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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
INTRODUCTIONWhat is microfinance……why this study…..
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in Aquaculture & Fisheries (GAF3)
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 variablesThese aspects examined among fisherwomen and men who have availed microfinance credit
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in Aquaculture & Fisheries (GAF3)
MATERIALS & METHODSThe study….where, when and how……...
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in Aquaculture & Fisheries (GAF3)
Personal interviews based on questionnairesDescriptive statistics, Group Dynamics Index for group behaviour, Risk analysis on awareness of microfinance schemes
Type of MF Institution Male Female TOTAL
Government 11 73 84
NGO 14 32 46
TOTAL 25 105 130
Institution
• Based on governance structure
• Government & NGO
Two districts of Kerala
• Ernakulam• Thiruvananthapuram
Respondents
• 130• 25 men & 105
women
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Aquaculture & Fisheries (GAF3)
RESULTS & DISCUSSIONThe findings….…...
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Aquaculture & Fisheries (GAF3)
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
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Aquaculture & Fisheries (GAF3)
Chellanam-KandakadavuFishermen Welfare
Development Cooperative Society, Ernakulam, Kerala
Matsyafed, the Kerala State Co-operative Federation for Fisheries Development Ltd.
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During 2009-10, disbursed INR 542 lakh to a total of 10103beneficiaries in Kerala, the average amount being Rs. 5400 perbeneficiary.
Majority of the beneficiaries are fisherwomen - only 14.9%fishermen
Fisher groups
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
cultivation
17.17
Small businesses, provision stores, bakeries 9.09
Cloth business 4.55
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9
Microfinance through Govt. supported Fishermen CooperativeSociety
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 during2008-2011.
The interest rate is 6% (5% of which goes to the financing body and 1% tothe Society as service charges)
Repayments are monthly over a period of 18 months (there is nominimum repayment amount)
Repayment good with very few defaulters and compulsory savings
The NGO caseLent to a group, usually a thrift group
Interest rate 12%
Weekly repayment (Usually a person appointed by the NGO goes forcollection of the amount)
Repayments generally good (as single defaulter in a group would makethe other members liable for repayment and thus groups are formedcarefully)
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Men WomenGovt 41.91 43.81NGO 46.71 44.69
Socio-demographic variables
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Aquaculture & Fisheries (GAF3)
Govt. NGO TOTAL
Men Women Men Women
Illiterate 1 9 1 2 13
Can read and write
1 6 45 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
10%• Illiterate
12.31%• Can read &
write
20.77%• Primary
33.08%• Middle
16.15%• Secondary
7.69%• Have gone to
college
0
10
20
30
40
50
60
Illiterate Can read and write
Primary Middle Secondary Collegiate
Men
Women
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All respondents were married
78%
22%
Nuclear
Joint
Govt. NGOMen Women Men Women5.18 4.45 4.57 5
Average family size
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Basic household amenities
33%
28%
33%
6%
Concrete
Tiled
Thatched
Asbestos roof
39% of the respondents
lived in houses having
temporary roofing
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Aquaculture & Fisheries (GAF3)
Radio9%
TV51%
Refrigerator15%
Cycle16%
Motorcycle9%
Half the respondents had a television
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0
10
20
30
40
50
60
70
80
90
100
ToiletPotable water
92% of respondents had access to toilets and potable water
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Access to education and healthcare is good and the distance to the nearest educational institutions and health centre are given
0 2 4 6 8 10 12
Primary school
Secondary School
College
1.01
2.32
10.95
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0.00 1.00 2.00 3.00 4.00 5.00
PHC
Hospital
1.26
4.64
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Income
Male Female TOTAL
Govt 469 195 226
NGO 224 161 178
Average monthly family income of respondents is USD 209
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0%20%
40%60%
80%
100%
Occasionally
Regularly
No
28.00
48.00
4.00
8.00
40.00
24.00
56.00
12.00
Newspaper
Radio
TV
Information gathering behaviour
4% of men respondents do not read newspapers & 12% do not watch TV
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Aquaculture & Fisheries (GAF3)
0% 20% 40% 60% 80% 100%
Occasionally
Regularly
No
30.48
55.24
6.67
20.00
25.71
2.86
36.19
73.33Newspaper
Radio
TV
6.67% of women respondents do not read newspapers & 2.86% do not listen to the radio
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Economic motivation
020406080
100120140160
180
Better Production
Higher Income
Men Women
Getting higher incomes was a major economic motivation among the respondents
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Aquaculture & Fisheries (GAF3)
Purpose of availing MF credit
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Start enterprise
Household consumption
Repay debt
Household repairs
Others
53.57
21.43
4.76
11.90
8.33
28.26
41.30
4.35
23.91
2.17
Government NGO
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Men
Women0
10
20
30
40
50
60
Start enterpriseHousehold
consumption Repay debtHousehold
repairs Others
More men than women took credit for starting an enterprise, while women mainly wanted credit to meet household expenditure
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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
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Availed benefit of other schemes
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Govt NGO
76.1965.22
56.3263.04
Benfitted from NGO scheme earlier
Benfitted out Govt schemes earlier
Multiplicity of agencies and schemes in coastal areas has been observed
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Section III•Credit taken•Repayment schedules•Knowledge about the
schemes•Relative risk
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Aquaculture & Fisheries (GAF3)
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
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23.08% of the respondents were regular in repayment, 66.67% of them women
85.05
14.95
Fixed
Varying
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81.82
90.91
72.73
72.73
90.91
90.91
85.71
78.57
57.14
64.29
92.86
92.86
0 50 100
Knowledge of the scheme
Knowledge about source of finance
Rate of interest
Knowldege about rate of interest before availing credit
Knowledge of repayment schgedule
Knowledge about reapayment schedule before availig credit
NGO_Men
Govt_Men
Knowledge about terms of credit
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0 20 40 60 80 100
Knowledge of the scheme
Knowledge about source of finance
Rate of interest
Knowldege about rate of interest before availing credit
Knowledge of repayment schedule
Knowledge about repayment schedule before availing credit
NGO_Women
Govt_Women
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Relative riskBased on the contingency table on awareness of credit schemes and related information, relative risk was calculated
0.95
1.16
1.27
0.98
0.78
0.80
1.00
1.03
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40
Credit scheme
Financial details
Rate of interest
Repayment schedule
Women
Men
Women had less awareness about the various aspects of the microfinance credit schemes and had higher relative risk when compared to men
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Livelihood changesRespondents feel that personal as well as family incomes have increased
0 10 20 30 40 50 60 70
Men
Women
64.29
39.13
1.19
6.52
Incraesed
No change
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Occupations of women respondents
47%
34%
5%
14%Home makers
Fish drying
Fish marketing
Others
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75%
80%
85%
90%
95%
100%
Government NGO
63.01
37.50
1.37
6.25
No change
Incraesed
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
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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
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Impact on living conditions
9.80
17.65
17.6554.90
5.88
Roof
Walls
Toilet
Room add
Others
Respondents brought about changes to their houses
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Aquaculture & Fisheries (GAF3)
38.71
25.816.45
19.35
3.236.45
TV
Fridge
Cycle
Scooterr/motorcycle
furniture
Others
Respondents added household articles
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Change in Social Status
86.30
13.70
78.13
18.75
3.13
0 20 40 60 80 100
Has increased
Has decreased
No change
Can't say
NGO
Government
Majority of women who have started
enterprises felt that their status in their
community has increased
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Decision making
Government
NGO0
5
10
15
20
25
30
35
40
45
50
Husband only
Mostly husband
BothMostly wife Wife only Can't say
32.8
8
13.7
0
32.8
8
8.22
1.37
10.9
6
25.0
0
15.6
3
46.8
8
6.25
0.00
6.25
Credit
Among 30 to 50% of the respondents the decision to avail credit is taken jointly
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Aquaculture & Fisheries (GAF3)
0 10 20 30 40 50 60 70
Husband only
Mostly husband
Both
Mostly wife
Wife only
Can't say
NGO
Government
Food
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!
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Aquaculture & Fisheries (GAF3)
0%20%
40%60%
80%100%
Husband only
Mostly husband
Both
Mostly wife
Wife only
Can't say
17.81
1.37
45.21
21.92
4.11
9.59
6.25
0.00
43.75
40.63
3.13
6.25
Government
NGO
Decisions on purchase of clothing is usually taken jointly as is seen in 45% of respondents
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clothing
0
10
20
30
40
50
60
70
Husband only Mostly husband
Both Mostly wife Wife only Can't say
15.0
7
2.74
50.6
8
21.9
2
2.74
6.859.
38
0.00
65.6
3
15.6
3
0.00
9.38
Government
NGO
Another important area in family welfare is heath and the decisions regarding these are mostly taken jointly
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hospital
Government
NGO
0
10
20
30
40
50
60
70
Husband onlyMostly
husband BothMostly wife
Wife onlyCan't say
10.9
6
1.37
61.6
4
15.0
7
2.74 8.
22
9.38
28.1
3
50.0
0
6.25
0.00 6.
25
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.
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School/college
0 10 20 30 40 50 60 70 80
Husband only
Mostly husband
Both
Mostly wife
Wife only
Can't say
6.85
1.37
69.86
5.48
2.74
13.70
3.13
0.00
78.13
0.00
0.00
18.75
NGO
Government
Marriage is major event in rural communities and decisions regarding these for majority of
respondents is taken jointly by the spouses
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78
80
82
84
86
88
90
92
94
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
Govt_Women
NGO_Women
Decisions on running of the enterprise
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Physical Mobility
0
10
20
30
40
50
60
70
80
Another village Nearby town City Outside district Outside state
35.14
13.51 16.22 16.22 18.92
39.60
22.77
6.9310.89
19.80
Women
Men
While locally the mobility of women is more, men have more mobility towards the city
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0
10
20
30
40
50
60
70
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
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More women who have availed microfinance under government schemes have travelled outside the state.
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Group dynamics
Yes, 93.75
No, 6.25
Yes, 80.82
No, 19.18
GOVT.
NGO
Member of SHG
81% - 94% of women are members of one
organisation or other
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4.75
6.39
3.75
4.83
Duration of membershipVaries from 3.7 years to 6.93 years
Women have more years of experience in SHGs than men
Govt_MenGovt_Women
NGO_MenNGO_Women
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Yes
No
0
10
20
30
40
50
60
70
Government
NGO
58.9062.50
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84.93
96.88
0 10 20 30 40 50 60 70 80 90 100
Regulary
Sometimes
Rarely
Never
NGO
Government
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0 10 20 30 40 50 60 70 80 90 100
Regulary
Sometimes
Rarely
Never
75.34
90.63
NGO
Government
The women also participate in discussions regularly
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0 20 40 60 80 100
Regulary
Sometimes
Rarely
Never
NGO Government
They also exercise their franchise regularly
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0
10
20
30
40
50
60
70
80
90
100
Regulary Sometimes Rarely Never
Government
NGO
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Government
NGO
79.45
87.50
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
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Group Dynamics Index
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
0
10
20
30
40
50
60
Govt NGO
41.02
59.13
0 20 40 60 80 100
Govt_Men
Govt_Women
NGO_Men
NGO_Women
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0 10 20 30 40 50 60 70 80 90
Govt_Men
Govt_Women
NGO_Men
NGO_Women
81.82
73.97
57.14
81.25
No
Yes
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)
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72.7375.34
85.71 87.50
0
10
20
30
40
50
60
70
80
90
100
Govt_Men Govt_Women NGO_Men NGO_Women
Has increased
No chage
Perceived confidence levels among respondents have increased in almost 80% of the respondents
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Less than 20% of the respondents had trouble
operating their accounts & understanding entries in their
bank books
0
20
40
60
80
100
Govt_Men Govt_Women NGO_Men NGO_Women
81.81872.603
42.857
81.250
Yes
No
0
10
20
30
40
50
60
70
80
90
Govt_Men Govt_Women NGO_Men NGO_Women
81.818
69.863
64.286
78.125
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0 10 20 30 40 50 60 70 80
Govt_Men
Govt_Women
NGO_Men
NGO_Women
54.55
64.38
50.00
71.88
No
yes
However, a majority of respondents needed help in filling up official forms. 50% of the men and 60-70% of the women.
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0 10 20 30 40 50 60 70 80 90 100
Govt_Men
Govt_Women
NGO_Men
NGO_Women
90.909
87.671
85.714
84.375
No chage
Has decreased
Has increased
The confidence level in approaching organizations has also increased in almost 90% of the respondents.
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CONCLUSIONSThis study……&…..Future
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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 studies-observed 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.
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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.
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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
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THANK YOU
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…
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