Meeting with the SHG leader

I visited the Zuari SHG on 21/4/13 to interview the SHG leader at her house. What an eye-opener!!

The leader is a woman named Fathima. Fathima is a living example of how SHG concept (if executed properly) can greatly benefit women from the lower strata of the society. She is very enthusiastic about making money and took to the idea of producing goods throughout the year at once. She infact is already trying to make different goods and tries to sell them. She was willing to go to far off places like Panjim also to sell her goods, she confidently says that she knows how to sell different things differently!!! So, now the only problem for her is that she doesnt have a permanent market to sell her goods. So, if we manage to find her and her team a permanent market it is going to make the SHG completely economically sustainable.  

The Reasons !!

Hello everybody, I finally narrowed down on the major reasons affecting the economic sustainability of the Zuari SHG which i would be explaining below.
Thanks to the Ex Nirmaan chapter president of BITS Goa who gave her insights into the problem which were immensely helpful.
Now, coming to the reasons,

The first one is the lack of marketing. I mean there's practically no other place apart from BITS where the SHG sells its products, It might be so because the common man might not be willing to spend more on the SHG product when he gets the same for a lesser price at any shop. So, the need arises to find a perennial market for the products produced by the SHG.

The second one is lack of trust between the members. There is always an issue when it comes to payments after the fests, The women do not take to the idea of volume based payment i.e you get paid for how much you produce, rather they prefer that everyone gets the same amount. Here lies the problem, If X has produced 100 goods and Y produces only 20 how is it fair for X that both of them get the same amount. Then it would lead to them thinking anyways we are going to get the same amount, why put in hard work.
Secondly, because the members live close by each other any petty fights between the families of members leads to a cold war between the members in most cases.

Learnings from an interview with Dr. Rekha Gaonkar

I met Dr. Rekha Gaonkar on 8th of april 2013 at MES college Zuarinagar. She is an expert on SHG's, having done extensive research and field work in Goa.

The million dollar question.

Why are some SHG's not doing well ? 
Answers
1.  Lack of support and training by government or NGO. This is an external factor.
2. They do not produce unique goods. (Competition from branded goods, with most of the consumers preferring branded goods)
3. No Product differentiation within the SHG, Say for example every member produces the same product and its a seasonal one, they all lose out on sales in a season (Not the case with our SHG, Paper-bags aren't seasonal)
 4. Marketing is a big challenge for the SHG as they neither have the funds to extensively market their goods nor they have a place to sell their goods (say a kiosk or outlet in a market).
5. Literacy of the members. SHG's having more number of illiterate members are seen to fail in most cases.

Fundamental concepts re-learnt about SHG's:
1. 10-20 people from homogeneous background come together to form a SHG.
2. Initially for the first 6 months they put their own money into the thrift fund. ex. say 50-100 rs a month.
3. They have to have at least one meeting of all members in a month and the minutes have to be noted.
4. A book of transactions from the thrift fund to be kept.
5. After 6 months they can approach a bank and avail of loan in the name of the SHG. (Usually lent at 14% pa)
6. Members taking loan must then pay around 2% per month interest on the principal around 24% pa and the rest of the money after paying bank interest may be shared or left in the thrift fund.
7. There are 3 office bearers in an SHG elected periodically. President, Secretary and treasurer who perform the roles on rotation . ex x y and z are office bearers means they all will perform each role for 4 months in a year.

It's all about the money : Money is the fundamental reason which leads to a SHG's existence. Members join to avail of the loan facility.

And these are some of the products that successful SHG's are producing around Zuari:
Papad, Pickle, Ladoo, Chakli, Masala

Working model of an SHG

Best practices followed by SHG's

These are some points that most successful SHG's adhere to.

Savings Function

• Thrift collection could commence from first meeting itself.
• Periodicity and quantum of thrift be decided by members themselves.
• Minimum compulsory thrift to be made by all members.
• Withdrawals against thrift not allowed.
• Groups must insist on on-time contribution from members.
• Collection of thrift during meetings only.
• Thrift to be used for internal lending and must not stay idle.
• Penal provisions like fines and penalties for late payment.
• Delayed thrift contribution must not be received outside the meetings.
• Chronic thrift defaulters may be disciplined by penalties.
• Return thrift to members withdrawing for genuine reasons
• No discontinuance of thrift due to fund infusion like subsidy/grant.

Credit Function

• SHGs normally offered small short-term loans.
• Internal lending must commence from first pooling.
• Group must have system of priorities based on loan purpose.
• Best member borrower attends meeting regularly and pay timely.
• Overall credit need evaluation should be need based.
• Credit decisions at meetings only.
• Repayment schedule should be rationale.
• SHGs may be allowed freedom in fixing collaterals from members.
•  Concurrent loans may be discouraged.
• Loans are to be disbursed in the presence of all group members.
• Group must be taught to monitor end use of loan.
• Late repayments penalized and timely repayment rewarded.
• Internal lending to continue even after receipt of grant/subsidy

Fund Management

• Group fund consists of thrift, interest on internal loans, fines and penalties, loans and grants received, margin and interest payable to bank.
• Groups are not expected to discriminate between the source of fund for meeting loan requirements.
• Idle funds are a drag on the group and should be watched carefully at every meeting.
• Responsibility sharing in Cash Management will ensure (i) Transparency (ii) reduce load on leaders (iii) Enhance fund management (iv) Competence of all members.
• Periodic reconciliation of bank accounts and group’s records.
• Members should take turns in depositing collections and also accompany leaders to bank for withdrawals.
• Initial stages: Encourage short-term loans ranging from 3-12 months. Installments must be weekly to monthly.
• Above measures will increase Loan velocity and Fund Recycling.
• Groups must adopt market-linked policy for interest rates.
• Group must not reduce interest rates in the short run upon receipt of grant or bank loan. Interest charged on loans is a source for raising additional capital to fund the Corpus base.
• Cash balance to meet emergent situations must be encouraged but too big an amount held for long periods constitutes idle funds.
• SHGs upon maturity incur higher amounts for book keeping honorarium and bank transactions. Member contributions may be suitably enhanced.
• Investing entire corpus in a single activity will block internal lending, reduce access of households and enhance risks.

Record Keeping

• Groups must ensure responsibility and members must share tasks.
• Training must ensure recognition of accounts structure.
• Group meetings must necessarily focus on contents of books.
• In case of non-availability of literate members SHGs must be encouraged to hire services of professional book-keepers/literate boys/girls.
• SHGs must inculcate the habit of paying for book-keeping.
• Book writer must read out noting in meetings and updations must be acknowledged by group members.
• Some SHPIs are concerned about audit. At federation meetings peer-audit by other SHG leaders must be encouraged.
• The practice of keeping books with SHPI staff or in the NGO office should be discouraged.
• Cost of books and stationery be met by SHGs.
• In the long run all members must be encouraged to read and write.
• System of confirming entries in member pass-book by 2 other members must be encouraged.

Topic of my research

Finally figured out my research problem. I'm going to focus on the NIRMAAN funded Zuari SHG that is located opposite to BITS Pilani KK Birla Goa campus. They are into making paper bags, as of now the SHG has a market only during the fests of our campus and rest of the time they are out of business. I dont think that's right, I believe that they could make money all through the year. I'm going to focus on the reasons for their unsustainability. If i could find out reasons why they aren't making enough money, I am looking forward to implementing some practical solutions to help improve their sustainability.

On talking to a couple of the people in charge of the SHG project in my campus, I came to know that there a few major problems that are a hindrance to the SHG's sustainability.
The major problems include :
1. Members not trusting the leader of the SHG.
2. Members not happy with the payments.
3. No permanent market for their goods and hence no cash flow all year round.

Now coming to the research problem,

Lets divide it into 3 parts,

Project topic

A topic can further be classified as a broad topic and a focused topic. As the name suggests a focused topic is a narrowed version of the broad topic.

Broad topic

Understanding SHG’s

Focused topic

Study of Zuari SHG to find out the causes for its unsustainability.

Research Questions

Why is the Zuari SHG unsustainable?

Are there any factors on improvement of which Zuari SHG can have permanent markets to sell its goods?

Significance

To help improve the sustainability of the Zuari SHG by finding out the reasons for their unsustainability and practically implement some of the solutions found out to the currently existing problems as part of this research. 

I am planning to focus my research on the cause of these problems and provide solutions wherever possible.

Proposed research problem -

-I am studying the Nirmaan funded Zuari SHG

-to find the reasons for its unsustainability

-and to help improve its sustainability.

To view a presentation made by me related to this topic:
https://docs.google.com/file/d/0B8Y9OkutiQq5aGdsUHB1aDlmY1k/edit

Getting started with research

These are some of the fundamental points that every researcher who is preparing to take the plunge into a new topic must keep in mind :

1.Answer a question that solves a problem that the potential reader cares about
2.Look out for that Mental itch - that eureka moment !!
3.Finding a topic out of the possible research interests
4.List down all ideas relevant to the topic
5.Narrowing down the topic according to timeframe , resources
6.Include action words in your topic name
7.Ask and answer Journalistic questions
8.Answer the “So What” Question, which every potential reader is going to ask about the topic

9.Topic outline (Structure) : Topic, question and Significance
10.There exists a relationship between the solution to a practical problem and a solution to a research     problem
11.Problems are of two types :
        Practical (real world) – applied research
        Conceptual (laboratory) – pure research
14.ASK FOR HELP