What Money Doesn't Buy: Microfinance and Women's Empowerment in South Asia

In the rural countryside of Orissa, northeastern India, coconut palms punctuate a flat terrain of rice fields and low-slung villages of mud and thatch. Women in bright-colored saris cut cane between marigold hedges and lagoons filled with lotus flowers. The scene is fantastically picturesque, but scenery feeds the soul, not the stomach. Stop and ask any of these villagers what they hope for their children, and they'll likely say the same thing: to move away to the city someday.

Orissa is India's poorest state. Cyclones from the Bay of Bengal pummel its coastline; monsoons flood the Ganges delta. Mining and industry displace vulnerable agrarian and refugee populations. Many here live so far outside the cash economy, development agencies measure poverty by daily caloric intake rather than income. Electricity and clean water are scarce. Caste and gender discrimination are everywhere.

The dirt pathway leading into Akandalamuni Village was flanked with women waiting for visitors; they raised a highpitched ululating cry as we approached. A tiny old woman blew a long tone on a conch-shell horn while younger ones waved incense and daubed our foreheads with red powder. "Welcome! You have wasted your time coming to see us!" they said in a ritual chant, waving bone-thin arms clinking with bangle bracelets. The 15-member Akandalamuni Women's Club led us between their mud houses across the swept-clay ground, which is kept bare to discourage cobras from entering the doorways. We sat on rugs spread under a tree and listened to their story.

Like millions of women in South Asia, they started their own microcredit group. Attending twice-monthly meetings and putting two rupees per month (about four cents) into a joint savings account qualified them for small loans, collateralized by group guarantee. This year they borrowed enough to rent a five-acre plot for growing sugar cane, from which they share the proceeds. In microcredit groups, the first meeting of each month is usually devoted to finances, the second to "programs." Most of these women could not read or write and wondered what a program might entail. They'd heard of a village on the river, called Bisailo, whose women's club held community self-education classes. They walked there to find out more. The women of Bisailo happily volunteered to pass on something they called "Cornerstones training"-a series of workshops in accountability, gender and caste equity, cooperation, farming skills, sanitation and nutrition. The women bonded, and later when monsoons flooded the river village, the Akandalamuni Women's Club brought them food and garden seeds.

It might seem an ordinary tale of cooperation, but in the context of Indian society it holds a few surprises. First, the riverside village was inhabited by so-called Untouchables, rarely visited by outsiders. Helping others in need was a new experience for nearly all these women, who had virtually nothing of their own. Finally, no outside development agency had lured the Akandalamuni Club into community- improvement classes (or mingling with lower-caste women) by promising material aid. They did it on their own. Saving money was a start, but they wanted more. None of it surprised Sushant Verma, director of India's Heifer programs. He knows these villagers, whose motives are often underestimated by the economic thinking of outsiders. "Programs that offer material support only, in a short amount of time, often fail. Here, 99 percent of the work is what we call capacity-building."

Elsewhere in the world, the word that currently dominates global development conversation is "microfinance." In the model created by Muhammad Yunus and the Grameen Bank, microfinance extends credit to poor people who would normally be turned away. By taking an oath and attending meetings, members assume collective responsibility for loans. The lenders target women, who have proven likely to repay loans and use the earnings for family well-being. Research in India also shows women are more flexible at learning new kinds of work. According to The Times of India, microfinance has helped some 15 million people in South Asia rise from poverty. Yunus won the Nobel Prize for his pioneering economic model, and the U.N. designated 2005 the International Year of Microcredit. Former U.N. Secretary-General Kofi Annan predicted microcredit would create jobs, give families access to health care and send children to school. Supporters hail it as the development tool that could end poverty in the 21st century, it is widely endorsed by mainstream development agencies and even offers investors the feel-good option of profitable philanthropy. Social welfare and equality are presumed to follow naturally from the growth of free markets; a report from the World Bank in 2001 suggested as much, downplaying the specific need to address gender issues in poverty-amelioration programs. The report drew questions from feminist critics. The U.N. Women's Conference had long resolved to make women's rights integral to all development programs. These newer, more simplified economic plans, they worried, could displace a more holistic approach that emerged in the previous decade, in which women's rights, the environment and social justice are seen as deeply connected development issues.

Is the current fascination with microfinance fueling a backlash, overshadowing more nuanced problems in societies stratified by caste and gender? A.K. Behera, a former director of Orissa's rural development agency, offers an equivocal answer. Women's microcredit groups are a groundswell in Orissa, he said. "We have more than 100,000 of them at present, more than any other state. Obviously there is a need here." But the problem for extremely poor women, he says, is that they rarely know how to use loans for earning potential. These self-help groups (as they're called in India) can facilitate information exchange, but even with exposure to ideas, Behera says, women can't become entrepreneurs without the skills and confidence to manage businesses.

Many studies show that for marginalized women, the success of a microfinance scheme hinges on the borrower's position in her family and community. For example, access to credit could be disastrous for a woman whose husband could force her to borrow money he'll use for alcohol. And "success" may not be measured simply by repayment of a loan. Quality of life is slow to change and difficult to put on a ledger.

In a tiny village just down the road from Akandalamuni, a small cement building bears a large sign: Bhodal Milk Production Cooperative Society. Thirteen women founded this grassroots co-op 20 years ago, to ward off exploitation by milk companies. Milk producers in India tend to have just one or two animals, but collective bargaining can earn them better prices. The Bhodal Milk Production Cooperative Society has grown to 167 members who sell nearly 265 gallons of milk daily and recently earned India's "Best Cooperative" award.

Milk was their sole agenda until the massive cyclone of '99, in which more than 80 percent of local livestock were lost, mainly because of the region's lack of infrastructure- roads, electricity, emergency communications. The co-op's entrepreneurs learned a difficult truth: no individual can rise far above the constraints of a wholly impoverished society. Wanting to improve everyone's security by helping the district's poorest women, they proposed the "Small Livestock Livelihood Program." Heifer International was invited to be a partner in the project.

Sushant Verma, who directed Heifer's involvement, has worked with many international development agencies but prefers Heifer for one clear reason: the agency's focus on community self-education. "The emphasis on nonmaterial support here is key. A small amount of money and a little appropriate technology yield a big emotional attachment to the success of the program."

He's not kidding about the small amount of money: a budget of $60,000 from Heifer last year paid for Verma's salary, office expenses, a veterinary program and the poultry and goats that reached 3,000 families throughout the state of Orissa. The animals generate income, but the real priority is social change: improving women's status in their families; addressing mental poverty; loosening the bonds of caste.

Here in Bhodal, about 250 families within walking distance of the milk co-op's cement headquarters received livestock through the program in 2006-but only through collectives, beginning always with the founding of a women's microcredit group. Upstairs in the building, one such group was now meeting. They'd spent months working with consultants from Heifer and the Bhodal Milk Co-op, whose members had long experience in women's self-organizing. First the new group made a livestock plan for their village, choosing an animal to raise-in this case, meat goats. While Hindu populations elsewhere adhere to legume-and-rice based vegetarian diets, most people here are landless; gardens are a luxury. Goats penned in a tiny yard, fed on waste rice stalks gleaned from neighboring fields, can provide protein for a family. Poultry can be managed with even fewer resources. The decision is village-wide, and crucial.

Next came the Cornerstones classes, discussions of the 12 principles that provide entry to every Heifer-supported project on the planet. The children got involved, too, forming a club whose first project was to demand their school's sole teacher begin showing up, for a change. In the airy upstairs veranda that serves as school and meeting-room, the kids' drawings of "My Ideal Village" showed water pumps and latrines among the Hindu shrines and lotus flowers.

As the women sat on the floor for their meeting, I asked what had changed because of their goat project. "People are more likely to go to another family to ask, if we need help," one participant volunteered. "We take more responsibility for everything we do," another offered. "The group management training has led us to better ways of solving our conflicts." Their husbands are seasonal agricultural laborers, away from home for months at a time to harvest rice or cane. How do the men feel about this transformative project? The question invoked a pause before Busbalata Senapati answered. "Now that I have an income, now that my kids are smarter because I can send them to school, my husband respects me more. He had a lot of pressure on him before, being the only income earner. So it's better for him now. He encourages me to go to the meetings."

Sarojini Mishra, a co-founder and 20-year veteran of the milk co-op, has been a powerful mentor to these women. "Working with this project has changed my mind about so- called charity to the poor," she said. "The Cornerstones training includes a contract for passing on to someone else exactly the same number and kind of animals they originally received. That makes it very clear: We are not involved in charity. Every recipient becomes a donor. It affects how people feel about themselves, and their position in the community. We see mutual generosity. One daughter is everyone's daughter, for example. Everyone pitches in to help with the wedding. In 20 years of working with self-help groups, that is the biggest change I have seen here."

A dozen kids from the children's club clattered in, shucked their shoes at the door and announced they'd prepared a play, written by the club's no-nonsense president, Modismita, who looked 8 but was 11. (Low calorie intake means slow maturity for these kids.) It was a fascinating kids-eye-view of the changes in their village. Act One: the tallest boy played a drunkard, sipping from a flask and reeling as he staggered home from harvesting cane to shout at his wife. A cluster of girls dressed in pinned-up saris pretended to be bickering gossips. A trio of boys dressed as monks in white robes arrived chanting and set up shop. A "father" carrying his sick "child" (who might have outweighed him) came to the monks to plead for the child's life, followed by a girl with her sick chicken. "Pay us money and he'll get well," the monks declared. "If you don't, he won't. Same goes for the chicken."

Act Two: the entire village squatted on the ground, weeping. The "child" was dead, the chicken upside-down. Other animals in the village were sick. The small actors shed genuine tears; it was no stretch to imagine this crisis. But then-if only they had a soundtrack!-in strode Modismita dressed as a project partner, with a Heifer shoulder bag. She gathered up eight "women" for Cornerstones training and clicked down the list impressively: "Accountability! We set our own goals, plan strategies and evaluate success. Gender and Family Focus! Men and women share decision-making. Improving the Environment! Sustainability and self-reliance! And better veterinary care for these animals!" The last value she mentioned was "Spirituality," presumably meaning to practice one's religion without getting fleeced. When the priest came back demanding payment-post Cornerstones training-the women chased him away with sticks.

"Two Years Later," Modismita announced, gesturing at a village where the animals now prospered, and the priest was teaching Cornerstones training.

For Rekha Jena and her family, "food" used to mean a few cups of rice porridge each day. She lives in Bisailo Village, the "untouchable place" on the riverside where local women befriended the Akandalamuni Women's Club and passed on to them the Cornerstones training they'd learned in a Heifer project. In exchange, the women's club brought food during the last flood. Jena held her hand at her knees to show the level reached by the monsoon-swollen river. It's an annual disaster, forcing the villagers to huddle for weeks on the opposite bank in miserably unsanitary conditions.

Jena's family has now returned to their house where the floor space is about twice the size of the family's single cot. Her outdoor kitchen is a hole in the ground, for fire. Half-grown pullets darted around the courtyard, evidence of the village's chicken project. Last year Jena earned $200 from sales of eggs. "Each of my children eats one egg every day. Now I am increasing my number of birds." She pushed her orange sari back from her wide forehead, revealing deep-set eyes and delicate features ornamented by a thin gold nose ring. "Before, I depended on my husband for everything. If I needed a sari or anything, I hated to ask. I don't want my daughters to live like that." Recently when they visited her husband's family in another village, he bragged that his wife was secretary of her group. "That's when I knew he was proud."

Her husband, Sudersan, agreed. "She's become more confident than I am. The women here used to just pull their saris over their heads and go inside the house if anyone came. Now they hold hands and go where they want. My wife can speak to 50 people. When I see her go to these meetings, and stand up and speak, I know she has changed."

Rekha Jena said her group was making plans now to go to the government office to tell them to construct a dike to stop the flooding. "In the beginning we heard this word empowerment, and we didn't know what it meant. Now we do. It is having a plan."

The post-9/11 world has seen rising militarization and more people than ever living in poverty. Development models must weigh the best options for using limited resources to promote both economic growth and human well-being. Virtually every mission, whether religious or secular, brings some form of social agenda along with material support. Even in the Grameen Bank system, microcredit recipients are required to sign a 16-point oath vowing, among other things: "We cultivate vegetables the whole year round," and "We intend to have small families."

By contrast, the Heifer Cornerstones workshops offer such nuanced goals as Accountability and Sustainability in the context of group conversations. The one nonnegotiable requirement is passing on the gift, in which recipients of livestock and training must make pass on some of their animals' offspring, along with workshops and veterinary training, to new recipients. In Orissa the animals are always passed from one women's group to a newer one they helped organize. These female-centered events tend to reach ceremonial heights that can outshine the material component. Gift-goats wear marigold garlands; handmade gifts are exchanged both ways. During one such ceremony, an elderly man leaning against a tree remarked: "These women always used to start the day by fighting. Now look how they are."

Participants rarely report serious complaints from husbands. According to Surojit Chatterjee, state representative of CARE India, the men have more to gain than lose from these small livelihood projects, since women are unlikely to compete for their jobs. "At this point in Indian society, some sectors of the economy are exclusively male. So the men aren't threatened by the income-earning enterprises. These women won't overstep the bounds. But who knows, maybe in 10 or 15 years that could happen."

Dr. S.N. Padhi, a member of the Rural Management Faculty of Orissa's Amity Business School, has been impressed to see women take to the Cornerstones training so enthusiastically, independently of material aid. "We studied this for months before we began to understand it," he said, but believes success lies in its reinforcement of pre-existing community mores. "This formalized training is building on ancestor values: respect, accountability, generosity. Ours is a culture of extreme hospitality. That translates very reasonably into Passing on the Gift, for example.

Gender inequity is also deeply imbedded in Indian culture, as Gandhi himself acknowledged. But Heifer project participants in more than a dozen Orissa villages said they now feel more secure and equal in their families. Their most-cited reason was not access to credit or even a livelihood, but the breakdown of their social isolation.

Articulating core values proves a powerful bonding experience for women whose poverty has kept them apart. The psychological impact of having these can't be measured on a bank balance. In the remote Ganges delta town of Jaleswar, it shines in the faces of the Women's Food Manufacturing Co-op, who open every meeting by singing: "Jagore! Jagore! Wake up, to women's power!" This collection of wives and widows began as a 20-member self-help group.

Now the 120-member cooperative, which is partnered with Heifer, produces and sells mudhi (puffed rice) through local stores. The group has paid off its capital loan and has a spectacular $12,000 in its savings account. But one cooperative member insisted, "Mudhi is just the beginning. This work brings us together. We talk about our problems. Now we have organized the Women's Peace Soldiers so we can go to the police station to get results. The spirit of knowing we women can do it ourselves-that puts a smile on everyone's face."