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Poverty is largely a rural phenomenon in many economies and the majority of world’s poor are women. The impact of microfinance has been identified as an effective mechanism in rural poverty alleviation and empowering women in developing countries. Sri Lanka is a developing economy with a widely diversified Microfinance system and the Samurdhi Program has the largest Microfinance clientele serving rural areas there. The vast majority of Samurdhi program participants are women. This paper discusses to what extent this program has been successful in empowering rural women in Sri Lanka. A case study was conducted in Ihala Koswaththa village situated in Kurunegala district in North Western province of Sri Lanka. The study is analyzed through three dimensions of economic empowerment, improvements in well being, and social and political empowerment. The findings demonstrate that the access to financial services through the Samurdhi Program contributes to household wellbeing, but the impact on economic empowerment, the program’s main objective, has been limited. The women of Ihala Koswaththa were actively involved in the Samurdhi Program group activities and community development programs. These activities provided more opportunities for the women to expand their social networks, exchange information, and improve their personal development skills thus widening their social and political awareness. This article concludes with some recommendations for rural women’s empowerment through Samurdhi Program.
microfinance, rural poverty, women’s empowerment, Samurdhi Program, Sri Lanka
Poverty is largely a rural phenomenon in many developing economies and women bear a disproportionate burden of global poverty, representing 70 percent of the world’s poor. Providing affordable financial services to the rural poor has been an important component of inclusive development in most developing countries for the last several decades (Yaron, Benjamin, & Charitonenko, 1998). In this context, Microfinance has received attention in the development arena due to its potential contribution to developing functional financial markets in rural areas (Thankom, 2005) through providing capital to poor women through repayment technologies that placed them at an advantage.
Microfinance refers to the provision of financial services on a sustainable basis to the poor who are generally outside the reach of formal financial markets and often includes social intermediation (Churchill & Frankiewicz, 2006; Ledgerwood, 2001). Studies have demonstrated the impact of Microfinance on poverty reduction including reaching the poor, lifting their economic well being as well as empowering them. In particular, Microfinance has shown to empower women through providing access to material resources and increasing their participation in household decision making (Khandker, 2002; Robinson, 2001; Todd, 2000, Amin et al, 1998; Buvinic, 1983).
As with the rest of the South Asia region, Microfinance in Sri Lanka has a long history dating back to the early years of the 20th century (World Bank, 2006). Microfinance has been given a leading role in government poverty reduction programs, and in its strict sense began to be widely recognized in Sri Lanka as a central tool for alleviating poverty and empowering the poor with the enactment of the government’s Janasaviya Program in 1989. This program was later replaced by the Samurdhi Development Program, which was introduced in 1995 and remains the largest government initiative (Thilakaratna, Wickramasinghe & Kumara, 2005; Fernando, 2009). The Samurdhi Program has extensive coverage in the rural areas and the majority of the program participants are women.
Some researchers question the impact of microfinance on women’s empowerment. They view the effect of women’s participation in Microfinance programs as reinforcing patriarchal norms of women’s subordination leading to worsening gender relationships and disempowerment of women (Goetz & Gupta, 1996; Montgomery et al, 1996; Rahman, 1999). This article provides some insight into this debate by examining the impact of the Samurdhi Program in empowering rural women in Sri Lanka. The study was conducted in the Ihala Koswaththa village situated in Kurunegala District in North Western Province of Sri Lanka. The assessment in this article relies on the female Microfinance clients of Ihala Koswaththa to indicate and evaluate the changes that access to Microfinance services through the Samurdhi Program has brought into their lives.
Microfinance and Women’s Empowerment
The concept of empowerment is complex and there is no agreement on a single definition of empowerment in the literature. However, the majority of the definitions at least agree on the fact that empowerment is a progressive process of change rather than an end product.
According to Keiffer (1984), empowerment is a development process that includes the four stages of entry, advancement, incorporation, and commitment. The entry stage is referred to as an act of provocation that appears to be motivated by the individual’s experience of some event or condition threatening to the self or family. The advancement stage includes the three major aspects of mentoring relationships, supportive peer relationships with a collective organization, and the development of a more critical understanding of social and political relations. During the advancement stage these three aspects are considered to be important in continuing the empowerment process. The incorporation stage focuses on the development of increasing political awareness. In the final stage of commitment the individuals apply the new participatory competence to ever expanding areas of their lives.
Whitmore (1988) identifies some common underlying assumptions when defining empowerment. These assumptions are:
individuals understand their own needs better than anyone else and therefore should have the power to both define and act upon them;
all people possess strengths upon which they can build;
empowerment is a lifelong endeavor; and
personal knowledge and experience are valid and useful in coping effectively.
While it is already complicated to define and conceptualize empowerment in general, defining women’s empowerment is even more difficult. Empowering women may specifically refer to their economic situation, but also to increased wellbeing and transformation of power relations, all depending on their existing conditions and viewpoint. Furthermore, empowerment may reflect itself in women’s participation in social and political activities, and therefore ideally empowering other women as well (Majoor, & Manders, 2009).
The following table highlights different conceptualizations and frameworks for women’s empowerment in Microfinance.
Different Conceptualization and Frameworks for Women’s Empowerment
Moser’s (Gender Needs) Framework (1989)
Emphasis in this framework is laid on gender needs
Women’s interest: the diverse, complex and often conflicting interests which women hold as individuals and which are therefore shaped by class, ethnicity, age and gender
Practical gender interest: arises because of different gender roles and are formulated by (wo)men themselves in response to an immediate perceived need
Strategic gender interests: arises from a feminist analysis of women’s subordination (and men’s dominance) aimed at transforming gender relations for gender equality
Longwe’s (Progression) Framework (1989,1991)
This framework presents empowerment as a linear entity, both as a stage that feeds into the next stage, from
Welfare: with improved women’s material welfare such as food, income, and medical care, etc.
Access: on equal footing to factors of production and public services
Conscientisation: on the difference between, with the aim of transformation of sex and gender roles
Participation: as equals, (wo)men partake in decision making, policy processes and administration
Control: with (wo)men equally taking control over factors of production and the distribution of benefits there from without dominance
Rowland’s (Power Process) Framework (1997)
The emphasis of Rowland is on power, i.e
Power from within: individual changes in confidence and consciousness
Power to: capability and capacity improvement as in skills, income, and market and job access
Power over: overcoming subjugation at household, community and macro level
Power with: networking, partnership, collaboration and joint action to challenge and change power relations
Chen’s (Product) Framework (1997)
Material change: in income (quantity and security); resources (access, control, and ownership); basic needs (for well being); and earning capacity (availability and ability to take opportunity)
Perceptual change: in self esteem (of individuality, interest and value); self confidence (in own ability and capacity); vision of future (by forward planning); and visibility and respect (for individual value and contributions)
Relational change: in decision making (in household and community); bargaining power, participation (in local institutions and processes eg. Politics); self reliance (reduced dependence and increased interdependence as equals) and organizational strenghths (structure and leadership)
Source: Adapted from Mayoux (2002)
Kabeer (2001) discusses why various studies come up with different answers to whether women are empowered or not through participation in Microfinance programs. She explains these contrasting answers as a result of studying empowerment as a linear process, of methodology and the view of women as a homogeneous group. She argues that empowerment should not be studied as a linear process, and instead it should be viewed as a multidimensional process of many levels, where causes and effects are not easily distinguished. Thus, it is not much use to apply quantitative methods in such studies, which confirms empowerment through a few indicators that might not be valid in all cases. She further explains that women are not a homogeneous group but a group of individuals and empowerment is a subjective experience because women respond to various opportunities in different ways, and therefore, women’s empowerment should be studied from the women’s viewpoint, by listening to their personal experiences and referring to their understanding of reality.
Mayoux (2000) suggests three contrasting paradigms of women’s empowerment in Microfinance programs.
Financial self sustainability paradigm: based on programs sustained by women’s repayment rates and expecting empowerment to emerge
Poverty alleviation paradigm: where Microfinance is integrated with community development, targeting the poor and household wellbeing is linked to empowerment
Feminist empowerment paradigm: is a sectoral strategy that centers women’s empowerment and offers Microfinance as a means to this end
Mayoux (1999) views the effect of Microfinance on women’s empowerment as a set of mutually reinforcing ‘virtuous spirals’ of increasing economic empowerment, improved wellbeing, and social and economic empowerment. She further suggests that although the above mentioned three distinct paradigms of women’s empowerment in Microfinance come from different theoretical underpinnings they are believed to lead to similar virtuous spirals of empowerment, both for individual women and at the household, community and macro level (Mayox, 2009).
Microfinance and Rural Women: Process of Empowerment
Financial Self Sustainability Paradigm
Poverty Alleviation Paradigm
Feminist Empowerment Paradigm
Source: Mayoux (2002)
Women’s economic empowerment is the main focus of the financial sustainability paradigm. It is assumed that increasing women’s access to Microfinance services will in itself lead to individual economic empowerment through enabling women’s decisions about savings and credit use, enabling women to set up Microenterprises, increasing incomes under their control. It is then assumed that this increased economic empowerment will lead to improved well being of women and also to socio-political empowerment. The financial sustainability and feminist empowerment paradigms emphasis is more on increasing incomes at the household and the use of loans for consumption.
Well being improvements are the prime focus of poverty reduction paradigm. The assumption is that increasing women’s access to Microfinance will enable women to make greater contributions to household income and this together with other interventions to increase household well being will translate into improved well being for women and enable women to bring about wider changes in gender inequality.
Women’s social and political empowerment is considered to be as a combination of increased economic activity and control over income resulting from access to Microfinance is expected to improve women’s skills, mobility, and access to knowledge and support networks. This leads further to enhanced status for all women within the community and wider changes in women’s roles. These changes are expected to be reinforced by group formation, leading to wider movements for social and political change. The financial self sustainability paradigm and the poverty alleviation paradigm assume that this social and political empowerment will occur without specific interventions to change gender relations at the household, community or macro levels. By contrast, the feminist empowerment paradigm advocates explicit strategies for supporting women’s ability to protect their individual and collective gender interest at the household, community and macro levels (Mayoux, 2006).
The analysis in this study draws on the primary data collected during fieldwork in Ihala Koswaththa village during September 2007 and 2010. The study is qualitative in nature with data collected through in depth interviews with individual Samurdhi Program beneficiaries, small groups, Samurdhi field officers, and Grama Niladhari officer , informal interviews, and observations made by visiting beneficiary households, weekly Samurdhi group meetings and monthly meetings of Samurdhi societies during the fieldwork. The respondents were selected through purposive sampling. by selecting information rich cases on the basis of theoretical saturation, and the interviews of Samurdhi Microfinance clients were conducted with the married middle aged poor women in the village.
For the purpose of analyzing the impact of the Samurdhi Program on women’s empowerment in rural areas, this study has divided women’s empowerment in to three dimensions – economic empowerment, increased wellbeing, and social and political empowerment. These dimensions are based on Mayoux (year?).
The Samurdhi Program consists of three main components; the provision of consumption grants, the provision of savings and credit facilities, and community development programs. Although the financial services through the Samurdhi Program are provided under the second component, the program often mixes welfare services and financial services as all three components are operated as integral support activities. Due to the fact that all the women who were involved in this research were Samurdhi welfare grant recipients, the impact on these women’s empowerment may not only be attributed to the financial services but also to the other component of the program as well.
An Overview of the Samurdhi Program
Samurdhi, which means prosperity in the local language, is a Sri Lankan government sponsored national poverty alleviation program. The program has a large percentage of poor families as members of it banks. The program was launched by an act of parliament in 1995. The act stipulates that the main functions of the Samurdhi National Program are to improve the economic and social conditions of youth, women and disadvantaged groups. The program achieves this by:
broadening opportunities for income enhancement and employment;
integrating target groups into economic and social development activities;
linking family level economic activities with community development projects at village, district, divisional and provincial levels;
mobilizing participation in the planning and management of projects;
fostering cooperation, promoting savings and assisting in obtaining credit;
facilitating the delivery of inputs and services of government departments, public corporations, local authorities, private sector organizations and nongovernmental organizations to beneficiaries of the program, and to implement the program so formulated and other programs of the government poverty alleviation. (Glinskaya, 2000)
Since its inception, Samurdhi has changed from being a simple income transfer scheme to a more comprehensive program encompassing not only welfare, but also banking, savings, insurance, job training, infrastructure development and self employment.
Institutional and Organizational Structure of the Samurdhi Program
Source: Modoran & Grashof (2009)
The organizational structure of the Samurdhi program is complex and highly hierarchical, going from the Grama Niladhari Division level up to the zonal, divisional, district and national levels. The program has three major components: provision of consumption grant (food stamps), provision of savings and credit facilities, and rehabilitation and development of rural infrastructure. Financial services are provided through the Banking Finance Division of the Samurdhi Authority that follows a similar hierarchical structure and act as the head office of Samurdhi Bank Societies or SBSs which carry out the second component of savings and credit program (Modoran & Grashof, 2009).
Samurdhi Bank Societies (SBSs) are community based lending societies. SBSs have a modified village banking model where the members of the societies are linked to village banks for savings and loans and these banks are also owned by the society members. The model has centralized management with empowerment and the social development objectives are built in the methodology. SBSs are managed by women and group lending, where only members or shareholders can borrow, is used. The borrower has to be in a group of five people with the other four members guaranteeing the loan repayment. Samurdhi finances its loans only from the savings and shares in the Samurdhi Bank where savings become a part of the collateral. Individual Samurdhi Banks are not separate legal entities, but have autonomy within the general guidelines given by the government Samurdhi Authority (Atapattu, 2009; Modoran & Grashof, 2009).
With the emphasize of an enhanced effort at rural financing the Samurdhi Program has attempted to mobilize voluntary savings among its beneficiaries, build up credit institutions for the poor and facilitate their access to the formal banking system (Gunatillake, 2000) while providing other credit plus services (Atapattu, 2009). The program serves the largest number of Microfinance clientele in the country having a significant outreach to poor people. However, they are also the largest provider of welfare services, and therefore they often mix welfare services and financial services in questionable ways such as forcing poor people receiving social welfare grants to set aside a percentage of the grant in inflexible savings accounts (Duflos et al, 2006).
The Context: Ihala Koswaththa Village
Ihala Koswaththa is a rural village situated in Bingiriya Secretariat Division in Kurunegala District falling under the intermediate agro ecological zone that includes both dry and wet agro ecological zones in North Western Province of Sri Lanka. The district is well served by microfinance organizations and in 2000 had the most widespread coverage by Microfinance institutions among all districts in Sri Lanka (Gant et al, 2002). The area marked on the map below illustrates the location of Ihala Koswaththa village, the case study location.
Source: Created by Author
Bingiriya Secretariat Division consists of fifty two villages in four zones and Ihala Koswaththa is in the Bingiriya zone. The village is located approximately two kilometers away from the main source of public transportation service, which is not very efficient. Though Ihala Koswaththa is considered as a rural village it is not as isolated as other rural villages in Sri Lanka. However, the villagers still face considerable market and infrastructure constraints in improving their livelihoods. The following table highlights the basic demographic information of Ihala Koswaththa .
Table 1: Population of Ihala Koswaththa Village in 2010
Population and Households
Average Number of People per Household
Population Over Age 18
Samurdhi Welfare Grant Recipient Households
Social Security Scheme Beneficiaries
Government Pension Recipients
Defense Force Employees
Small and Medium Enterprises
Source: Created by Author based on fieldwork
The village has a population of 2,502 with 620 families and an average household size of four people, only five families had over six members. Ihala Koswaththa is primarily a Sinhala village where there were only two Tamil families and one Muslim family in the village. Only a few families have been in Ihala Koswaththa for generations with the rest of the villagers being mostly migrants who recently settled in the village. The recent migrants were cultivating village lands even though they were not the legal owners. They later gained ownership of these lands under various land legislation programs such as Swarnabhumi, Janabhumi and the Land Reforms Commission (LRC). However, some of the migrants are still without any proper ownership of the lands that they are cultivating.
Both men and women in the village are predominantly involved in agricultural and day laborer jobs. Common agricultural crops include paddy, vegetables, coconuts, cashews, betel leaves, and black pepper. There are also activities such as retail boutiques and poultry farms are across the village. Villagers are also involved in seasonal income generating activities such as coir drying and straining. There are many household issues present in the village including domestic conflict, single mothers, and alcohol abuse. These issues lead to a greater responsibility being places on women as income generators. Many women from the village work as maids in the Middle East and send remittances back home. Additionally, most of the young unmarried women from poor families in the village work for the garment industry.
Samurdhi Program and other Microfinance Interventions in Ihala Koswaththa Village
As found in Table 1, there are 111 Samurdhi Welfare Grant recipient households among the 620 families in Ihala Koswaththa village. T he main components of of the Samurdhi Program including welfare, savings and credit programs, and community development programs are available in Ihala Koswaththa. Under the community development programs there are several training and social development activities such as women’s training programs, housing development projects, infrastructure development projects, irrigation and agriculture development activities, a weekly market, the children’s society, programs for the elderly, and scholarships for the children of Samurdhi beneficiaries.
The Samurdhi Program in based on participatory development principles and therefore groups at various levels are created by the program to mobilize and encourage participation where there are several action groups in each village. Smalle groups of five are organized to consolidate and develop the member’s skills and abilities. The Samurdhi Task Force is another grassroots level organization comprised of young men and women between 18 to 35 years old. The task force contributes to providing the necessary infrastructure to villages under the Community Development Project. Advisory councils comprised of intellectuals, elders, and clergy members of the area provide guidance and advice to these task forces. There are also divisional and district level Samurdhi committees. Bingiriya Divisional Samurdhi Committee is responsible for the implementation of the Samurdhi Program in the Bingiriya Division and therefore in Ihala Koswaththa.T divisional secretary acts as the chairman of this committee and all public officers and government heads are members. The District Samurdhi is comprised of all the heads of government establishments located in the Kurunegala district. Bingiriya Samurdhi Maha Sangam or General Union acts as the divisional level apex organization of Samurdhi Program for Ihala Koswaththa. This is set up to cover 10,000 Samurdhi beneficiary families and administered by an executive committee comprised of members selected among the presidents of Samurdhi Societies in Bingiriya Division.
In addition to the Samurdhi Program there are several other Microfinance interventions available in the village such as
SEEDS (Sarvodaya Economic Enterprise Development Services)
Janasurakum Sanwardhana Samupakara Samithiya
Vidhatha Samithiya (Funded through Bingiriya Divisional Secretariat)
Isuru Development Society (Operated by Wayamba Development Bank or Regional Development Bank)
Villagers in Ihala Koswaththa also have access to the Microfinance services offered by other Microfinance providers such as SANASA and Cooperative Rural Banks in nearby villages. They also rely on other informal credit sources such as money lenders, neighbors, and friends.
The traditional system of Seettu is also practiced by the women in Ihala Koswaththa. This systems enables the women to save to gain access to lump sum of money which otherwise would not be able to acquire.
In 2007, Ihala Koswaththa was selected by the Nation Building and Infrastructure Development Ministry as one of the villages to implement the Gama Naguma Community Development and Livelihood Improvement Project. This project aims to benefit Samurdhi recipients island wide. Thus far the livelihood improvement project has built a library building and a project to repair the gravel roads and convert them into tar based roads and concrete pathways has been launched in Ihala Koswaththa.
The Samurdhi Program has been mainly targeting women in Ihala Koswaththa for loans. Women receiving these loans have become self employment. According to Samurdhi field officers, female recipients of Samurdhi in Ihala Koswaththa have been participating in the Samurdhi marketing exhibitions and other various trade fairs.
Samurdhi Program and Rural Women’s Empowerment
The basic theory in Microfinance under the financial self sustainability paradigm assumes that increasing women’s access to financial services empowers them by putting capital in their hands enabling them to increase their income through self employment and contribute financially to their households and communities. This economic empowerment is expected to produce increased self esteem, respect, and other forms of empowerment for Microfinance women beneficiaries (Cheston & Kuhn, 2002, Mayoux, 2002).
Most of the women interviewed in Ihala Koswaththa village had obtained loans through the Samurdhi Program by indicating in the loan application that they would invest in existing income generating activities. This is consistent with the main objective of the program, to ensure recipient participation in the production process by increasing access to resources for self employment. However, according to the interviews with recipents the loans were often not used for the stated purposes. but rather had been used for housing and family welfare activities.
Mayoux (2000) points out thatwomen’s empowerment cannot be assumed to be an automatic outcome of Microfinance programs, unless empowerment is an integral part of the planning process. Microfinance expansion is unlikely to make more than a limited contribution to empowerment. All of the women interviewed in Ihala Koswaththa possessed skills such as weaving baskets, mats, and coconut leaves for thatched roofing, sewing, and making sweets. Some women had vocational training courses such as flower planting and kindergarten teaching. Although they had access to finance through the Samurdhi Program and their skills could have been utilized for income generating activities, not all of the women had an entrepreneurial spirit or were interested in starting or expanding their business. This may have also been due to factors such as market and infrastructure constraints, risk averseness, lack of enabling household environment, and the traditional negative perception towards indebtedness in Sri Lankan society.
Some women prefer to work for local industries such as making incense sticks or match boxes, which are not available in the village. There were very few exceptional cases of considerable improvement in economic activities through the investment of loans from the Samurdhi Program. The program is not contributing significantly towards the economic empowerment of the women of Ihala Koswaththa due to the fact that the majority of women did not invest their loans in livelihood activities. It is interesting to note that when it was inquired about how handful number of their peers had been able to be successful in their self employment with Samurdhi Microfinance services and why the others had not been able to do so, most of these women themselves thought that it might have been due to their lack of commitment and risk averseness.
Some women were very keen on starting some small businesses. However, they were not satisfied with the loan amount they received from the Samurdhi Program. They claim that the amount is too small to start a business. In some cases, they had been able to partially complete their projects, such as building small shops. However, they were unable to afford starting their business because they were worried about taking the risk of another loan since they had not been able to generate any income yet. Repayment is required soon after receiving the loan, even if they are generating any profit from the new venture.
During the interviews with the Samurdhi field staff, it was highlighted that they assess the feasibility of the loan recipients’ income generating projects by visiting them before granting the loans. According to the staff, they monitor the progress of these projects on regular basis. However, the beneficiaries said that in most cases, the field staff had not visited them before granting the loans and did not monitor their progress unless they had been given a considerably large sum of money. It was not difficult for the recipients to get loans by referring to their existing projects and mislead the officers. If the recipients made their repayments on time, the field officers were not concerned with their activities..
There were some cases of non repayment of loans reported by the field staff and the group members. All of the women who were interviewed managed the loan repayments on time with the income from their existing livelihood activities, with the help of their husbands, or in extreme cases
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