Role & Impact of Microfinance Institutions in Coastal Communities Nikita Gopal & B. Meenakumari # Central Institute of Fisheries Technology (Indian Council of Agricultural Research) Matsyapuri P.O., Cochin 682 029 Kerala, India # Deputy Director General (Fisheries) Indian Council of Agricultural Research, New Delhi
What is microfinance why this study.. INTRODUCTION Special 3rd Global symposium on Gender in 2
Microfinance as defined by ADB (2000) refers to the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance to poor and low-income households and their micro-enterprises Has existed in informal forms in rural areas, with a lot of drawbacks As in rural areas of many countries, especially developing and less developed countries, institutions dealing in microfinance is gaining inroads into the fisher community in India as well Making easy credit availability at rather flexible terms Encourages thrift Many agencies involved Its impact on employment and income and other socio-personal variables These aspects examined among fisherwomen and men who have availed microfinance credit Special 3rd Global symposium on Gender in 3
The study.where, when and how... MATERIALS & METHODS Special 3rd Global symposium on Gender in 4
Institution Based on governance structure Government & NGO Two districts of Kerala Ernakulam Thiruvananthapuram Respondents 130 25 men & 105 women Type of MF Institution Male Female TOTAL Government 11 73 84 NGO 14 32 46 TOTAL 25 105 130 Personal interviews based on questionnaires Descriptive statistics, Group Dynamics Index for group behaviour, Risk analysis on awareness of microfinance schemes 5
The findings.... RESULTS & DISCUSSION 6
While the institutions like Fishermen Cooperative Societies operated microfinance schemes funded by the state, the NGO schemes were funded through their own funds or through funds they arranged from banks The major role that these institutions play, is to make credit easily available to rural households The credit is usually given to groups, but may also be lent to individuals The rates of interest depend on the scheme and are varying Usually, the state sponsored schemes are linked to enterprise initiatives and credit is lent to individuals or groups starting an small scale enterprise Repayment schedules may range from daily, weekly to monthly ones for different schemes 7
Matsyafed, the Kerala State Co-operative Federation for Fisheries Development Ltd. Chellanam-Kandakadavu Fishermen Welfare Development Cooperative Society, Ernakulam, Kerala Fisher groups During 2009-10, disbursed INR 542 lakh to a total of 10103 beneficiaries in Kerala, the average amount being Rs. 5400 per beneficiary. Majority of the beneficiaries are fisherwomen - only 14.9% fishermen 8
Activity Percentage Fish Marketing 49.49 Ornamental fish culture, fishing tools, net making, fishing allied activities, pickling units 19.70 Coconut products, curry powders, flours, mat making, milk, oil, paper bags, rice marketing, soap making, tailoring unit, vegetable 17.17 cultivation Small businesses, provision stores, bakeries 9.09 Cloth business 4.55 9
Microfinance through Govt. supported Fishermen Cooperative Society The Society has through the microfinance scheme given INR 1,09,05,333 (more than USD 200,000) to 113 men and 176 women groups during 2008-2011. The interest rate is 6% (5% of which goes to the financing body and 1% to the Society as service charges) Repayments are monthly over a period of 18 months (there is no minimum repayment amount) Repayment good with very few defaulters and compulsory savings The NGO case Lent to a group, usually a thrift group Interest rate 12% Weekly repayment (Usually a person appointed by the NGO goes for collection of the amount) Repayments generally good (as single defaulter in a group would make the other members liable for repayment and thus groups are formed carefully) 10
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Socio-demographic variables Men Women Govt 41.91 43.81 NGO 46.71 44.69 12
10% Illiterate 60 50 12.31% Can read & write 20.77% Primary 40 30 20 10 0 Men Women 33.08% Middle Illiterate Can read and write Primary Middle Secondary Collegiate 16.15% Secondary 7.69% Have gone to college Govt. NGO TOTAL Men Women Men Women Illiterate 1 9 1 2 13 Can read and write 1 6 4 5 16 Primary 1 18 1 7 27 Middle 8 24 4 7 43 Secondary 0 11 1 9 21 Collegiate 0 5 3 2 10 TOTAL 11 73 14 32 130 13
All respondents were married 22% 78% Nuclear Joint Average family size Govt. NGO Men Women Men Women 5.18 4.45 4.57 5 14
Basic household amenities 33% 6% 28% 33% Concrete Tiled Thatched Asbestos roof 39% of the respondents lived in houses having temporary roofing 15
Motorcycle 9% Radio 9% Cycle 16% Refrigerator 15% TV 51% Half the respondents had a television 16
100 90 80 70 60 50 40 30 20 10 0 92% of respondents had access to toilets and potable water Toilet Potable water 17
Access to education and healthcare is good and the distance to the nearest educational institutions and health centre are given College 10.95 Secondary School 2.32 Primary school 1.01 0 2 4 6 8 10 12 18
Hospital 4.64 PHC 1.26 0.00 1.00 2.00 3.00 4.00 5.00 19
Income Average monthly family income of respondents is USD 209 Male Female TOTAL Govt 469 195 226 NGO 224 161 178 20
Information gathering behaviour Newspaper No 4.00 Radio 12.00 TV Regularly 48.00 40.00 Occasionally 28.00 56.00 0% 20% 40% 8.00 60% 24.00 80% 100% 4% of men respondents do not read newspapers & 12% do not watch TV 21
No 6.67 2.86 Regularly 55.24 25.71 73.33 Newspaper Radio TV Occasionally 30.48 20.00 36.19 0% 20% 40% 60% 80% 100% 6.67% of women respondents do not read newspapers & 2.86% do not listen to the radio 22
Economic motivation 180 160 140 120 100 80 60 40 20 0 Getting higher incomes was a major economic motivation among the respondents Better Production Higher Income Men Women 23
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Purpose of availing MF credit Others 8.33 2.17 Household repairs 11.90 23.91 Repay debt 4.76 4.35 Government NGO Household consumption 21.43 41.30 Start enterprise 53.57 28.26 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 25
60 50 40 30 20 10 0 Women Start enterprise Household consumption Repay debt Household repairs Others Men More men than women took credit for starting an enterprise, while women mainly wanted credit to meet household expenditure 26
Knowledge about MF credit Government NGO Men Women Men Women Cooperative Society/NGO 6 42 6 16 Neighbours 2 15 2 8 Family - 4 2 3 Others 3 12 4 5 The agencies operating the schemes were the main source of information about the schemes 27
Availed benefit of other schemes 100% 90% 80% 56.32 63.04 70% 60% 50% 40% 30% 76.19 65.22 Benfitted from NGO scheme earlier Benfitted out Govt schemes earlier 20% 10% 0% Govt NGO Multiplicity of agencies and schemes in coastal areas has been observed 28
Section III Credit taken Repayment schedules Knowledge about the schemes Relative risk 29
Loan amount taken ranged from five to ten thousand rupees (approx USD 100 to 200) 0.88 20.35 78.76 Daily Weekly Monthly 79% of respondents made monthly repayments while 20% respondents repaid every week 30
23.08% of the respondents were regular in repayment, 66.67% of them women 14.95 85.05 Fixed Varying 31
Knowledge about terms of credit Knowledge about reapayment schedule before availig credit Knowledge of repayment schgedule 92.86 90.91 92.86 90.91 Knowldege about rate of interest before availing credit 64.29 72.73 Rate of interest 57.14 72.73 Knowledge about source of finance 78.57 90.91 Knowledge of the scheme NGO_Men 85.71 81.82 0 50 100 Govt_Men 32
Knowledge about repayment schedule before availing credit Knowledge of repayment schedule Knowldege about rate of interest before availing credit Rate of interest NGO_Women Govt_Women Knowledge about source of finance Knowledge of the scheme 0 20 40 60 80 100 33
Relative risk Based on the contingency table on awareness of credit schemes and related information, relative risk was calculated Repayment schedule 0.98 1.03 Rate of interest 1.00 1.27 Women Financial details 0.80 1.16 Men Credit scheme 0.78 0.95 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 Women had less awareness about the various aspects of the microfinance credit schemes and had higher relative risk when compared to men 34
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Livelihood changes Respondents feel that personal as well as family incomes have increased Women 39.13 6.52 Incraesed No change Men 64.29 1.19 0 10 20 30 40 50 60 70 36
Occupations of women respondents 5% 34% 14% 47% Home makers Fish drying Fish marketing Others 37
100% 1.37 95% 6.25 90% 85% 63.01 No change Incraesed 80% 37.50 75% Government NGO Women respondents who have taken credit from government schemes feel that their incomes have increased when compared to those respondents who have taken from NGOs 38
Monthly income before starting enterprise using microfinance credit Nil 3 3 <500 7 19 4 11 500-1000 3 34 8 11 >1000 17 7 Earnings per month (after credit linked enterprise) <500 7 1 4 500-1000 2 30 4 18 > 1000 4 23 4 39
Impact on living conditions 5.88 9.80 17.65 Roof Walls 54.90 17.65 Toilet Room add Others Respondents brought about changes to their houses 40
3.23 19.35 6.45 38.71 TV Fridge Cycle 6.45 25.81 Scooterr/motorcycle furniture Others Respondents added household articles 41
Change in Social Status Can't say 3.13 No change 18.75 13.70 NGO Has decreased Has increased 78.13 86.30 0 20 40 60 80 100 Government Majority of women who have started enterprises felt that their status in their community has increased 42
Decision making 50 46.88 45 40 35 30 32.88 25.00 32.88 Credit 25 20 15 13.70 15.63 10 5 0 Husband only Mostly husband Both 8.22 Mostly wife 6.25 1.37 Wife only 0.00 10.96 Can't say 6.25 NGO Government Among 30 to 50% of the respondents the decision to avail credit is taken jointly 43
Can't say Wife only Food Mostly wife Both Mostly husband Husband only NGO Government There is no specific trend in food decisions, with decisions being taken by husband, wife and together. Surprisingly 45 respondents couldn t respond to this question! 0 10 20 30 40 50 60 70 44
clothing Can't say 9.59 6.25 Wife only 4.11 3.13 Mostly wife 21.92 40.63 Both 45.21 43.75 Government NGO Mostly husband Husband only 0% 20% 17.81 Decisions on purchase of clothing is usually taken jointly as is seen in 45% of respondents 40% 1.37 60% 80% 6.25 0.00 100% 45
hospital 70 65.63 60 50 50.68 Another important area in family welfare is heath and the decisions regarding these are mostly taken jointly 40 30 21.92 Government NGO 20 15.07 15.63 10 9.38 2.74 0.00 2.74 0.00 6.85 9.38 0 Husband only Mostly husband Both Mostly wife Wife only Can't say 46
School/college 70 60 50 40 61.64 50.00 30 20 10 0 10.96 Husband only 9.38 1.37 Mostly husband 28.13 Both 15.07 Mostly wife 6.25 2.74 Wife only 0.00 8.22 Can't say 6.25 NGO Government Decisions regarding education are also mostly taken jointly, but the domination of men in this case is visible in case of 40% of the respondents where these decisions are mostly or almost entirely taken by men. 47
Can't say Wife only 0.00 2.74 13.70 18.75 Marriage is major event in rural communities and decisions regarding these for majority of respondents is taken jointly by the spouses Mostly wife 0.00 5.48 Both 69.86 78.13 NGO Government Mostly husband 0.00 1.37 Husband only 3.13 6.85 0 10 20 30 40 50 60 70 80 48
94 92 Decisions on running of the enterprise 90 88 86 Govt_Women NGO_Women 84 82 80 78 What to do with credit Where to purcahse raw material How to manage the enterprise Where to sell the product Schedule the rea\payment Saving from the income Working hours of enterprise 49
Physical Mobility 80 70 60 39.60 50 40 Women Men 30 20 35.14 22.77 6.93 10.89 19.80 10 13.51 16.22 16.22 18.92 0 Another village Nearby town City Outside district Outside state While locally the mobility of women is more, men have more mobility towards the city 50
70 60 50 40 30 20 10 0 No change Move more freely Less freedom 61% of women felt that their mobility has increased than before, while 39% feel that there has been no change or restrictions have increased 51
More women who have availed microfinance under government schemes have travelled outside the state. 52
No, 19.18 Group dynamics GOVT. Yes, 80.82 Member of SHG 81% - 94% of women are members of one organisation or other No, 6.25 NGO Yes, 93.75 53
3.75 4.83 4.75 6.39 Govt_Men Govt_Women NGO_Men Duration of membership NGO_Women Varies from 3.7 years to 6.93 years Women have more years of experience in SHGs than men 54
70 60 50 40 58.90 62.50 30 20 10 No 0 Government NGO Yes 55
Never Rarely NGO Government Sometimes Regulary 84.93 96.88 0 10 20 30 40 50 60 70 80 90 100 56
Never NGO Government Rarely Sometimes Regulary 75.34 90.63 0 10 20 30 40 50 60 70 80 90 100 The women also participate in discussions regularly 57
Never NGO Government Rarely They also exercise their franchise regularly Sometimes Regulary 0 20 40 60 80 100 58
100 90 80 70 60 50 Government NGO 40 30 20 10 0 Regulary Sometimes Rarely Never 59
NGO 87.50 Government 79.45 Political awareness was also high among the women with 80-88% of the women having knowledge about which political group is in power at the local government 60
NGO_Women Group Dynamics Index NGO_Men Govt_Women 60 59.13 50 41.02 Govt_Men 40 0 20 40 60 80 100 30 20 10 0 Govt NGO Group Dynamics Indices (GDI) were higher for men than women Among both men & women, it was higher for women availing credit from NGO schemes The overall GDI was also higher for respondents in the NGO group 61
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NGO_Women 81.25 NGO_Men 57.14 Govt_Women 73.97 No Yes Govt_Men 81.82 0 10 20 30 40 50 60 70 80 90 Having an account in a nationalised bank is becoming more common among the coastal communities. Monthly savings ranged from Rs. 700 to 1500 (USD 14 to USD 30) 63
100 90 85.71 87.50 80 70 72.73 75.34 60 50 40 Has increased No chage 30 20 10 0 Govt_Men Govt_Women NGO_Men NGO_Women Perceived confidence levels among respondents have increased in almost 80% of the respondents 64
100 80 81.818 72.603 81.250 60 40 20 0 42.857 Govt_Men Govt_Women NGO_Men NGO_Women Yes No Less than 20% of the respondents had trouble operating their accounts & understanding entries in their bank books 90 80 70 60 50 40 81.818 69.863 64.286 78.125 30 20 10 Special 0 3rd Global symposium on Gender in Govt_Men Govt_Women NGO_Men NGO_Women 65
NGO_Women 71.88 NGO_Men 50.00 No yes Govt_Women 64.38 Govt_Men 54.55 0 10 20 30 40 50 60 70 80 However, a majority of respondents needed help in filling up official forms. 50% of the men and 60-70% of the women. 66
NGO_Women 84.375 NGO_Men Govt_Women 85.714 87.671 No chage Has decreased Has increased Govt_Men 90.909 0 10 20 30 40 50 60 70 80 90 100 The confidence level in approaching organizations has also increased in almost 90% of the respondents. 67
This study &..Future CONCLUSIONS 68
From the beneficiaries point of view, microfinance is a good option for meeting the consumption needs of the rural poor, and this is true for the coastal areas as well. The emergence of small scale livelihood options for fisherwomen as a result of availing microfinance loans, has had a positive impact on the income of the family. Financial discipline conceptual framework on many studiesobserved here also seen mainly in repayments. Instruments operated through groups- so higher group activity and group dynamic indices. Has had a positive impact on decision making within the family and within enterprises. 69
Credit in many cases has gone into meeting immediate household expenditure Only in certain schemes, especially government schemes, has credit been linked to enterprise and compulsory savings. Main drawback has been poor asset creation. Unless there is creation of tangible entrepreneurial assets, the income and employment generating activities will not be sustainable in the long run. Beneficiaries taking credit from multiple agencies, and repayment of credit taken from one agency from credit taken from another agency, is becoming common place. Microfinance credit linked to well defined asset creation for livelihood enhancement, is an option that needs to be explored. 70
Future direction: Actual number of agencies involved Extent of penetration of various agencies in coastal communities Exploration of the various instruments Monitoring & Quantification of impacts economic terms 71
ICAR Director, CIFT FAO Smt.P.Jeyanthi, Scientist Shri. V. Chandrasekhar, Scientist Shri. K.D.Jos, Technical Officer Shri. K.D.Santosh, Technical Assistant Shri. Ajith Chellappan, Technical Assistant All the respondents of the study THANK YOU 72