Self-help Groups as Financial Intermediaries in India ... - Sa-Dhan

SHGs. Finally, with the SHG acting as a financial intermediary, transactions between theSHG and its members are not recorded at higher levels. As a result loan tracking as alsotracking the stream of benefits accruing at the individual or family level is not possible.6.5 Future of Impact Assessment of SHGsIt is fairly clear that the state of impact assessment in microfinance, and more especially ofcommunity organisations in microfinance, such as SHGs and federated structures based onthem, is still undeveloped. Impact assessment has essentially been a donor requirement,which NGOs and field workers have found irksome and alienating, not the least because of ananxiety about their own performance being put to question. It is unlikely that they wouldpursue it in the absence of donor pressure.It has also become clear that one-off high cost and time-consuming surveys do not adequatelyhelp us to understand processes and pathways of change and to make mid-term corrections.Qualitative and participatory methods partly fill this gap but have their limitations in respectof the reliability of the responses generated. Increasingly, a role is being seen forparticipatory impact monitoring by which (through the active involvement of participants)feedback can be provided for management decision making as well as provide the necessarydata for making broad judgements about the effectiveness of projects. This is empowering forparticipants since through a participatory learning and action approach they are in a better toposition to assess their own conditions of existence and make informed choices about theirlives. Donors are becoming sensitive to these needs and are supporting initiatives that involvesuch participation. In this approach impact monitoring is located in a participatory frameworkwhich could include participatory poverty assessment, participatory baseline-setting,participatory planning, etc.Some of the best practice NGOs such as MYRADA, PRADAN and OUTREACH are alreadysubstantially engaged in the use of participatory methodology at various levels. A set ofMYRADA publications cover the use of participatory methodology in assessment ofcommunity based institutions.The costs of implementing participatory methodologies can be substantial and the clearbenefits not easy to see, especially if SHGs are to relinquish some of their functions to clusterand higher-level institutions. In any case, whether opting for traditional approaches,approaches involving a mix of methodologies, or to taking a fully participatory route, it isclear that substantial capacity building is necessary at NGO and SHG level to assessprogramme effectiveness. As additional layers of primary and secondary federation arecreated, the roles and responsibilities, MIS requirements and training have to be planned atdifferent levels.Banks and funding agencies are already using organisational, managerial and financialcriteria for the appraisal of SHGs and SHG federations. Similar exercises are also beingconducted by facilitating NGOs to help strengthen weak groups. Efforts need to be made togenerate impact information at the appropriate level both for “proving impact” as well as“improving practice” of microfinance through SHGs.59