Making money– microenterprise– is this a way to sustainable livelihoods? PACT’s Nepalese Lessons
Many Americans are steeped in the belief that we must ‘pull ourselves up by our bootstraps’, that hard work and especially faith in small businesses is the way to success. This is one of the many reasons why microfinance so appeals to donors as an investment. Does it work?
The US NGO-umbrella, Interaction, posted some “Aid Works” global results, including “the percentage of USAID-funded microfinance institutions that achieved financial sustainability jumped from 38% in 2000 to 76% in 2012.” Yet there have been numerous detractors of the model and the unsustainability of control over resources/ empowerment  .
What does one ex-post evaluations that we have on hand tell us? PACT’s USAID-funded WORTH program in Nepal was focused on women ending poverty through business, banking and literacy/ bookkeeping . The project, implemented between 1999 and 2001 worked with 240 local NGOs to reach 125,000 women in 6,000 economic groups across Nepal’s southern Terai (in 2001 a Maoist insurgency led to the groups being on their own) . By then, 1,500 of these groups led by the women themselves (35,000-strong) received training to become informal-sector Village Banks . Working with local NGOs enabled them to reach 100,000 women in a few months due to the NGOs’ presence and connections in the communities. The collaboration worked well due to a shared belief by PACT and the NGOs that dependency is not empowering. As the report says “WORTH groups and banks were explicitly envisaged as more than just microfinance providers; they were seen as organizations that would build up women as agents of change and development in their communities” .
In 2006, PACT and Nepalese Valley Research Group looked to see sustainability of the banks, the extent of retained income by the women as well as any effect on community development and broader issues such as domestic abuse . They went to 272 Banks from a random sample of 450 from seven of the 21 WORTH districts. Remarkably, they found even more functioning: 288 (16 more) of them were thriving and – wow- WORTH women had spawned another 400 more groups on their own . Participant interviews were done with members and management as well as those women who had left their Banks and members of groups that had dissolved plus they interviewed a ‘control group’ of poor, non-WORTH women in Village Bank communities.
Was it a universal success? Almost. See the bar chart below showing what impacts the management committee felt the village banks had had on members, which is mostly better off, some the same, some far better off. This held true for the original village bank members and the new bank members.
The SEEP network reviewed WORTH’s ex-post and found five key findings:
- Wealth creation: A Village Bank today holds average total assets of over Rs. 211,000, or $3,100, more than three times its holdings in 2001. Each woman member of WORTH now has an average equity stake of $116 in her Village Bank .
- Sustainability: Approximately two-thirds (64 percent) of the original 1,536 Village Banks are still active eight and a half years after the program began and five to six years after all WORTH-related support ended. That means there are nearly 1,000 surviving groups with approximately 25,000 members .
- Replication: A quarter of the existing WORTH groups has helped start an estimated 425 new groups involving another 11,000 women with neither external assistance nor prompting from WORTH itself. If all these groups are currently operating, then more Village Bankers are conducting business today in Nepal than when formal WORTH programming ended in 2001. The report also said 63% of the Village Bank members derived the income from agriculture/ sale of food versus 17% in commerce/ retail trade and the rest in miscellaneous trades. Over 40% of the participants said they borrowed to pay for education and health costs and another 20% to pay off other loans plus for festivals (e.g. birth, death) .
- Literacy: 97 percent of respondents reported that literacy is “very important” to their lives; 83 percent reported that because of WORTH they are able to send more of their children to school .
- Domestic disputes and violence: Two-thirds of groups reported that members bring their personal or family problems to the group for advice or help. Of these, three-quarters reported helping members deal with issues of domestic disputes and related problems. Forty-three percent of women said that their degree of freedom from domestic violence has changed because of their membership in a WORTH group. One in 10 reported that WORTH has actually helped “change her life” because of its impact on domestic violence .
The report outlines other impacts, including self-help actions such as two-thirds of groups being engaged in community action, and three-quarters said that the group has done something to help others in the community. Speaking of community, it is notable that the self-selected women were primarily from wealthier groups (60%), 15% from the middle class, with only 20% from the most disadvantaged castes . Frankly this is not as surprising, as those most willing to take on risk are rarely the poorest until later; 67% of the very poor later wanted to join such a bank (once the risk was shown not to be too high versus income) .
The study’s author asks “Yet for all this documented success, WORTH and other savings-led microfinance programs remain among the best kept secret in the world of international development and poverty alleviation. Although together such programs reach some two million poor people, they go almost unnoticed by the $20 billion credit-led microfinance industry… The empowered women in this study—like WORTH women elsewhere in Asia and Africa— have proved themselves equipped to lead a new generation of entrepreneurs who can take WORTH [onward] through a model of social franchising now being pilot-tested [which is] as creative and potentially groundbreaking as is WORTH…WORTH has the potential to become an “international movement that supports women’s efforts to lift themselves, their families, and their communities out of poverty” .
So why aren’t are we learning from such projects and scaling them up everywhere? PACT is . They have reached 365,000 women in 14 countries – including Myanmar, Cambodia, Colombia, Swaziland, DRC, Ethiopia, with Nigeria and Malawi starting this year . Coca-Cola awarded $400,000 to PACT in 2013 to replicate WORTH in Vietnam with 2,400 women . Who else is replicating this model? It’s not clear from many excellent microenterprise sites I visited except one tells me that Mastercard Foundation and Aga Khan are looking into wider replication as well. Let’s track their results and ask participants!
 Bateman, M. (2011, September 20). Microcredit doesn’t work – it’s now official. Retrieved from https://opinion.bdnews24.com/2011/09/20/microcredit-doesn%E2%80%99t-work-%E2%80%93-it%E2%80%99s-now-official/
 Vaessan, J., Rivas, A., & Duvendack, M. (2014, November). The Effects of Microcredit on Women’s Control Over Household Spending in Developing Countries: A Systematic Review and Meta-analysis. Retrieved from https://www.findevgateway.org/paper/2014/11/effects-microcredit-womens-control-over-household-spending-developing-countries
 Mayoux, L. (2008, June). Women Ending Poverty: The WORTH Program in Nepal – Empowerment through Literacy, Banking and Business 1999-2007. Retrieved from https://www.findevgateway.org/case-study/2008/06/women-ending-poverty-worth-program-nepal-empowerment-through-literacy-banking
 PACT. (n.d.). WORTH. Retrieved 2015, from https://web.archive.org/web/20141106013639/http://www.pactworld.org/worth
 PACT. (2013, August 13). The Coca-Cola Foundation awards $400,000 grant to Pact. Retrieved from https://www.pactworld.org/article/coca-cola-foundation-awards-400000-grant-pact