pact case study 10-16-07 before peer review

8/8/2019 PACT Case Study 10-16-07 Before Peer Review

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WOMENS EMPOWERMENT PROGRAM (WEP)NEPAL

PACT

SEEP NETWORKS POVERTYOUTREACH WORKING GROUPS MF/MED APPROACHESTARGETING VERYPOOR PEOPLE

CASE STUDYNO. X

Jan P. MaesOctober, 2007


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TABLEOF CONTENTS

Executive Summary .............................................................................................................i1. Context ...........................................................................................................................1

1.2. Local context target area ....................................................................................... 22. Organizational Framework ...........................................................................................122.1. International Organization .....................................................................................122.2. Local organization ................................................................................................. 16

3. Description of Very Poor Target Group ....................................................................203.2. Socioeconomic conditions .....................................................................................21

4. Poverty Targeting and Assessment ...............................................................................244.1. Poverty measurement practices ..............................................................................244.2. Available Poverty Data ..........................................................................................244.3. Poverty Targeting ...................................................................................................25

5. Products and Services ................................................................................................... 27

5.2. Microenterprise Development Services .................................................................335.3. Non-financial Services ...........................................................................................345.4. Design and Product Development: .......................................................................365.5. Implementation Process ........................................................................................42...................................................................................................................................... 44

6. Results ...........................................................................................................................45

6.1. Method of measuring results ...................................................................................456.2. Impact .................................................................................................................... 456.3. Cost Effectiveness and Sustainability ...................................................................46


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Executive Summary

The Women Empowerment Project (WEP) was a USAID funded project that took placein Nepal from 1998 to 2001, and was carried out by Pact, its NGO partner ECTA, and anetwork of local NGOs at the district level.

With 10years experience in Nepal, Pact had a long-term commitment in the country towomens issues, the promotion of literacy, the growth of democracy and increasing theeconomic and social status of vulnerable peoples. Pact began in Nepal managing asubgrant for World Education to developNaya Goreto, a national literacy programfunded by USAID. With the opening of Pacts first office in Nepal in 1988, an expandeddesign team helped to furtherNaya Goretos reach. In 1994, Pact received a grant fromUSAID to implement an innovative pilot project, Women Reading for Development(WORD). Working through 1,100 NGOs, WORD reached women in 70 of the countrys75 districts with remarkable results. Through WORD, over 550,000 women participatedin adult literacy classes and nearly 350,000 Nepali women learned to read at a third grade

level.

While this project proved the role of literacy to be a powerful entry point for workingwith women, it did not address the priority needs expressed by women, especially incomegeneration. Further, Pact recognized that there was a serious shortage of post-literacymaterials geared to rural neoliterate women. At the same time USAIDs research foundthat, compared to those who only complete literacy classes, women who furthered theirskills through post-literacy courses had higher self-confidence, more children whoattended school, and increased involvement in collective activities. This evidence,combined with womens continuing demand for literacy, their hunger for post-literacymaterials, and the top priority they gave to learning how to increase family incomes,

demanded yet another approach. USAID/Nepal decided to embark on a new strategy thatwould promote economic empowerment as the focal point for furthering womensliteracy skills. In doing so, USAID/Nepal became the only mission in the world to makewomen a primary objective of its national strategy. During this same period Pact alsoundertook its own research, leading to the development of the first Savings and Creditseries, which was piloted in western Nepal.

WEP delivered a package of literacy, savings, credit, microenterprise, and microfinanceto a target population of over 120,000 women in 21 Terai districts. Starting in 1999, Pactintroduced its new action-oriented curriculum, Women in Business, to 125,000 womenthrough over 100 field staff and 240 indigenous organizations. These organizations were

primarily NGOs but also included cooperatives, Nirdhan (a Grameen bank replicator),and Parks and People funded by UNDP. In addition, over 800 Empowerment Workershired by the local partners provided training and technical support.

Women were mobilized by local NGOs in predominantly rural areas, and either formednew groups or continued to work together in already existing literacy groups establishedduring WORD, cooperatives or solidarity groups connected to Nirdhan. While there was

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no poverty targeting, an independent study established that 45% of the women enrolledwere poor.

Pacts microfinance approach uses a group lending methodology and stimulates smallbusiness ventures by group members. Its savings-led approach (started as WEP and

continuing to evolve as WORTH in several African countries and Cambodia) helps poorwomen establish and operate their own village banks and acquire skills in managingmicro- and small enterprises. The microfinance approach cannot be understood inisolation from the WEPs integrated approach to empowering women, which alsoincludes action-oriented literacy and (through a separate agreement with USAID) a legalrights awareness training and advocacy program implemented by The Asia Foundation.

All three components are meant to provide women with the tools to take their fate intheir own hands: to read for themselves, to take social action for themselves, and even toprovide their own financial services. In other words, rather than providing (andinstitutionalizing) financial services or products, perhaps WEPs most important service

has been to build the capacity and confidence of the poor, and be a catalyst for illiteratewomen to deliver these services (saving and lending) to each other.

WEP uses an approach based on Appreciative Planning and Action (APA), whichencourages women to build on their strengths. In essence, APA invites women to focusnot on the problems they have, but on the opportunities they have to improve their livesand their community as well as on their previous successes in overcoming obstacles.These opportunities are translated into an action plan with a commitment to take animmediate first step.

Group members trained themselves through a four-book literacy program, whichintroduced WEPs objectives, group strengthening, basic business skills, empowermentand activism in the community. Literacy and savings were the focus of a first two-partseries, Women in Business. The first book in the series, Our Group, utilizes the key wordmethod and teaches women basic sounds, letters and numbers, and principles fordeveloping strong groups. The second book used in WEP,Forming Our Village Bank,instructs women on how to set aside regular savings and use simple math to track thegrowth of savings. Practically all of the more than 6,000 groups went through this firstphase and were calledEconomic Groups. Most groups started to disburse their first loanswithin several months of formation. Groups choose their own savings and interest ratesbased on a balance of the economic conditions of members and their financial goals (e.g.,how much people can feasibly save vs. how fast they want to grow the loan fund).Similarly, groups have flexibility to decide upon adjustable loan amounts.

A third training manual, entitled Village Bank Lending, focused on helping groupsmanage their loan fund, set policy, and do the needed bookkeeping. The fourth manual,Village Bank Entrepreneur, teacheswomen how to manage their microenterprises.Building small businesses is a key component of WEP, and women are encouraged tobuild businesses on what they already know how to do, gearing their businesses to thelocal markets. Many women familiar with subsistence farming choose to grow market

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gardens, raise goats or keep chickens, while others near towns engaged in petty trade.WEP encouraged women to get into high cash turnover businesses so that they would beable to make their weekly loan installments on time.

While the entire training was self-guided, the role of so-called Empowerment Workers

(EW) was extremely important in terms of providing guidance, additional training, andtechnical assistance (especially in bookkeeping) to the groups. Approximately ten groupsbased on geographic proximity were being visited twice a month by an EmpowermentWorker (employee of partner NGO paid by the project) to backstop the groups efforts,troubleshoot issues as they arose, and mentor group members.

While the projects original aim was to help each Economic Group transform into aVillage Bank through the self-guided training manuals and mastering the bookkeepingsystem, this proved unrealistic even with ample additional training and handholding bythe EWs. The training strategy evolved over time as PACT started to realize that groupswere not able to learn to keep their books just by reading them together, supported by the

bi-weekly visits of the EW. Those groups who were deemed ready and capable to do so,sent their management committees to an intensive training (3 cycles of three days each)in leadership and group management, responsible savings and lending, and the villagebank accounting system. By the end of the project funding, 1500 (almost 25 percent) ofthe Economic Groups had graduated to Village Banks. In order to qualify as a VillageBank, the following criteria had to be met:

Compulsory weekly meeting

Election of office holders

Possession of a lockbox with 3 locks

Implementation of Village Bank accounting system

Ready to follow sixteen-week loan cycle

After less than two years 110,000 women had learned to read (or: 74,000 women learnedto read and write? How is reading/writing defined?) and had begun saving actively. Morethan 30,000 had loans, 55,586 had started micro-enterprises, and 45,467 were meetingtheir income targets. WEP women have taken 45,667 collective actions for socialchange. After four years the women had increased their initial savings of $720,000 tomore than $2 million in savings, and self-financed loans for $1.5 million to more than45,000 group members (average loan $33).

Pact had gained significant experience in obtaining this type of scale. In fact, its previousprogram in Nepal, WORD, was 4 times bigger in terms of number of program

participants, and operated in almost every district of Nepal. As a result, Pact Nepalalready had a huge network of local NGO partners, it was very familiar with thesubgranting process, and it already had developed ample (literacy-related) trainingmanuals for the Nepal context. Program costs were extremely low and calculated at $42per program participant. On average, there were 10 groups and 120-250 group membersper Empowerment Worker. As a savings-led self-managed village bank model, WEP iseasily replicable in different country contexts, as has been demonstrated through

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WORTH, which is now in operation in several African countries and Cambodia.However, certain factors tend to determine the degree of success:

There is a need to have available a strong and extensive network of local NGOs orother organizations (in Kenya, for example, the Salvation Army has an extensivechurch community-based network to build upon).

The program works especially well in near-urban and relatively densely populatedrural areas, but would become significantly more expensive in remote rural areas.

The self-guided manuals are especially effective for semi-literate groups (more sothen illiterate groups).

Strengths

One of the strongest elements of the WEP model is the rapid fashion by which it investswomen with the capacity to start, manage and grow self-sustaining village banks. Using asavings-led approach taps into local sources to fuel the growth of each groups loan fund,

rather than depending on constant infusions of external capital. Literacy and training inbank management enables members to operate their village bank, rather than relyingupon a cadre of outsiders to make decisions. Knowledge sharing between WEP groupsand the presence of Empowerment Workers provides a constant source of technicalassistance, support and dissemination of best practices. Women having to rely onthemselves and their own resources also has the advantage of imparting self-confidence.Often the group also provides a valuable source of support beyond the program itself itis a real solidarity group for members.

Weaknesses

Challenges include:

a) need for the group to identify four individuals two of whom provide the bookkeepingservices that the group needs to run as a village bank. This can be a challenge if all orvirtually all of the members of the group begin the program illiterate.b) becoming literate takes time which not all women want to give to this.c) while the women can and do generate profits in their operations (individual enterprisesand village banks), the delivery system from the implementer does not produce income tocover delivery costs the women collect their own interest, not the implementer.d) the accounting system tends to be complicated and relies on forms. If groups donthave forms readily available, they often move away from using the system.

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1. Context1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics

1.1.1. National CurrencyNRP

Amount Year

1.1.2. Population (millions) 27.1 million 2005

1.1.3. Population density per square kilometre 125 2005

1.1.4. Percentage urban / rural population 14%/86% 2005

1.1.5. Inflation 4.7% 2003

1.1.5. Nominal Exchange Rate (current, X Currency per US$1) 78.5 2003

1.1.6. PPP Exchange rate 16.7 2003

1.1.7. HDI value 0.504 2002

1.1.8. HDI ranking 115 2002

1.1.9. GDP/Capita (PPP US$) 132 2002

1.1.10. Local currency equivalent of $1-a-day international poverty

line

17.35 2003

1.1.11. Population below national poverty line (%) 1 30.9% 2004

1.1.12. Population living below $1 a day (%) 39.1% 1994

1.1.13. Population living below $2 a day (%) 82.5% 1994?

1.1.15. Population growth rate 2.39 2000

1.1.16. Life expectancy 57.4 2000

1.1.17. HIV prevalence (% ages 15-49) 0.5% 2005

1.1.18. Malaria cases (per 100,000 people) 33 2000

1.1.19. Population undernourished 16.8% 2001

1.1.20. Children underweight 48.3 2001

1.1.21. Adult literacyMale

Female62.6%27.6%

20032003

1.1.22. Net primary enrolment ratioMale

Female74.6%66.0%

20002000

1.1.23. Net secondary enrolment ratioMale

Female58.0%43.0%

20022002

1.1.24. Physicians per 100,000 people 5 1990

1.1.25. Health expenditures per capita 4.2% 2001

1.1.26. Gender-related development index (GDI) rank 106 2002

1.1.27. Gender-related development index (GDI) value 0.511 2002

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1.2. Local context target area

1.2.1. Briefly describe local socioeconomic conditions1.2.1.1. Geographic reference of location and size of populationWEP started out in 21 of Nepals 75 districts in Southern Nepal: these include 19 (allbut one, Dang) districts in the Terai as well as Surkhet and Ilam (Hill districts).

Almost the entire target area is rural and densely populated.The Terai is the most densely populated region of Nepal (254 persons per squarekilometer, versus 125 for country); this population density has almost doubled in thelast two decades as a result of the north-south movement of the population andimmigration. The Terai belt accounts for almost 60 per cent of Nepals population.

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1.2.1.2. Local population characteristics:

1.2.1.2.1. Ethnic groupsThe people in the Terai are predominantly of Indo-Aryan ethnic group origins. TheTharus are the largest and oldest ethnic group of the Terai belt found living in close

proximity to densely forested regions. In the Eastern Terai the hill high castesconstitute the upper level of the economic hierarchy, but together with the Yadavsand Tharus. The poor in the Eastern Terai are the landless, or near landless, TeraiDalits, including the Musahar and Chamar, as well as the traditional fishermen, theMallah, and some of the hill Dalits. In the Western Terai, the hill high castes,together with the traditional Tharu landlords constitute the upper level of theeconomic hierarchy. In the west the less wealthy groups are the hill and Terai Dalits.

1.2.1.2.2. Most important economic activitiesAgriculture remains Nepal's principal economic activity, employing over 76% of thepopulation and providing 39% of GDP. Rice and wheat are the main food crops. The

lowland Terai region produces an agricultural surplus, part of which supplies thefood-deficient hill areas. A large proportion of the people in the Eastern Terai arelandless.

Industrial activity mainly involves the processing of agricultural produce includingjute, sugarcane, tobacco, and grain.

Remittances from labor migrants have had a strong increase during the last decade.The largest increase comes from labor migration to the Middle-East and Malaysia.But for the poor, seasonal migration to India for agricultural work, and morepermanent migration for work in industries in India, is more important. Agriculturallaborers from Eastern Terai travel as far as Punjab for agricultural work, whilelaborers from the Western Terai appear to take the shorter route to factories in theDelhi area.

1.2.1.2.3. Cultural and religious backgroundThe majority of people in the Terai follow the Hindu religion, but there are alsosmall Muslim and Buddhist minorities. The poorest households in Terai are also the

socially excluded households, as defined by the Hindu caste system. The Musahars,Chamars, and other Dalit groups are at the very bottom of the caste-system. Inparticular the Musahars rarely get other work than hard farm labor, in particular theyare employed digging to prepare the fields for new crops.

1.2.1.3. Natural resources, economic activities, markets, unemploymentThe manufacturing sector is small and includes production of produced jute, sugar,cigarettes, beer, matches, shoes, chemicals, cement, and bricks.

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The most important mineral resources exploited are limestone for cement, clay, garnet,magnetite, and talc.

1.2.1.4. For rural areas only: most important crops and livestock activities, watersupply (irrigation, rain fed), seasons and number of harvests, land availability,

ownership patterns and contracts.Rice is the most important cereal crop. Rice-based cropping systems, with wheat ormaize as a secondary crop, are predominant. Fluctuation in rice production is verycommon because of changes in rainfall. Other food crops include wheat, millet, andbarley, but their contribution to the agricultural sector is small. Increased productionof cash crops--used as input to new industries--dominated in the early 1970s.Sugarcane and tobacco also showed considerable increases in production from the1970s to the l980s. Potatoes and oilseed production had shown moderate growth since1980.Cash crops include sugarcane, potatoes, linseed, jute, and tobacco. Sugarcane, jute,and tobacco are the major raw materials for Nepal's own industries. Tropical and

subtropical fruits are also grown, and vegetable-growing in kitchen gardens ispracticed as well.

Livestock is an important component of the Nepalese farming system providing foodfor humans, manure for plants, draft power for farms and cash income for farmfamilies. In the Terai people rear cattle, buffaloes, pigs and poultry. Livestock,particularly dairy production, is a major source of income for women and sale oflivestock and livestock products accounts for nearly 55% of total farm family income.

Fish culture is a relatively new practice and is being gradually integrated as a newcomponent in existing crop-livestock mixed farming system. Small-scale fish cultureis largely concentrated in the Terai.

In order to assess the current situation, the Ministry of Agriculture undertook a cropand food supply survey in October 2006 with the support of the Food and AgricultureOrganization of the United Nations (FAO) and the World Food Programme. Thisassessment revealed that over 900 000 people affected by drought, floods, andlandslides across 27 districts required urgent humanitarian support. To address theissue of food security and malnutrition, a coordinated response plan was developedbetween the Ministry of Agriculture and the different humanitarian partners in theframework of this Common Appeal for Transition Support.

1.2.1.5. Occurrence of droughts, floods, natural disasters or conflictsParticularly in the last three years, the agricultural sector has suffered huge losses froma variety of natural disasters. Nepal is one of the most natural disaster prone countriesof the world and the Terai faces recurrent floods and droughts, in addition to thehumanitarian challenges exacerbated by recurrent conflicts: the nation has a longhistory of political instability and poor governance at the hands of both the royalregime and multiparty democratic parties.

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In 1996, the Maoist rebels launched their People's War against the Nepalesegovernment, with demands for a communist republic, new constitution and an end tothe constitutional monarchy. This resulted in more than 14,000 deaths, displaced200,000 and created serious obstacles to development work, including theimplementation of WEP by PACT.

1.2.2. Describe government policies aimed at the very poor1.2.2.1. Social protection schemes by the government.Total expenditure on Social Protection (SP) in 2002/03 was around NRs9.4 billion,just over 2% of GDP. Almost half of total SP expenditure was on social insurance; thenext most important component of SP was microcredit, which accounted for around athird of the total. Expenditure on social assistance, labor market programs, and childprotection accounted for around 20%; most of the latter was in the form of school-feeding and textbook programs. The following SP programs reach more than 400,000beneficiaries: educational assistance (meals and text books), microcredit (targeted atthe poor and for job creation), health insurance and food for work, and allowances for

senior citizens.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination andaffirmative action laws.Despite the anti-discrimination provisions contained in the 1990 Constitution, castediscrimination remains ingrained in Hindu-dominated Nepalese society. Castediscrimination constitutes a form of racism in which people are categorically relegatedto subordinate social positions, and are denied equal access to social, economic,political and legal resources. Wealth and power are disproportionately distributed tofavour higher castes, restricting social mobility and the possibility of intergenerationalchange, because caste is based on lines of descent.Girls are less valued in Nepali culture than boys. They receive less medical care andeducation, and chauvinistic attitudes preclude vital opportunities. Female literacy andfemale foeticide rates are alarming. Girls are married early, despite the governmentsofficial minimum age requirements. Women often face domestic violence andharassment, with no legal recourse, as paternalism and gender discrimination is deeplyentrenched in society. Many laws are explicitly biased against women, especiallythose regarding property, citizenship and marriage.

1.2.2.3. Property and land rights.The root cause of much rural poverty in Nepal is the widespread denial of land rightsto tenant cultivators. Land ownership remains the main source of wealth and socialstatus in Nepal and is the source of economic and political power. In Nepal, as manyas five hundred thousand families cultivate other peoples land with the agreement thatthey share the produce, often 50:50, with the landowner.Although there are legal arrangements to safeguard tenants rights, these have anumber of shortcomings and are often ignored in practice. Unregistered tenants find itvery difficult to claim any ownership rights to land they may have cultivated forgenerations. Anyway, they often do not demand their rights for fear of landowners

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evicting them. As a result many of them do not have written agreements with thelandowners.The status of women has been defined in terms of their marital status, and right toancestral property is fragile, temporary and imperfect. A daughter is not entitled to herpaternal property, simply because once married her status will change. Women must

return her paternal property after marriage.Bonded laborers are either from the Tharu indigenous community (kamaiya) or theyare dalits. Although the Government prohibited theKamiaya system through an Act inParliament in 2002, up to 20,000 kamaiya still have not been released and continueworking as bonded laborers.

1.2.2.4. Local government and non-governmental development programs.Virtually all major INGOs as well as most bilateral and multilateral agencies areengaged in development in the Terai.

1.2.2.5. Other

N/A

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1.2.3. Brief prof ile of microfinance environment

1.2.3.1. List microfinance institutions (other than subject of case study) and otherfinancial institutions/services accessible by the poor.

Microfinance practices reflect the diversity of landscape and population density inNepal. In the Terai region, more densely populated, with better transport infrastructureand easier access to clients, the Grameen Bank model has been adapted by a largenumber of organisations. It is also a region where traditional financial organisations,such as commercial and development banks, operate. Since the early 1990s, privateinitiatives led by NGOs, such as Nirdhan and the Center for Self-help Development,used the Grameen Bank methodology. With the promulgation of the DevelopmentBank Act in 1995, Nirdhan was the first NGO (1998) to transfer its microfinanceportfolio into an autonomous microfinance rural bank (Nirdhan Utthan DevelopmentBank). Since 2000, three other microfinance rural banks were created through thesame process first initiated by Nirdhan, with DEPROSC Development Bank in 2000,

Swabalamban Bikas Bank Ltd and Chhimek Bikas Bank in 2001.

Community-based models exist as well, such as the Savings and Credit CooperativeSocieties (SCCS). They tend to serve a well-off population but also the poor, with astronger emphasis on the disadvantaged in the case of organisations established bydevelopment programs. They can be linked to commercial banks, an approach takenby the Banking with the Poor Program implemented by the Rastriya Banijya Bank(RBB). Despite the institutional challenges and necessary methodological adjustmentsto be made, RBB has lent directly to self-help groups under this program.

The Village Bank model is also used in Nepal, with the Women EmpowermentProgram, the subject of this case study.

1.2.3.2. Describe dominant microfinance models and services.

Microfinance providers using the Grameen methodology will typically offer generalloans, seasonal loans, specific loans (sanitation, housing) and the loans issued from thegroup fund. Savings products are generally the compulsory group fund savings, andany additional personal, voluntary savings. In recent years, several leadingmicrofinance providers have started to move away from the traditional Grameenmodel, to focus on new practices for Nepal, such as a streamlining of operations, theintroduction of customer friendly products, and a strong emphasis on institution andstaff capacity building. New products have also been offered to clients by severalorganizations, such as microinsurance covering risks related to health, life andlivestock.

Savings and Credit Cooperative Societies (SCCS) provide a wide range of savings andloan products to their members. They commonly require compulsory savings, but alsooffer individual or group saving products, deposits, and festival and educationalsavings services. Loans provided by SCCS have a minimum term of 3 months and can

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be extended for more than 18 months, covering specific purposes, such as agriculture,microenterprise, housing, or, in some cases, emergency or social reasons.

The informal sector gathers informal community-based organisations at differentstages of institutionalisation, such as self-help groups and informal savings and credit

organisations. Moneylenders, traders, friends and relatives can also be included in thisgroup as they provide an informal source of finance used by the majority of the poorpopulation in Nepal. Dhikuti are informal groups that pool funds to extend informalcredit to their members.

Lastly, it is estimated that there are about 20,000 active NGOs in the country. All ofthem have some sort of saving-credit program operating through community groups.

1.2.3.3. Demand versus supply of microfinance services.

There is an estimated 17.6 million people in Nepal lacking access to financial services.

The recent conflict in Nepal had a negative impact on the access of the Nepalipopulation to financial services, especially in rural areas. In fact, most financialinstitutions were reticent to operate in rural areas due to the current Maoist insurgencyin Nepal. The most affected commercial banks had reduced the size of their ruralnetwork, already downscaled by cost-savings measures.

The majority of the targeted credit programs have been unable to directly cater to theneeds of the bottom 20 percent households because the poor lack other resources andknowledge to benefit from the saving-credit programs.

1.2.3.4. Depth of microfinance outreach.

Deepening the outreach in targeting the poorest is still a difficult task in Nepal.Moreover, the political context and the recent insurgency did not provide the idealconditions for microfinance methodologies to be the most efficient, given theadditional costs related to the insecurity situation in rural areas.

The central bank, Nepal Rastra Bank (NRB) imposes priority sector lending tocommercial banks, which entails lending a certain percentage of their deposit liabilityto deprived population, including the usual microfinance clients. The ratio of prioritysector lending over time has increased from 5% to 12% in which 0.25 to 3% must beinvested in the deprived sector, which aims at targeting the hardcore poor.Commercial banks can choose to lend the required amount to end clients directly, ordisburse it through loan or equity in other microfinance institutions. Because of thecreation of new wholesale funds and the liberalisation of the financial system, NRBhas recently decided to phase out its priority credit policy by 2007, with decreasedratio of 6% in 2004, and 2% in 2006. However, the 3% deprived sector requirementwill stay in place, and include microfinance.

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1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.Two initiatives are particularly worth mentioning, as they are described in two othercase studies:- Save the Children and Nirdhan Utthan Bank have worked together since 1997 to

increase access to financial services for poor women and other vulnerable groups

in rural Nepal. With institutional capacity building and technical assistance fromSave the Children, Nirdhan has successfully re-engineered its methodology andintroduced flexible new products to reach those in remote areas with little or noassets. These innovations have driven Nirdhans growth from 3,000 clients toover 70,000 clients, making it Nepals leading women-focused microfinanceinstitution.

- ILO has partnered with multipurpose NGOs in Banke District to develop anddeliver a package of services designed to rehabilitate bonded laborers (mainlyformer Kamaiyas) that have been officially released. With most partners, theproject is small part of the NGOs overall activities, but one that has attracted asignificant amount of attention and support from the NGOs senior management.

In addition to microfinance services, the integrated approach includes socialempowerment, education, skill training and health services.

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1.2.4. Poverty1.2.4.1. Existing Poverty data and geographic areas of the country where extremepoverty is most concentrated.

The Nepal Living Standards Survey (NLSS) was conducted in 1996 and again in

2003-4.Central Bureau of Statistics conducted Nepal Living Standard Survey over all Nepal in1996 with introduction of ultra poor. The survey was comprehensive and also micronature. The survey measured 42.0% as national average of poverty incidence in 1996out of which the poor was 24.9% and the ultra poor was 17.1 % regarding the definedpoverty line.

The poverty line is set to the rupees per person a normal household will need to buy anormal basket of food that contains 2124 kcal per day, plus normal additionalspending for a poor household. The poverty line varies between regions depending onlocal prices. In rural Eastern Terai the poverty line is 6,000 rupees, which for a six-

person household means 3,000 rupees per month. A normal wage in Kathmandu forcasual workers is now in the range of 100-200 rupees, and in rural Terai it is in therange of 50-120 rupees. As casual laborers do not work every day, a poor householdwill need at least two working members, who are employed large parts of the year tocross the poverty line.

1.2.4.2. Does the target area fall within these extreme poor regions?

The Women Empowerment Program targeted all but one of the Terai districts. Povertydata by district are not available.

1.2.4.3. If known, what is the proportion of population in the target area living below$1-a-day and/or within bottom 50% of people living below the national poverty line?

The most recent Nepal Living Standards Survey (NLSS) was conducted in 2003-4,and found that 31% of the total population was living below the poverty line, with aslightly higher figure, 35%, for the rural population. The poverty headcount rates inRural West Terai and Rural East Terai were 38% and 25% respectively.

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1.2.4.4. Main determinants of poverty.

Overall, people who tend to remain poor are households of agricultural wage earners,those who are landless or have small land holdings, those with illiterate household

heads, and those living in large households (with seven or more members).In terms of different caste and ethnic groups, Hill and Terai Dalits represent thepoorest segment of the population, despite a decline in poverty -- from 58% to 46%.Especially in Eastern Terai there still seems to exist feudal principal-agentrelationships between the landlords and the landless workers, where landlords offertake-it-or-leave-it contracts to the laborers, that is, contracts where the working hoursand the corresponding payments make the laborers only marginally better off thanwith their outside option. This means that the landlords get the entire extra surplus thatis produced by hiring laborers

Incidence of poverty by farm group is presented in table 4. The per capita income cut

off point to distinguish poor from non-poor is Rs 2584 for the Terai. Percentage ofpoor households by farm size and region is presented in table below. Poverty is verymuch concentrated among small landholders.

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2. Organizational Framework2.1. International Organization

2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)Pact is an independent non-profit corporation registered in Washington, DC. Pact is anetworked global organization that builds the capacity of local leaders and organizations

to meet pressing social needs in dozens of countries around the world.

2.1.2. Organizational background2.1.2.1. Mission and visionPacts mission is to build empowered communities, effective governments andresponsible private institutions that give people an opportunity for a better life. We dothis by strengthening the capacity of organizations and institutions to be good serviceproviders, represent their stakeholders, network with others for learning andknowledge sharing, and advocate for social, economic and environmental justice.Interdependence, responsible stewardship, inclusion of vulnerable groups, and respectfor local ownership and knowledge are core values across all of our programs.

Pact's mission is to help build strong communities globally that provide people with anopportunity to earn a dignified living, raise healthy families, and participate indemocratic life. Pact achieves this by strengthening the capacity of grassrootsorganizations, coalitions and networks and by forging linkages among government,business and the citizen sectors to achieve social, economic and environmental justice.

Pact envisions an interconnected world in which relationships of trust and mutualbenefit among the state, the marketplace and communities provide the inspiration andfoundation for taking actions to end poverty, ensure justice and achieve greater equity.

2.1.2.2. Brief historyPact was founded in 1971 as a membership organization of U.S. private and voluntaryorganizations (PVOs) to facilitate the distribution of small USAID grants to PVOsworking in relief and development assistance. From the beginning Pact had as a goalfor its members to empower local organizations in order to attain sustainabledevelopment.

By the early 1980s Pact had begun directly assisting local NGOs and supportorganizations with small institutional development grants and in 1985 opened itsmembership to local NGOs. In 1992 Pact dissolved its membership, revised itsbylaws, and established itself as an independent, nonprofit corporation registered in

the District of Columbia.

Since then Pacts annual operating budget has grown from some $3 million to $40million in FY 2004. Likewise its program reach has expanded with Pact currentlyimplementing 61 field projects in 15 countries in Asia, Africa and Latin America andadditional activities in 32 countries under two large global grant-making programs.Most of these programs focus on providing grants management and/or generalcapacity building services to NGOs and NGO networks in six program areas:

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democracy and governance, HIV/AIDS, livelihoods, natural resource management,peace building, and equity empowerment of vulnerable groups.

2.1.2.3. Type of support: funding, capacity building, technical assistance, direct

service provider, otherPact is a leading facilitator of leadership and organizational development for bothnascent and established NGOs, networks and intermediary organizations around theworld. Through training, technical assistance, mentoring and direct financial support,Pact strengthens organizations' capacity to further development goals. At the sametime Pact encourages the establishment of permanent ties to grassroots communitiesand cooperative but equal relationships with donors, government and business.Typically Pact programs promote innovative, locally defined development approaches,increase the effectiveness of NGOs in implementing such schemes, mobilize financialand technical resources that increase grassroots influence on public opinion, andempower local leaders to emerge and gain recognition as valid participants in public

life. At the heart of Pact's organizational development approach is the concept ofteamwork, a natural extension of two guiding principles that characterize all Pactprograms-participation and partnership. Pact's local partners share in Pact's values anddemonstrate a strong commitment to development goals as well as a capacity to groworganizationally.

Core areas of program excellenceCapacity building

Through cost-effective investments Pact helps local organizations learn the skills ofbasic operational competence how to craft a budget and account for funds, supervisestaff and administer an office, strengthen boards and design, execute and evaluate

action plans.

Forging networks, coalitions and strategic alliances

Pact recognizes that effective networks, coalitions and strategic alliances not onlybuild common visions but also advance sound plans for implementing them. Pactinitiatives spur organizations to augment their resources and spheres of influence andlearn that working together makes them strong. By forging linkages between local,national and international NGOs and between NGOs and governmental organizations,businesses, universities, the media and donor agencies, NGOs become more visionaryand strategic in addressing common issues.

Organizational capacity assessmentVibrant, viable and effective organizations require ongoing self-assessment andlearning to maintain their success. Pact's unique methodology for organizationalcapacity assessment and strengthening helps guide organizations in selecting the mostappropriate activities, tools and strategies for capacity building and in anticipating andovercoming the greatest barriers to change. This comprehensive process bringstogether communities of peer organizations (or complex organizations with multipledepartments/program offices) to reflect upon their performance and set strategies to

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broaden their impact and affect change. Through the assessment and planning process,organizations recognize their own potential and are able to make informed decisionsfor themselves about how best to address the challenges they face.

Information and knowledge networking

As we witness the information age emerging around the world, individuals andorganizations serving community interests are challenged to incorporate new skillsand strategies to scale-up their impact in response to social challenges. In anincreasingly interconnected and information-intensive environment, strategicallymanaging information and knowledge resources is rapidly becoming as important assound financial management to an organization's effectiveness and sustainability.Pact's Information and Knowledge Networking (IKN) services offer a customizedapproach to enhancing organizational capacity to efficiently and effectively create,acquire and share knowledge to support learning.

Corporate community engagement

Pact recognizes it takes more than public sector resources to address the world'spressing social, economic and environmental problems. At the same time businessesincreasingly see planned investments in social issues are in their long-term bestinterest in achieving bottom-line benefits. In response to this recognition Pact, withfunding from USAID, formed a strategic alliance with the Prince of Wales BusinessLeaders Forum. This alliance supports businesses and local communities to gain fromactive partnerships in sustainable development. Pact is also pursuing linkages withindividual businesses that represent resources to support our development mission andprograms while meeting the needs and interests of business at the local level. In eachcase we and the business partner seek new ways of doing business together thatcontribute to sustainable development through principled best use of our comparativeadvantages.

Financial services

Pact is known for its excellence in grants management and financial operations andmarkets these services to a range of program managers in both PVO and donororganizations around the world. Over the last three years Pact has managed over 3000subgrants in its program portfolio totaling more than $41 million in USAID funds.

2.1.3. Development intervention approachThe main focus of Womens Empowerment Program (WEP) is womens empowerment.

2.1.3.1. Primary target group and development focusPacts livelihood promotion programs target poor and vulnerable sections of thepopulations. Depending on the local program context, these can be women, the ruralpoor, and other vulnerable groups, who are being reached with microfinance,microenterprise development, education/literacy or health services, to name the mostprominent ones.

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2.1.3.2. Specialized in MF/MED or multisectoralPact does not specialize in one single approach in microfinance or microenterprisedevelopment, but instead has built up expertise and capacity in various models of MFand MED, as well as in non-economic development areas.

2.1.3.3. MF/MED modelPacts approach to economic challenges faced by the poor depends on local countrycontext and ranges from savings mobilization, microenterprise development, andmarket-based livelihoods development activities that increase household income. Thisapproach aims to provide sustainable financial services, which can be savings-led orfocused on microcredit.

In Myanmar Pat is running a large traditional MF program (credit-led). This approachuses a group lending methodology and stimulates small business ventures through arange of small business support services. The savings-led approach (as it originated inWEP and continues to evolve in WORTH) helps poor people (usually women)

establish and operate their own village banks and acquire skills in managing micro-and small enterprises.

In other cases Pact practices market-based livelihoods development, assessing anddeveloping a market for local products, improving the local production capacity andstrengthening supply channels.

2.1.3.4. Other sectorsPact doesnt usually implement multi-sector programs directly, but focuses oncapacity building services to NGOs and NGO networks in six program areas:democracy and governance, HIV/AIDS, livelihoods, natural resource management,peace building, and equity empowerment of vulnerable groups.

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2.2. Local organization

PACT/Nepals country office worked with a variety of local organizations to train andmonitor the village banks. In total 240 Nepali organizations were recruited, trained andenlisted as WEP partners, mostly small NGOs and CBOs.1

PACT/Nepal also collaborated with the Asia Foundation, which was in charge of legal

rights training and advocacy components of the project.An important partner in the Women's Empowerment Program has been Education,Curriculum, and Training Associates (ECTA), a Nepal-based non-governmentalorganization, which played a key role in creating the program's innovative curriculumand training field staff. ECTA, which means "unity" in Nepali, was founded in 1997 witha goal of promoting rural development strategies and programs that can be done at lowcost by village groups without extensive outside aid.

The following sections focus on Pacts partner NGOs that implemented the WEPprogram in the field.

2.2.1. Organizational development (S)

Table 2.2. Institutional Background

Issues Observations

2.2.1.1. Name of the organization or institution N/A

2.2.1.2. Geographic area of operationMost partner organizations arelocal (ranging from district tovillage level)

2.2.1.3. Legal structure NGOs, CBOs

2.2.1.4. Registration status Registered

2.2.1.5. Regulation status Not regulated

2.2.1.6. Date established Various

2.2.1.7. Specialized (MF/MED) or multisectoralMostly not specialized in MF orMED

2.2.1.8. Start of MF/MED activities At time of WEP introduction

2.2.1.9. Core business (f.i. credit, savings, ) Community mobilization

2.2.1.10. Business model Donor-dependent

2.2.1.11. Target market MF/MED N/A

2.2.1.12. Number of clients/participants MF/MED Varies upon capacity

2.2.1.13. Number of staff Variable

2.2.2. Organizational development (S)

2.2.2.1. Mission and visionN/A

1It is important to note that the WEP project also selected a significant number of womens groups thatwere affiliated with other agencies, such as the Ministry of Forests and Soil Conservation through its ParkPeople Program (PPP), Nirdhan, a Grameen replication MFI, as well as several Cooperatives. Since thesegroups operated differently according to the approach of these other institutions and did not evolve intoVillage Banks, the focus in this section is on Pacts more traditional NGO/CBO partners.

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2.2.2.2. Brief historyN/A

2.2.2.3. Objectives

Many of the local NGO/CBO partners are engaged in community mobilization on arange of issues, such as irrigation, forest management, farming and health.

2.2.2.4. Organizational culture, leadership, innovation (S, M)N/A

2.2.2.5. Organizational structure, roles and responsibilities (diagram may be helpful)N/A

2.2.2.6. General qualifications and profile of field staff(S, M)For their participation in the WEP program, local NGOs, in consultation with Pact,

employed Empowerment Workers (EWs), either existing staff or hired for thispurpose. Their education level is at least 8th grade, but preferably up to 12th because ofthe required math skills needed for training and monitoring the accounting of thegroups. Pact also required passing a basic math test. Preference was given to women,as long as this did not impede job duties that required frequent travelling (by bicycle)within the District, attending evening meetings, etc. EWs came from the same area asthe womens groups and had the same ethnic and linguistic background. Given therequired education level, they often came from a higher caste background than mostgroup members. Most local NGO partners had no more than three EWs.

Literacy volunteers received day of training and were not paid by Pact; they wereliterate members of the groups themselves who helped guide their fellow groupmembers through the WEP self-guided training manuals.

The EWs were trained by Pact Nepal and their job description included biweekly visitsto each of the ten groups that each was serving, attend the training sessions andprovide coaching to the adult learners. They also administered the baseline and follow-up literacy tests. They also undertook the MIS, or Results Survey, every 6 months,beginning in June 1999 until June 2001. They were paid $27/month.

2.2.2.7. Training/sensitization (of staff, managers, board) on mission and povertyoutreach (S, M)N/A: no training on mission and poverty outreach.EWs were trained to train and assist the women groups as they progressed through theWEP training manuals, from forming a strong group to starting regular savings,lending out accumulated savings among members and improving microenterpriseactivities.

2.2.2.8. Incentives for poverty outreach (S, M)

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There were no incentives for reaching out to very poor clients. NGOs were free tomobilize communities within their usual target areas. Each NGO received the sameamount of financial assistance, based on the number of groups they assisted.

2.2.2.9. Governance

The financial services (savings and lending) are managed by the members of thevillage banks themselves. They received training to do so, and each group elected itsown management committee.WEP had EWs, Trainers, Lead Trainers, and Regional Supervisors. All of thesepeople were circulating among groups to monitor progress and support learning.Groups themselves were responsible for preventing and handling corruption.

2.2.3. MF and MED servicesN/A (MF model described under Section 5)

2.2.3.1. MF model and products/services.N/A

2.2.3.2. Description of main target group (if not the very poor).N/A

2.2.3.3. Selection and/or eligibility criteriaN/A

2.2.3.4. Use of poverty assessment toolN/A

2.2.4. Resources and external assistanceThe majority of Pacts NGO/CBO partners had limited resources, and their programswere often donor-driven, i.e. they were involved in health, literacy, natural resourcemanagement, and other programs, that were being funded by external donors. Pact Nepalwas careful not to overload these NGOs, and typically no more than three EmpowermentWorkers were assigned for any given NGO.A large majority of NGOs were drawn from the pool of NGOs that had collaborated withPact Nepal in WORD, Women Reading for Development, a literacy project that had beenimplemented by Pact just before WEP started. WORD worked with 1,100 localNGOs/CBOs in 70 of Nepals 75 Districts to enroll more than half a million women inliteracy classes.As a result the WEP partner NGOs were already familiar with Pacts reporting andfunding requirements. Yes, we used standard budget templates and grant fees.

2.2.5. Relationships (networks, partnerships, other institutions)2.2.5.1. NetworksN/A. Most NGO partners had been involved with Pacts WORD program, and wereorganized in an NGO network.

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2.2.5.2. PartnershipsSome local NGO partners also implement local development programs in partnershipwith district authorities and other INGOs such as CARE, PLAN, etc.

2.2.5.3. Other institutions

N/A

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3. Description of Very Poor Target Group

3.1. Individual and Household conditionsAll WEP group members are women, whose economic status both in the household andthe community is lower than that of men. It is considered proper for women to restrict

their activities to the household. Due to restrictions on their mobility, womens access toeducation and trainingand, consequently, modern avenues of incomeare limited.Property is inherited only through the male line. 90.5% of women are engaged inagriculture as against 74.9% of men. Women contribute considerably to householdincome through farm and non-farm activities.

3.1.1. Gender100% women

3.1.2. AgeN/A

3.1.3. Disability and chronic diseaseN/A

3.1.4. Culture or religionNot different from overall population in same area.

3.1.5. EthnicityNot different from overall population in same area.

3.1.6. Membership to socioeconomic groups, such as caste and class

Brahmins/Chetris: 41%; Indigenous castes: 21%; Lower castes: 3%; Mixed castes: 34%

3.1.7. Household type, composition, marital statusThe following data are for households/women in general in the Terai, and are most likelysimilar for those reached by WEP. In the rural Terai households count on average 6.5people per household. The average number of children per household is 2.8 and theaverage age of the household head is 44.7 years. The literacy rate is only 28.4%.A significant portion of the households are female headed (13.5%).

3.1.8. LiteracyMost women were illiterate before entering the program. Still, 36% of the women did

pass the baseline literacy test, which is largely due to the fact that a significant number ofthe WEP savings groups already existed as literacy groups in Pacts previous WORDprogram.

3.1.9. EducationN/A, except about 39,000 of the 125,000 women in the program could already read andwrite at at least a third grade level.

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3.2. Socioeconomic conditions

3.2.1. Refugee or IDP statusNone

3.2.2. Economic conditions (F, C)

3.2.2.1. Underemployment3.2.2.2. Income Sources3.2.2.3. Land ownership3.2.2.4. Asset ownership3.2.2.5. Income level

The following data are obtained from external evaluation by Jeffrey Ashe in 2001.This report distinguished between the poor (45%), the emerging poor (35%) and thebetter-off (20%) reached by WEP.

The poor often rent their homes or live with relatives, and their per capita income isless than $75 annually. They are much more likely to speak a language other thanNepali as their first language and to belong to an indigenous or mixed caste group.63% percent of the poor had never been to school and only 13% had as much as eightyears of schooling. The schooling most received was not enough to significantlyincrease their ability to read, which was little higher after completing the WEP literacycurriculum when compared to those who had never gone to school. Half of the poorsurveyed were able to feed their family on what they grew for more than seven monthslast year. A quarter restricted the number of meals they ate for part of the year and,when they could not meet their needs for food, worked as agricultural laborers, left thearea to find work or sold their meager possessions. There are three other factors that

reflect the difficult circumstances of poor women they are more likely to be widows(4% compared to 1% among the better off); heads of household (22% compared to9%); and to have only one economically active adult per child. In the better offhouseholds the ratio is 1.6 economically active adults per child. This puts a heavierburden on poor adults to provide for their children, as well as forcing the children intoworking roles earlier in life. The poor have on average less than 5 of a list of 20household items (representative for Nepali households), of which only one was a highvalue item. That the poor are struggling to meet their most basic needs is reflected inthe answer to this question: How did you use the income from your business? Thepoor answered food, clothing and school expenses; while the better off mentionedschool expenses, saving, investing in the business and buying items for the household.

While the poor are surviving, the better off are investing in the future.

The emerging poor own on average 10 items on the list of 20 (compared to 5 for thepoor), and of these, 2.4 are on the high value list. The emerging poor generally owntheir homes, have enough land to produce what they need to eat for the year (three-quarters of the group are self-sufficient regarding food, compared to only half of thepoor). The per capita income of the emerging poor may reach $160 per year,considerably less than the Nepali average of $210 per year but still double that of the

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poor. 41% of the emerging poor had never been to school, while a third had as muchas eight years of schooling.

The better-off own on average 13.3 items on the list of 20, and of these 4.5 are highvalue items. The better off own their homes, often located in cities and larger towns.

86% say they have enough land to produce all they need; virtually all speak Nepaliand more than 80% are high caste Brahmins and Chetris. Per capita income is oftenabove the $210 average for the country. The better off are, not surprisingly, the besteducated group, with only 17% having never having gone to school and close to 60%with eight years or more of education.

3.2.3. Geographic conditions3.2.3.1. Rural/urban, remoteness from trading centers and roads, population densityMost groups live in rural areas, with varying degree of distances from urban tradingcenters or access to good roads. Population density is high.

3.2.3.1. Access to marketsN/A

3.2.3.1. Access to banksIn some areas of the Terai, especially in and around the bigger towns and tradingcenters, some Grameen Bank model MFIs exist. Some other banks are present aswell, but the women reached by WEP did not have access to these institutions. Inaddition to banks, Savings and Credit Cooperative Societies (SCCS) are present insome areas, but few tend to serve the poor and disadvantaged.

3.2.3.1. Access to doctors and clinicsN/A

3.2.3.1. Proneness to natural disastersN/A (same as for Terai overall: See 1.2.1.5.)

3.2.4. Major vulnerabilities and risks encountered by target group (F, C)The following findings are by the Center of MicroFinance (CMF, Nepal) inResearch on risk and vulnerability of rural women in Nepal(December 2001).Primary risks found - listed in order by frequency and costliness: illness, death of anincome earner, enterprise risks (e.g. death of livestock, crop disease, fall in marketprices), life cycle needs/risks (e.g. marriage, building homes, festivals, education).Both ex ante and ex post coping mechanisms are found. Women with greater financialmeans were somewhat more resilient to risks because they had savings and assets to drawupon. They were more proactive in mitigating risks. For the poorest people a severe crisissituation can be economically devastating. With few savings or assets, they often turn tocoping strategies, often borrowing from moneylenders.Risks were dealt with differently depending on a person's age, marital status, incomelevel, and geographic location (i.e. proximity to medical facilities). Ex post, women were

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borrowing money from the village lender, selling assets, or borrowing from thecooperative and informal savings groups (ROSCA). Ex ante, women were saving moneyas a means of risk preparation and investing in their homes, children's education as wellas purchasing productive assets.

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4. Poverty Targeting and Assessment4.1. Poverty measurement practices

4.1.1. Poverty data collection4.1.1.1. Which poverty indicators are collected?None

4.1.1.2. What poverty assessment tool is used?N/A

4.1.1.3. When and how often are poverty data collected?N/A

4.1.1.4. Which clients are measured?N/A

4.1.2. Use of poverty data

4.1.2.1. What, if any, are poverty categories distinguished by poverty data?N/A

4.1.2.2. How are each of these categories defined?N/A

4.1.2.3. How are poverty data used by organization?4.1.2.3.1. For client monitoring?N/A4.1.2.3.2. For client screening?N/A

4.1.2.3.3. For client targeting?N/A4.1.2.3.4. For impact monitoring/assessment?N/A4.1.2.3.5. For other uses?N/A

4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection methodN/A

4.2.2. Poverty data from a recent poverty and/or impact assessment studyThe following data are obtained from external evaluation by Jeffrey Ashe in 2001. Thisreport distinguished between the poor (45%), the emerging poor (35%) and the better-off(20%) reached by WEP. See section 3.2.2. for a qualitative description of these povertycategories. Jeff Ashe also produced this table:

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ECONOMIC LEVEL OF GROUPMEMBERS

VillageBank

EconomicGroup

Coop/MFI

Weightedaverage

Staff perceive village is:

Prosperous 3.7% 2% 0% 1.5%

Average 67.9% 49% 50% 52.8%

Poor 23.5% 37.3% 39.1% 35.5%

Very Poor 4.9% 11.8% 10.9% 10.2%

Status of group members is:

Among better off in theVillage

2.5% 0% 0% .4%

About average 75.3% 64.7% 64.1% 66.4%

Poorer than most other

Villagers

17.3% 27.5% 26.6% 25.3%

Among the very poorest 4.9% 7.8% 9.4% 7.9%

Group members mostly orentirely landless

17.9% 27.5% 12.3% 20.2%

Most members do not speakNepali or speak Nepali poorly

24.1% 29.4% 13.3% 22.4%

Distance to market 5 or morekilometers

15.5% 21.2% 37.5% 26.4%

4.2.3. Poverty Data obtained through use of USAID certified poverty tool

N/A4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion wasused: $1 a day or bottom 50% below poverty line?N/A4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample sizeand selection.N/A4.2.3.3. Poverty results: proportion of very poor clients versus poor clients.N/A

4.2.4. Interpretation of Poverty data

4.2.4.1. Comparison between internal and USAID poverty tool dataN/A4.2.4.2. Organizations own interpretation of poverty outreachN/A

4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool?

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No

4.3.2. What is the client poverty target level?N/A

4.3.3. Staff use of poverty targeting (S, F)4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreachHow is staff trained in poverty targeting?N/A

4.3.3.2. Staff incentive schemesN/A

4.3.4. Issues with poverty targeting (S,F)N/A

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5. Products and ServicesWEP has a three-pronged approach to empowering women: 1) action-oriented literacy; 2)legal rights awareness training and advocacy; and 3) microfinance and microenterprisetraining. All three components are meant to provide women with the tools to take theirfate in their own hands: to read for themselves, to take social action for themselves, and

even to provide their own financial services. In other words, rather than providing (andinstitutionalizing) financial services or products, perhaps WEPs most important servicehas been to build the capacity and confidence of poor, illiterate women to deliver theseservices (saving and lending) to each other.

WEP uses an approach based on Appreciative Planning and Action (APA), based onappreciative inquiry, which encourages women to build on their strengths. In essence,appreciative inquiry invites women to focus not on the problems they have, but on theopportunities they have to improve their lives and their community as well as on theirprevious successes in overcoming obstacles. These opportunities are translated into anaction plan with a commitment to take an immediate first step.

Appreciative Planning and Action

Using a logically sequenced process that takes participants from a 'discovery' of theirbest, through a visioning of even better and the steps necessary to get there, and on to the'delivery' of an action plan and the steps to get it moving, APA energizes and empowerspeople and organizations to take independent action. The approach has been found tobuild self-confidence and pride, mobilize institutions toward the achievement of theirfuture-oriented visions.

APA aims to empower communities and individuals to take pride inwhat and who they are and what they have achieved; to dream of what

might be; to plan for what can be; and to feel the energy that comesfrom making commitments and taking the first step. At the same timeAPA is simple enough that anyone can do it and profound enough tochange people's lives.

APA seeks the root cause of success (not the root cause of failure).Thiswould involve countering the prevailing negative images that ruralpeople have of themselves and their communities, their preoccupationwith their poverty, remoteness, and lack of visible modernization. Itwould be replaced by seeking instead validation and learning fromwhat is valued, beautiful, successful, working.

From:Appreciative Planning and Action A trainers guidebook. (CARENepal, 2000)

WEP provides no traditional subsidies, but women themselves pay for whatever isneeded: loans for income generation activities, lanterns and even the self-guided WEPmanuals (although at a subsidized cost). WEP worked with newly formed groups as wellas existing ones. For instance, about 25 percent of the groups had already been formed as

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literacy groups in Pacts previous WORD project. Another significant proportion ofgroups were solidarity groups, who were clients Nirdhan, a Grameen-type microfinanceinstitution.

Group members trained themselves through a four-book literacy program, which

introduced WEPs objectives, group strengthening, basic business skills, empowermentand activism in the community. Literacy and savings were the focus of a first two-partseries, Women in Business. The first book in the series, Our Group, utilizes the key wordmethod and teaches women basic sounds, letters and numbers, and principles fordeveloping strong groups. The second book used in WEP,Forming Our Village Bank,instructs women on how to set aside regular savings and use simple math to track thegrowth of savings. Practically all of the more than 6,000 groups went through this firstphase and were calledEconomic Groups. Most groups started to disburse their first loanswithin several months of formation. Groups choose their own savings and interest ratesbased on a balance of the economic conditions of members and their financial goals (e.g.,how much people can feasibly save vs. how fast they want to grow the loan fund).

Similarly, groups have flexibility to decide upon adjustable loan amounts.

A third training manual, entitled Village Bank Lending, focused on helping groupsmanage their loan fund, set policy, and do the needed bookkeeping. The fourth manual,Village Bank Entrepreneur, teacheswomen how to manage their microenterprises.Building small businesses is a key component of WEP, and women are encouraged tobuild businesses on what they already know how to do, gearing their businesses to thelocal markets. Many women familiar with subsistence farming choose to grow marketgardens, raise goats or keep chickens, while others near towns engaged in petty trade.WEP encouraged women to get into high cash turnover businesses so that they would beable to make their weekly loan installments on time.

While the entire training was self-guided, the role of so-called Empowerment Workers(EW) was extremely important in terms of providing guidance, additional training, andtechnical assistance (especially in bookkeeping) to the groups. Approximately ten groupsbased on geographic proximity were being visited twice a month by an EmpowermentWorker (employee of partner NGO paid by the project) to backstop the groups efforts,troubleshoot issues as they arose, and mentor group members. In addition to regular bi-weekly visits to each group, Empowerment Workers also held periodic mobile workshopswhere two representatives of each group in the cluster of ten share experiences with eachother and receive extra training in village banking methodology and financial monitoringand evaluation. These workshops are called mobile because each group in a clustertakes a turn hosting the meeting.

While the projects original aim was to help each Economic Group transform into aVillage Bank through the self-guided training manuals and mastering the bookkeepingsystem, this proved unrealistic even with ample additional training and handholding bythe EWs. The training strategy evolved over time as PACT started to realize that groupswere not able to learn to keep their books just by reading them together, supported by thebi-weekly visits of the EW. Those groups who were deemed ready and capable to do so,

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sent their management committees to an intensive training (3 cycles of three days each)in leadership and group management, responsible savings and lending, and the villagebank accounting system. By the end of the project funding, 1500 (almost 25 percent) ofthe Economic Groups had graduated to Village Banks. In order to qualify as a VillageBank, the following criteria had to be met:

Compulsory weekly meeting Election of office holders

Possession of a lockbox with 3 locks

Implementation of Village Bank accounting system

Ready to follow sixteen-week loan cycle

When a group begins to save, the amount, which is set by the group, may be as small asthree cents per woman per week. Women are highly motivated to save not only becausethey want to put aside resources, but because their savings generate interest when theyare lent out to group members in the form of micro-enterprise loans.

Through the program, women form savings groups, or village banks, comprised of 15 to35 members (average 21). Contrary to other village banking schemes around the world,the WEP model is savings- rather than credit-led. Participants contribute their ownsavings to a group loan fund and do not have access to external funds. Through thesevillage banks members are able to access loans ranging in size from $10 to $250,depending on the size of the group fund and the loan policy adopted by a given group.

WEPs village bankers meet weekly - at least theoretically -, and every meeting is usedfor literacy, management skill-training, or other topics of interest to members. Custody ofcash is handled in lockboxes (of all sizes, materials, colors), secured with three separatepadlocks, each opened by a different key in the possession of the groups chair person,

secretary, controller, and treasurer. Usually keys are held by all but the treasurer and thetreasurer keeps the box between meetings. Loans are made for a wide variety of uses:business, personal emergency, schooling, etc. Each village bank is entirely responsiblefor collecting, managing, and lending its own savings.

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5.1. Financial Products

Table 5.1. Microfinance Product Details

Product Features and Policies

5.1.1. microcredit

5.1.1.1. Individual or group product Individual loans (from the group fund)

5.1.1.2. Loan terms (maturity, interestrate, interest type, flexibility)

Flexible loan duration: usually the loanduration was a multiple of 4 weeks, up to 16weeks.Interest rate = decided by group, butcommonly set at 2% per month

5.1.1.3. Loan source Groups own accumulated funds

5.1.1.4. Loan use

WEP materials strongly recommended thatwomen take loans only for income-producingactivities, but each group set its own loanpolicy and many groups gave loans forconsumption and emergency needs.

5.1.1.5. Loan size (first loan, averageloan, maximum loan size)

Average loan (2002) = $33 (outstanding)

5.1.1.6. Meeting requirement andfrequency

Weekly meetings

5.1.1.7. Mandatory savings requirementand amount

Weekly savings requirement

5.1.1.8. Collateral requirement No but often a collateral form signed

5.1.1.9. Other eligibility requirements Meet groups weekly savings requirement

5.1.1.10. Loan default policy Decided by group

5.1.1.11. Repayment flexibility

Groups were expected to give loans thatrequired pay back in weekly installments

that was the strong recommendation so thatthe money would be worked very hard. Infact, women did a variety of things,gravitating to a monthly or end-of-term pay-back system.

5.1.1.12. Other N/A

5.1.2. microsavings

5.1.2.1. Individual or group Individual savings into group fund

5.1.2.2. Savings TypeMandatory savings amount decided by groupitself

5.1.2.3. Deposit/collection location Lockbox

5.1.2.4. Deposit frequency, amounts,flexibility

Weekly (and same amount for each groupmember)

5.1.2.5. Meeting requirement andfrequency

Weekly

5.1.2.6. Savings terms (interest rate,minimum deposit, )

No interest on savings, but each villagemember receives interest income from loans.

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Product Features and Policies

5.1.2.7. Withdrawal and savings usepolicies

Mandatory Savings cannot be withdrawn.Motivation to save and earn interest on fundsdriven by access to bigger loans.

5.1.2.8. Record keeping and accountingGroups keep their own written records

passbooks and ledger account5.1.2.9. Investment of deposits

Deposited savings are used as group loanfund

5.1.2.10. Other N/A

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5.1.3. microinsurance

5.1.3.1. Microinsurance Type N/A

5.1.3.2. Group or individual product N/A

5.1.3.3. Term N/A

5.1.3.4. Eligibility requirements N/A5.1.3.5. Renewal requirements N/A

5.1.3.6. Rejection rate N/A

5.1.3.7. Voluntary or compulsory N/A

5.1.3.8. Product coverage (benefits) N/A

5.1.3.9. Key exclusions N/A

5.1.3.10. Pricing premiums N/A

5.1.3.11. Pricing co-payments anddeductibles

N/A

5.1.3.12. Pricing other fees N/A

5.1.4. microgrants

5.1.4.1. Individual or group product N/A5.1.4.2. Amount (and number of grants) N/A

5.1.4.3. Eligibility requirements N/A

5.1.4.4. Grant use and other conditions N/A

5.1.4.5. Savings requirement or matchedsavings arrangement

N/A

5.1.4.6. Straight grant, no interest orpartial repayment

N/A

5.1.4.7. Other N/A

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5.2. Microenterprise Development Services

Table 5.2. MED Service Details

Service Types and Features

5.2.1. Training

5.2.1.1. Financial literacy Yes

5.2.1.2. Business planning andmanagement

Yes

5.2.1.3. Marketing Yes

5.2.1.4. Recordkeeping andbookkeeping

Yes

5.2.1.5. Skill development Yes management skill, not technical skill

5.2.1.6. Technical assistanceYes (by Empowerment Workers and Pactstaff)

5.2.1.7. Training methodAppreciative inquiry, self-training, cascadingToT model

5.2.1.8. Other? N/A

5.2.1.9. Costs to client

Participants teach themselves and run theirown programs. They pay a recommendedenrolment fee Rs 10. They also paid aminimum of Rs 7 per book all of which waskept in the group fund to boost the fund. Nomoney was collected by NGOs from thegroups.

5.2.2. Business Consultancy and Advisory Services

5.2.2.1. Individual or group sessionsGroup sessions, self-instructional andreinforced by Empowerment Worker

5.2.2.2. FrequencySelf-training every week, and EW visits everyother week

5.2.2.3. Topics Business management

5.2.2.4. Confidence Building

This is probably the strongest outcome of thework of Empowerment Workers, who helpwomen identify their strengths and providethem with technical assistance as well ascontinuous encouragement.

5.2.2.5. Other N/A

5.2.2.6. Costs to client Periodic travel to nearby villages

5.2.3. Market Linkages

5.2.3.1. Input supply No5.2.3.2. Marketing Assistance No

5.2.3.3. Market Information No

5.2.3.4. Producer organizations No

5.2.3.5. Business linkage promotion No

5.2.3.6. Quality Control No

5.2.3.7. Other N/A

5.2.3.8. Costs to client N/A

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5.2.4. Other

5.2.4.1. Employment generation No

5.2.4.2. Technology development No

5.3. Non-financial Services

Certain service categories listed below might have been offered sporadically by any ofthe 240 NGO partners. However, only routine non-financial services of WEP arementioned in the table below.

Table 5.3. Non-financial Services Details


5.3.1. Nutrition

5.3.2. Health and Sanitation

5.3.3. Education

Literacy This is the program entry point

Legal rights Awareness training and action

5.3.4. Social Capital Development

Social capital strengthens significantly when women, who were often restricted to theirhomes, join groups and support each other in literacy training and savings/credit. Manyof these groups also took action on a variety of issues (such as alcoholism, HIV/AIDSprevention, child trafficking) through campaigns, visits with the district authorities,group gatherings, street dramas, and even advertisements in newspaper or radio.

5.3.5. Other

Training in Appreciative Planning andAction (APA)

To encourage women to build on theirstrengths and take charge of their owndevelopment, to monitor their effortsthemselves

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5.3.6. Empowerment and confidence buildingAs the name of the program implies, womens empowerment is the overall objectiveunderlying the three components of the WEP approach: literacy training, legal rights

awareness and advocacy, and increased access to economic opportunities. Improvedliteracy increases self-worth and opens up new opportunities. Women are not given anyhandouts; they engage in an appreciative inquiry process, facilitated by empowermentworkers, to take control of their lives by saving and increasing their incomes. They do notdepend on an outside institution for these services, and set their own rules for savings andcredit. Women are also encouraged to discuss their circumstances and to take collectiveaction to make positive changes.Womens empowerment in WEP is not a hollow claim based on access to credit forwomen, but is at the core of the projects design. Training manuals focus onempowerment, and empowerment workers are trained in empowerment exercises, such asconfidence building, understanding empowerment, forming a sisterhood, making

decisions, initiating collective action, eliminating violence against women Access tosavings and loans is only one part of empowerment.

5.3.7. Graduation of very poor clients into mainstream MF/MED servicesGraduating to mainstream (institutional) microfinance is not part of WEPs design.However, two of the biggest local partners of PACT in Nepal were Grameen-replicationMFIs. Their solidarity groups, trained by WEP, were obviously linked to a formalmicrofinance institution. But that was a peculiarity and not intended as a model for theexpansion of WEP.

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5.4. Design and Product Development:

5.4.1. Program rationale/ theory of change?One has to keep in mind that womens empowerment is the overriding objective ofWEP.

5.4.1.1. Main issues and challenges of very poor clients which the organization seeksto addressThe WEP framework takes as its point of departure the World Bank multidimensionaldefinition of poverty. This goes beyond income poverty to encompass the broaderconcerns of poor people: opportunity, security and empowerment. Empowerment is anexplicit part of this framework, defined in terms of voice in decision-making atdifferent levels.

Womens empowerment is seen as an integral part of WEPs definition of povertyreduction. The definition of empowerment itself, however, sees as its centrechallenging the different dimensions of power:

Power within: confidence and self-respect

Power to: building assets, incomes and capacities

Power over: increasing control and voice in decision-making

Power with: mutual support and collective action

5.4.1.2. Intended outcomes and impactsWEP began as a program to increase womens incomes and status in the householdand community on the understanding that challenging gender inequality was animportant goal in and of itself.The specific indicators on which WEP aims to have an impact at the different levels,

based on priorities of WEP women themselves, are indicated in the appropriate circlesin Figure 1.

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Figure 1: Poverty reduction indicatorsINDIVIDUAL FAMILY COMMUNITY

OPPORTUNITY Womenseconomic activities

Householdlivelihoods

Diversified markets

Womens Income Reduced wastefulexpenditure onmale luxuries

Removal of alcoholand gamblinghouses

Freedom andmobility

Roads andinfrastructure

Literacy and accessto information

Childrens literacyand education

Education facilities

SECURITY Womens savingsand assets

Food security andimproved nutrition

Water andsanitation facilities

Health Improved health Health facilities

Friendships and

support networks

Social capital Community

cohesionFreedom fromdomestic violence

Economic andsocial inclusion

Civil peace

VOICE Transparency inlocal government

Politicalparticipation

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5.4.1.3. How are products and inputs designed to achieve those intended impacts?The different WEP interventions are seen as both stimulating this empowermentprocess (represented by the figure at the centre of the circles), and also having directimpacts on specific dimensions of womens poverty, which then have an impact on thepoverty in their families and communities.

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WOMEN'S

EMPOWERMENT

FAMILY

POVERTY

REDUCTION

COMMUNITY

DEVELOPMENT

NATIONAL

DEVELOPMENT

Improved

family

livelihoods

OPPORTUNITYSECURITY

Freedom from

violence

Women's

savings

Expanding and

diversified

markets

VOICE

Power over:

Control anddecision-

making

Food security

and improved

nutrition

Improved

health

Health

facilities

Water and

sanitation

facilities

Freedom and

mobility

Education

facilities

Literacy and

access to

informationChildren's/

girls'

education

Roads andproductive

infrastructure

Power to:Building assets,

incomes andcapacities

Community

harmony and

peace

Women'

economic

activities

Economic and

social

inclusion

Political

participation

Transparency in local

governance

Social capitalLiteracy training

Rights Responsibility and Advocacy training

Business training

Loans

pact case study 10-16-07 before peer review

Documents