Saturday January 28, 2023

Financial interventions

October 19, 2021

Hasina, a mother of seven, from District Matiari faced grave circumstances when her husband, who was the family’s sole breadwinner, suffered a sudden and severe illness that left him bedridden. As his illness resulted in the loss of both income and savings, Hasina began working in nearby fields to feed her starving children. However, she earned low wages, and her work was further burdened by her own malnutrition.

In developing countries like Pakistan, women are the most financially vulnerable group of society. Exposure to poverty, amplified by dependence on husbands for household spending, restricts their contribution towards the country’s development.

The SUCCESS programme, funded by the European Union, has been working since 2015 to reduce poverty at the household level through women’s empowerment, in eight rural districts of Sindh. Through the social mobilisation approach of rural support programmes (RSPs), women are provided with income generating and diversification activities.

The financial interventions of the programme include the community investment fund (CIF) and income generating grants (IGGs). The CIF is a revolving grant (loan) by RSPs and is targeted at women from poor households. IGGs are a one-time grant given to poor households who do not have means to repay the CIF.

As of October 2020, the programme has granted a total of Rs1.56 billion for the CIF and Rs0.56 billion for IGGs, which has benefitted around 125,000 households.

The programme’s beneficiaries have invested almost 98 percent of financing on income generating activities and asset creation – only two percent of the total investment is made towards health and other activities.

According to a recent study by the Centre for Development and Public Policy (CDPP), the CIF and IGG have contributed towards poverty graduation in Sindh’s rural communities. The poverty scorecard (PSC) assessment tool has revealed that 42 percent of CIF and 44.5 percent of IGG beneficiaries from sample households have moved to a higher PSC band since the baseline 2016 survey.

The access to financial support has opened up investment arenas in livestock, agriculture, and enterprise. Of all the CIF and IGG funds distributed since October 2020, 82 percent were invested in livestock, 10 percent in agricultural activities, and eight percent in micro enterprise. The average net profits from livestock sales stood at Rs10,782 for CIF beneficiaries and Rs6,102 for IGG ones.

The households also developed a productive asset base in terms of livestock for which they receive earnings from meat and milk. The assets have an average market value of Rs35,982. However, the returns from these assets will be fully realised in the future. The investment towards agriculture has led to an increase in the purchase of seeds and fertilisers, as well as in renting tractors.

The average seasonal profits for IGG beneficiaries who invested in agriculture was Rs10,143, while CIF beneficiaries reported earning nearly three times greater profits of Rs29,665. For enterprise investment, beneficiaries aimed for new start-ups as well as expanded their current businesses. Popular setups included karyanas, confectionary shops, embroidery shops, vehicle repair stops, vegetable carts, etc. The average annual profits for both CIF and IGG beneficiaries totalled Rs24,264. This income, sourced from CIF and IGG investments, was spent by beneficiaries in the following manner: food (46 percent); health expenditures (19 percent); and clothing (nine percent).

Fortunately, Hasina, too, received an IGG of Rs13,000 along with micro health insurance to cover her family’s health and transportation expenses. Utilising the grant, she purchased a dairy goat which provided her earnings through milk sales. The goat later gave birth to three kids which led to an increase in Hasina’s asset base. Through her sharp business acumen, she realised further business opportunities through the sale of one kid. On a personal level, she succeeded in saving money during profitable times, which is helping her during Covid-19.

The financial inclusion of women through these CIF loans and IGG financing has led to greater participation of women in intra-household decision-making activities such as seeking medical advice or treatment for themselves and their children, making large asset purchases, using contraceptives, taking decisions regarding their children’s marriages, and applying for loans. Also, women now enjoy greater freedom of mobility when it comes to visiting family and friends, going to markets in other villages, attending local support organisation (LSO) meetings, and visiting urban centres for banking purposes. Women beneficiaries have also noted a slight decrease in incidents of domestic violence.

Over the course of the SUCCESS programme’s six years, the benefits of its financial inclusion interventions for poor households reflect through an increase in earnings and asset bases of beneficiaries and the greater financial inclusion of women at the household level. These outcomes demonstrate how the financial inclusion of marginalised communities through RSPs’ social mobilisation model in conjunction with innovations such as the CIF and IGGs, can serve as a strong foundation for women’s empowerment, and their contribution to reducing household’s poverty levels.

The writer is a knowledge management officer at the Sindh Union Council and Community Economic Strengthening Support (SUCCESS) Programme.