DRAFT_RGailey_Social Capital and Economic Empowerment_Stockholm Conference_Sept 2009

1Running head: SOCIAL CAPITAL AND ECONOMIC EMPOWERMENT

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Social Capital and Economic Empowerment: A Preliminary Look at a Longitudinal Analysis of the Relationship between Changes in Accumulated Assets and Measures of Social Capital amongRural South African WomenRobert Gailey, Doctoral CandidateUniversity of San DiegoWith assistance from:Dr. Paul Pronyk, The Earth Institute, Columbia University;Mr. John de Wit, Executive Director, Small Enterprise Foundation; andDrs. Fred Galloway and Robert Donmoyer, University of San DiegoStockholm International Workshop: Civil Society, Social Capital, and Economic DevelopmentHosted by:

The Bank of Sweden Tercentenary Foundation’s sector committee for research on the civil

societyKTH (Royal Institute of Technology)Jönköping International Business School

2AbstractThis preliminary longitudinal study explores the relationship between household assetaccumulation over time and measures of social capital among impoverished rural South Africanwomen. The study re-analyzes an existing data set from a 2001

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2005 study done in eight villagesin South Africa. The original study investigated the impact of a microfinance and educationintervention on the prevalence of HIV/AIDS and intimate partner violence. This study re-analyzes interview responses from 739 households in the original data set and uses multipleregression analysis to explore the relationship between measures of cognitive social capital(CSC) and structural social capital (SSC) and household economic welfare as measured bychange in household assets over time. The models used first consider the relationship of selectdemographic variables to asset accumulation and then explore the relationship of select socialcapital measures to asset accumulation.

Preliminary results for the study’s three primary research questions reveal that for the

overall multiple-variable models, there was no significance (p=.17, p=.24, and p=.22respectively), and the variables accounted, respectively, for only 1.9 percent, 2.0 percent, and 2.1percent of the variance in the respondents

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change in household assets score. Further analysisdone of the microfinance participation by degree of involvement reveals moderate significance(p < .001) in measures related to initial CSC (2% variance explained), follow-up CSC (9.7%variance explained), and change in CSC (2% variance explained), as well as measures related toinitial SSC (6% variance explained), follow-up SSC (15.4% variance explained), and changes inSSC (8.8% variance explained). This research offers microfinance practitioners and thoseinterested in addressing the challenges of poverty a better understanding of how microfinanceparticipation relates to measures of CSC and SSC.

3Definitions of Key WordsMicrofinance: the provision of financial services, primarily small loans but also saving andinsurance services and products, to entrepreneurs living in povertyMicrofinance institution (MFI): an institution, often a nonprofit organization, that providesmicrofinance services to poor peopleSmall Enterprise Foundation (SEF): the largest MFI in South Africa, begun in the NorthernProvince in 1992 and currently serving more than 50,000 peopl

eParticipatory Wealth Ranking (PWR): a system designed by SEF to determine who in a village is

among the bottom half of the population living below the country’s poverty level. PWR involves

first asking the community to map all the households in a village. Then, at least three groups arecreated from among the villagers and, separately, each group is asked to define levels of povertyin their community. The groups are then asked to rank each household in the village according tothe levels of poverty the group have identified. Results from all three independent groups arethen triangulated and averaged and each household in the village is given an overall score. Anoverall cut-off score is determined and only households scoring among the poorest in the villageare targeted to become SEF clients.Social capital: the groups, networks, norms, and trust that people have available to them forproductive purposesStructural social capital: the relationships formed through the groups or networks, both formaland informal, in which a person participatesCognitive social capital: the trust and trustworthiness among people who share common norms,values, attitudes, and beliefsSocial Capital Assessment Tool (SOCAT): one of the first tools created and validated by theWorld Bank in an attempt to measure social capital in meaningful and rigorous ways. Portions of the SOCAT have been used and modified by researchers involved in international developmentto study how different types of social capital, including cognitive and structural social capital,

factor into people’s lives at different levels

.Rural AIDS and Development Action Research (RADAR) program: program created byresearchers from the University of Witwatersrand in South Africa and the London School of Hygiene and Tropical MedicineIntervention with Microfinance for AIDS & Gender Equity (IMAGE) study: a major study,facilitated by RADAR from June 2001 to March 2005 in the Limpopo province of South Africa,to explore HIV/AIDS and intimate partner violence among rural South African women