of groups disbanded. In addition, the local partner organizations have taken responsibility for expanding the number of groups beyond their agreement with Pact, in response to demand from their women constituents. In the Eastern Terai alone about half of the local partners formed more than 500 additional groups (although they may have been counting some of the groups that the women created on their own).
45% of the group members (55,000) are considered poor; 35% (43,000) as the “emerging poor”; and 20% (25,000) as better off. This was a major accomplishment given that WEP was targeted to rural women, not poor rural women. Rural Nepal presents serious challenges for any organization: per capita income is $210 annually and less than half that in the rural region where WEP operates. A recent study ranking the state of the world’s women placed Nepal last out of 106 nations based on maternal mortality, use of contraception, births attended by trained personnel, anemia, literacy, and role in national government. Only 14% of rural women are literate. Violence against women is endemic.
Despite the region’s extreme poverty, the women participating in WEP mobilized $1,180,000 from savings, retained interest earnings and fundraising events between June 1999 and June 2001, over $500,000 per year. A total of $1,900,000 is held by WEP participants when group savings prior to joining WEP are considered. This amount is
projected to reach $3,000,000 by July 2002 and $5,000,000 by the middle of 2004 by which time most groups will meet all their credit needs. Not only are the groups saving more each year, the retained interest earnings on the loans becomes an increasingly important source of income for the group fund. This will be a remarkable accomplishment considering that MFIs justify their presence based on the perceived need for an external source of credit.
97% of the group funds are currently on loan to 45,366 members, making WEP the second largest village bank (VB) program listed in the MicroBanking Bulletin after Compartamos in Mexico. Compartamos, which began operations in 1992, currently has 49,000 borrowers and is working through roughly 2,500 groups. WEP, in contrast, has 130,000 savers and 45,000 borrowers and works through more than 6,000 groups. At the same time, it taught nearly 64,000 women to read with an essential part of the literacy curriculum focused on basic business literacy to improve the success of their enterprises.
Only 4% of the groups made loans that defaulted and 82% keep their own records without outside assistance, which is all the more important given that in many microfinance programs the staff are the groups’ de facto book-keepers.
An average of 89,000 women reported increased decision-making authority in the areas of family planning, children’s marriages, buying and selling property and girl’s schooling, reflecting the success of WEP’s empowerment objectives.
63,700 women gained a level of literacy with half of those who had never gone to school reading “easily” or with “some difficulty.”
86,000 women started a business since joining WEP thus for the first time having an independent source of income. In addition, since WEP builds equity instead of debt, the women earn an annual return on their savings of between 18% and 24% depending on the percentage of the group’s savings lent out..