WOMEN’S EMPOWERMENT PROGRAM (WEP) NEPAL PACT

SEEP NETWORK’S POVERTY OUTREACH WORKING GROUP’S MF/MED APPROACHES TARGETING VERY POOR PEOPLE CASE STUDY NO. X Jan P. Maes October, 2007

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CONTENTS

Executive Summary.............................................................................................................i 1. Context ...........................................................................................................................1 1.2. Local context – target area.......................................................................................2 2. Organizational Framework...........................................................................................12 2.1. International Organization.....................................................................................12 2.2. Local organization.................................................................................................16 3. Description of “Very Poor” Target Group....................................................................20 3.2. Socioeconomic conditions.....................................................................................21 4. Poverty Targeting and Assessment...............................................................................24 4.1. Poverty measurement practices..............................................................................24 4.2. Available Poverty Data..........................................................................................24 4.3. Poverty Targeting...................................................................................................25 5. Products and Services...................................................................................................27 5.2. Microenterprise Development Services.................................................................33 5.3. Non-financial Services...........................................................................................34 5.4. Design and Product Development: .......................................................................36 5.5. Implementation Process ........................................................................................42 ......................................................................................................................................44 6. Results...........................................................................................................................45 6.1. Method of measuring results...................................................................................45 6.2. Impact....................................................................................................................45 6.3. Cost Effectiveness and Sustainability ...................................................................46

Executive Summary
The Women Empowerment Project (WEP) was a USAID funded project that took place in Nepal from 1998 to 2001, and was carried out by Pact, its NGO partner ECTA, and a network of local NGOs at the district level. With 10years’ experience in Nepal, Pact had a long-term commitment in the country to women’s issues, the promotion of literacy, the growth of democracy and increasing the economic and social status of vulnerable peoples. Pact began in Nepal managing a subgrant for World Education to develop Naya Goreto, a national literacy program funded by USAID. With the opening of Pact’s first office in Nepal in 1988, an expanded design team helped to further Naya Goreto’s reach. In 1994, Pact received a grant from USAID to implement an innovative pilot project, Women Reading for Development (WORD). Working through 1,100 NGOs, WORD reached women in 70 of the country’s 75 districts with remarkable results. Through WORD, over 550,000 women participated in 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 working with women, it did not address the priority needs expressed by women, especially income generation. Further, Pact recognized that there was a serious shortage of post-literacy materials geared to rural neoliterate women. At the same time USAID’s research found that, compared to those who only complete literacy classes, women who furthered their skills through post-literacy courses had higher self-confidence, more children who attended school, and increased involvement in collective activities. This evidence, combined with women’s continuing demand for literacy, their hunger for post-literacy materials, 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 that would promote economic empowerment as the focal point for furthering women’s literacy skills. In doing so, USAID/Nepal became the only mission in the world to make women a primary objective of its national strategy. During this same period Pact also undertook its own research, leading to the development of the first Savings and Credit series, which was piloted in western Nepal. WEP delivered a package of literacy, savings, credit, microenterprise, and microfinance to a target population of over 120,000 women in 21 Terai districts. Starting in 1999, Pact introduced its new action-oriented curriculum, Women in Business, to 125,000 women through 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 Workers hired by the local partners provided training and technical support. Women were mobilized by local NGOs in predominantly rural areas, and either formed new groups or continued to work together in already existing literacy groups established during 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 enrolled were poor. Pact’s microfinance approach uses a group lending methodology and stimulates small business ventures by group members. Its savings-led approach (started as WEP and continuing to evolve as WORTH in several African countries and Cambodia) helps poor women establish and operate their own village banks and acquire skills in managing micro- and small enterprises. The microfinance approach cannot be understood in isolation from the WEP’s integrated approach to empowering women, which also includes action-oriented literacy and (through a separate agreement with USAID) a legal rights 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 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 (and institutionalizing) financial services or products, perhaps WEP’s most important service has been to build the capacity and confidence of the poor, and be a catalyst for illiterate women to deliver these services (saving and lending) to each other. WEP uses an approach based on Appreciative Planning and Action (APA), which encourages women to build on their strengths. In essence, APA invites women to focus not on the problems they have, but on the opportunities they have to improve their lives and 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 an immediate first step. Group members trained themselves through a four-book literacy program, which introduced WEP’s objectives, group strengthening, basic business skills, empowerment and activism in the community. Literacy and savings were the focus of a first two-part series, Women in Business. The first book in the series, Our Group, utilizes the key word method and teaches women basic sounds, letters and numbers, and principles for developing 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 the growth of savings. Practically all of the more than 6,000 groups went through this first phase and were called Economic Groups. Most groups started to disburse their first loans within several months of formation. Groups choose their own savings and interest rates based 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 groups manage their loan fund, set policy, and do the needed bookkeeping. The fourth manual, Village Bank Entrepreneur, teaches women how to manage their microenterprises. Building small businesses is a key component of WEP, and women are encouraged to build businesses on what they already know how to do, gearing their businesses to the local markets. Many women familiar with subsistence farming choose to grow market ii

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 be able 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, and technical assistance (especially in bookkeeping) to the groups. Approximately ten groups based on geographic proximity were being visited twice a month by an Empowerment Worker (employee of partner NGO paid by the project) to backstop the group’s efforts, troubleshoot issues as they arose, and mentor group members. While the project’s original aim was to help each Economic Group transform into a Village Bank through the self-guided training manuals and mastering the bookkeeping system, this proved unrealistic even with ample additional training and handholding by the EWs. The training strategy evolved over time as PACT started to realize that groups were 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 village bank accounting system. By the end of the project funding, 1500 (almost 25 percent) of the Economic Groups had graduated to Village Banks. In order to qualify as a Village Bank, 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 learned to read and write? How is reading/writing defined?) and had begun saving actively. More than 30,000 had loans, 55,586 had started micro-enterprises, and 45,467 were meeting their income targets. WEP women have taken 45,667 collective actions for social change. After four years the women had increased their initial savings of $720,000 to more than $2 million in savings, and self-financed loans for $1.5 million to more than 45,000 group members (average loan $33). Pact had gained significant experience in obtaining this type of scale. In fact, its previous program 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 Nepal already had a huge network of local NGO partners, it was very familiar with the subgranting process, and it already had developed ample (literacy-related) training manuals for the Nepal context. Program costs were extremely low and calculated at $42 per program participant. On average, there were 10 groups and 120-250 group members per Empowerment Worker. As a savings-led self-managed village bank model, WEP is easily 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 or other organizations (in Kenya, for example, the Salvation Army has an extensive church community-based network to build upon). • The program works especially well in near-urban and relatively densely populated rural areas, but would become significantly more expensive in remote rural areas. • The self-guided manuals are especially effective for semi-literate groups (more so then illiterate groups).

Strengths One of the strongest elements of the WEP model is the rapid fashion by which it invests women with the capacity to start, manage and grow self-sustaining village banks. Using a savings-led approach taps into local sources to fuel the growth of each group’s loan fund, rather than depending on constant infusions of external capital. Literacy and training in bank management enables members to operate their village bank, rather than relying upon a cadre of outsiders to make decisions. Knowledge sharing between WEP groups and the presence of Empowerment Workers provides a constant source of technical assistance, support and dissemination of best practices. Women having to rely on themselves 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 – it is a real solidarity group for members. Weaknesses Challenges include: a) need for the group to identify four individuals two of whom provide the bookkeeping services that the group needs to run as a village bank. This can be a challenge if all or virtually 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 enterprises and village banks), the delivery system from the implementer does not produce income to cover 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 don’t have forms readily available, they often move away from using the system.

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1. Context
1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics
1.1.1. National Currency 1.1.2. Population (millions) 1.1.3. Population density per square kilometre 1.1.4. Percentage urban / rural population 1.1.5. Inflation 1.1.5. Nominal Exchange Rate (current, X Currency per US$1) 1.1.6. PPP Exchange rate 1.1.7. HDI value 1.1.8. HDI ranking 1.1.9. GDP/Capita (PPP US$) 1.1.10. Local currency equivalent of $1-a-day international poverty line 1.1.11. Population below national poverty line (%) 1 1.1.12. Population living below $1 a day (%) 1.1.13. Population living below $2 a day (%) 1.1.15. Population growth rate 1.1.16. Life expectancy 1.1.17. HIV prevalence (% ages 15-49) 1.1.18. Malaria cases (per 100,000 people) 1.1.19. Population undernourished 1.1.20. Children underweight Male 1.1.21. Adult literacy Female Male 1.1.22. Net primary enrolment ratio Female Male 1.1.23. Net secondary enrolment ratio Female 1.1.24. Physicians per 100,000 people 1.1.25. Health expenditures per capita 1.1.26. Gender-related development index (GDI) rank 1.1.27. Gender-related development index (GDI) value Amount 27.1 million 125 14%/86% 4.7% 78.5 16.7 0.504 115 132 17.35 30.9% 39.1% 82.5% 2.39 57.4 0.5% 33 16.8% 48.3 62.6% 27.6% 74.6% 66.0% 58.0% 43.0% 5 4.2% 106 0.511 Year 2005 2005 2005 2003 2003 2003 2002 2002 2002 2003 2004 1994 1994? 2000 2000 2005 2000 2001 2001 2003 2003 2000 2000 2002 2002 1990 2001 2002 2002
NRP

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1.2. Local context – target area

1.2.1. Briefly describe local socioeconomic conditions 1.2.1.1. Geographic reference of location and size of population WEP started out in 21 of Nepal’s 75 districts in Southern Nepal: these include 19 (all but 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 square kilometer, versus 125 for country); this population density has almost doubled in the last two decades as a result of the north-south movement of the population and immigration. The Terai belt accounts for almost 60 per cent of Nepal’s population.

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1.2.1.2. Local population characteristics: 1.2.1.2.1. Ethnic groups The people in the Terai are predominantly of Indo-Aryan ethnic group origins. The Tharus 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 castes constitute the upper level of the economic hierarchy, but together with the Yadavs and Tharus. The poor in the Eastern Terai are the landless, or near landless, Terai Dalits, including the Musahar and Chamar, as well as the traditional fishermen, the Mallah, 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 the economic hierarchy. In the west the less wealthy groups are the hill and Terai Dalits. 1.2.1.2.2. Most important economic activities Agriculture remains Nepal's principal economic activity, employing over 76% of the population 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 the food-deficient hill areas. A large proportion of the people in the Eastern Terai are landless.

Industrial activity mainly involves the processing of agricultural produce including jute, 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 more permanent migration for work in industries in India, is more important. Agricultural laborers from Eastern Terai travel as far as Punjab for agricultural work, while laborers from the Western Terai appear to take the shorter route to factories in the Delhi area. 1.2.1.2.3. Cultural and religious background The majority of people in the Terai follow the Hindu religion, but there are also small 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. In particular the Musahars rarely get other work than hard farm labor, in particular they are employed digging to prepare the fields for new crops. 1.2.1.3. Natural resources, economic activities, markets, unemployment The manufacturing sector is small and includes production of produced jute, sugar, cigarettes, beer, matches, shoes, chemicals, cement, and bricks. 3

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, water supply (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 or maize as a secondary crop, are predominant. Fluctuation in rice production is very common because of changes in rainfall. Other food crops include wheat, millet, and barley, but their contribution to the agricultural sector is small. Increased production of cash crops--used as input to new industries--dominated in the early 1970s. Sugarcane and tobacco also showed considerable increases in production from the 1970s to the l980s. Potatoes and oilseed production had shown moderate growth since 1980. 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 is practiced as well. Livestock is an important component of the Nepalese farming system providing food for humans, manure for plants, draft power for farms and cash income for farm families. In the Terai people rear cattle, buffaloes, pigs and poultry. Livestock, particularly dairy production, is a major source of income for women and sale of livestock 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 new component in existing crop-livestock mixed farming system. Small-scale fish culture is largely concentrated in the Terai. In order to assess the current situation, the Ministry of Agriculture undertook a crop and food supply survey in October 2006 with the support of the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme. This assessment revealed that over 900 000 people affected by drought, floods, and landslides across 27 districts required urgent humanitarian support. To address the issue of food security and malnutrition, a coordinated response plan was developed between the Ministry of Agriculture and the different humanitarian partners in the framework of this Common Appeal for Transition Support. 1.2.1.5. Occurrence of droughts, floods, natural disasters or conflicts Particularly in the last three years, the agricultural sector has suffered huge losses from a variety of natural disasters. Nepal is one of the most natural disaster prone countries of the world and the Terai faces recurrent floods and droughts, in addition to the humanitarian challenges exacerbated by recurrent conflicts: the nation has a long history of political instability and poor governance at the hands of both the royal regime and multiparty democratic parties.

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In 1996, the Maoist rebels launched their ‘People's War’ against the Nepalese government, with demands for a communist republic, new constitution and an end to the constitutional monarchy. This resulted in more than 14,000 deaths, displaced 200,000 and created serious obstacles to development work, including the implementation of WEP by PACT. 1.2.2. Describe government policies aimed at the very poor 1.2.2.1. 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; the next most important component of SP was microcredit, which accounted for around a third of the total. Expenditure on social assistance, labor market programs, and child protection accounted for around 20%; most of the latter was in the form of schoolfeeding and textbook programs. The following SP programs reach more than 400,000 beneficiaries: educational assistance (meals and text books), microcredit (targeted at the 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 and affirmative action laws. Despite the anti-discrimination provisions contained in the 1990 Constitution, caste discrimination remains ingrained in Hindu-dominated Nepalese society. Caste discrimination constitutes a form of racism in which people are categorically relegated to subordinate social positions, and are denied equal access to social, economic, political and legal resources. Wealth and power are disproportionately distributed to favour higher castes, restricting social mobility and the possibility of intergenerational change, because caste is based on lines of descent. Girls are less valued in Nepali culture than boys. They receive less medical care and education, and chauvinistic attitudes preclude vital opportunities. Female literacy and female foeticide rates are alarming. Girls are married early, despite the government’s official minimum age requirements. Women often face domestic violence and harassment, with no legal recourse, as paternalism and gender discrimination is deeply entrenched in society. Many laws are explicitly biased against women, especially those 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 rights to tenant cultivators. Land ownership remains the main source of wealth and social status in Nepal and is the source of economic and political power. In Nepal, as many as five hundred thousand families cultivate other people’s land with the agreement that they share the produce, often 50:50, with the landowner. Although there are legal arrangements to safeguard tenant’s rights, these have a number of shortcomings and are often ignored in practice. Unregistered tenants find it very difficult to claim any ownership rights to land they may have cultivated for generations. 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 the landowners. The status of women has been defined in terms of their marital status, and right to ancestral property is fragile, temporary and imperfect. A daughter is not entitled to her paternal 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 they are dalits. Although the Government prohibited the Kamiaya system through an Act in Parliament in 2002, up to 20,000 kamaiya still have not been released and continue working 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 are engaged in development in the Terai. 1.2.2.5. Other N/A

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1.2.3. Brief profile of microfinance environment 1.2.3.1. List microfinance institutions (other than subject of case study) and other financial institutions/services accessible by the poor. Microfinance practices reflect the diversity of landscape and population density in Nepal. In the Terai region, more densely populated, with better transport infrastructure and easier access to clients, the Grameen Bank model has been adapted by a large number of organisations. It is also a region where traditional financial organisations, such as commercial and development banks, operate. Since the early 1990s, private initiatives led by NGOs, such as Nirdhan and the Center for Self-help Development, used the Grameen Bank methodology. With the promulgation of the Development Bank Act in 1995, Nirdhan was the first NGO (1998) to transfer its microfinance portfolio into an autonomous microfinance rural bank (Nirdhan Utthan Development Bank). Since 2000, three other microfinance rural banks were created through the same 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 Cooperative Societies (SCCS). They tend to serve a well-off population but also the poor, with a stronger emphasis on the disadvantaged in the case of organisations established by development programs. They can be linked to commercial banks, an approach taken by the Banking with the Poor Program implemented by the Rastriya Banijya Bank (RBB). Despite the institutional challenges and necessary methodological adjustments to 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 Empowerment Program, 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 general loans, seasonal loans, specific loans (sanitation, housing) and the loans issued from the group fund. Savings products are generally the compulsory group fund savings, and any additional personal, voluntary savings. In recent years, several leading microfinance providers have started to move away from the traditional Grameen model, to focus on new practices for Nepal, such as a streamlining of operations, the introduction of customer friendly products, and a strong emphasis on institution and staff capacity building. New products have also been offered to clients by several organizations, such as microinsurance covering risks related to health, life and livestock. Savings and Credit Cooperative Societies (SCCS) provide a wide range of savings and loan products to their members. They commonly require compulsory savings, but also offer individual or group saving products, deposits, and festival and educational savings services. Loans provided by SCCS have a minimum term of 3 months and can 7

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 different stages of institutionalisation, such as self-help groups and informal savings and credit organisations. Moneylenders, traders, friends and relatives can also be included in this group as they provide an informal source of finance used by the majority of the poor population in Nepal. Dhikuti are informal groups that pool funds to extend informal credit to their members. Lastly, it is estimated that there are about 20,000 active NGOs in the country. All of them 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 Nepali population to financial services, especially in rural areas. In fact, most financial institutions were reticent to operate in rural areas due to the current Maoist insurgency in Nepal. The most affected commercial banks had reduced the size of their rural network, already downscaled by cost-savings measures. The majority of the targeted credit programs have been unable to directly cater to the needs of the bottom 20 percent households because the poor lack other resources and knowledge 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 ideal conditions for microfinance methodologies to be the most efficient, given the additional costs related to the insecurity situation in rural areas. The central bank, Nepal Rastra Bank (NRB) imposes ‘priority sector’ lending to commercial banks, which entails lending a certain percentage of their deposit liability to deprived population, including the usual microfinance clients. The ratio of priority sector lending over time has increased from 5% to 12% in which 0.25 to 3% must be invested in the ‘deprived’ sector, which aims at targeting the hardcore poor. Commercial banks can choose to lend the required amount to end clients directly, or disburse it through loan or equity in other microfinance institutions. Because of the creation of new wholesale funds and the liberalisation of the financial system, NRB has recently decided to phase out its priority credit policy by 2007, with decreased ratio of 6% in 2004, and 2% in 2006. However, the 3% deprived sector requirement will 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 other case 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 from Save the Children, Nirdhan has successfully re-engineered its methodology and introduced flexible new products to reach those in remote areas with little or no assets. These innovations have driven Nirdhan’s growth from 3,000 clients to over 70,000 clients, making it Nepal’s leading women-focused microfinance institution. - ILO has partnered with multipurpose NGOs in Banke District to develop and deliver a package of services designed to rehabilitate bonded laborers (mainly former Kamaiyas) that have been officially released. With most partners, the project is small part of the NGO’s overall activities, but one that has attracted a significant amount of attention and support from the NGO’s senior management. In addition to microfinance services, the integrated approach includes social empowerment, education, skill training and health services.

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1.2.4. Poverty 1.2.4.1. Existing Poverty data and geographic areas of the country where extreme poverty 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 in 1996 with introduction of ultra poor. The survey was comprehensive and also micro nature. The survey measured 42.0% as national average of poverty incidence in 1996 out of which the poor was 24.9% and the ultra poor was 17.1 % regarding the defined poverty line. The poverty line is set to the rupees per person a normal household will need to buy a normal basket of food that contains 2124 kcal per day, plus normal additional spending for a poor household. The poverty line varies between regions depending on local prices. In rural Eastern Terai the poverty line is 6,000 rupees, which for a sixperson household means 3,000 rupees per month. A normal wage in Kathmandu for casual workers is now in the range of 100-200 rupees, and in rural Terai it is in the range of 50-120 rupees. As casual laborers do not work every day, a poor household will need at least two working members, who are employed large parts of the year to cross 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. Poverty data 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 a slightly higher figure, 35%, for the rural population. The poverty headcount rates in Rural 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 the poorest segment of the population, despite a decline in poverty -- from 58% to 46%. Especially in Eastern Terai there still seems to exist feudal principal-agent relationships between the landlords and the landless workers, where landlords offer take-it-or-leave-it contracts to the laborers, that is, contracts where the working hours and the corresponding payments make the laborers only marginally better off than with their outside option. This means that the landlords get the entire extra surplus that is 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 of poor households by farm size and region is presented in table below. Poverty is very much concentrated among small landholders.

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2. Organizational Framework
2.1. 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 a networked 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 background 2.1.2.1. Mission and vision Pact’s mission is to build empowered communities, effective governments and responsible private institutions that give people an opportunity for a better life. We do this by strengthening the capacity of organizations and institutions to be good service providers, represent their stakeholders, network with others for learning and knowledge sharing, and advocate for social, economic and environmental justice. Interdependence, responsible stewardship, inclusion of vulnerable groups, and respect for 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 an opportunity to earn a dignified living, raise healthy families, and participate in democratic life. Pact achieves this by strengthening the capacity of grassroots organizations, 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 mutual benefit among the state, the marketplace and communities provide the inspiration and foundation for taking actions to end poverty, ensure justice and achieve greater equity. 2.1.2.2. Brief history Pact was founded in 1971 as a membership organization of U.S. private and voluntary organizations (PVOs) to facilitate the distribution of small USAID grants to PVOs working in relief and development assistance. From the beginning Pact had as a goal for its members to empower local organizations in order to attain sustainable development. By the early 1980s Pact had begun directly assisting local NGOs and support organizations with small institutional development grants and in 1985 opened its membership to local NGOs. In 1992 Pact dissolved its membership, revised its bylaws, and established itself as an independent, nonprofit corporation registered in the District of Columbia. Since then Pact’s annual operating budget has grown from some $3 million to $40 million in FY 2004. Likewise its program reach has expanded with Pact currently implementing 61 field projects in 15 countries in Asia, Africa and Latin America and additional activities in 32 countries under two large global grant-making programs. Most of these programs focus on providing grants management and/or general capacity building services to NGOs and NGO networks in six program areas: 12

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, other Pact is a leading facilitator of leadership and organizational development for both nascent and established NGOs, networks and intermediary organizations around the world. Through training, technical assistance, mentoring and direct financial support, Pact strengthens organizations' capacity to further development goals. At the same time Pact encourages the establishment of permanent ties to grassroots communities and 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 financial and technical resources that increase grassroots influence on public opinion, and empower 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 of teamwork, a natural extension of two guiding principles that characterize all Pact programs-participation and partnership. Pact's local partners share in Pact's values and demonstrate a strong commitment to development goals as well as a capacity to grow organizationally. Core areas of program excellence Capacity building Through cost-effective investments Pact helps local organizations learn the skills of basic operational competence how to craft a budget and account for funds, supervise staff 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 only build common visions but also advance sound plans for implementing them. Pact initiatives spur organizations to augment their resources and spheres of influence and learn 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 visionary and strategic in addressing common issues. Organizational capacity assessment Vibrant, viable and effective organizations require ongoing self-assessment and learning to maintain their success. Pact's unique methodology for organizational capacity assessment and strengthening helps guide organizations in selecting the most appropriate activities, tools and strategies for capacity building and in anticipating and overcoming the greatest barriers to change. This comprehensive process brings together communities of peer organizations (or complex organizations with multiple departments/program offices) to reflect upon their performance and set strategies to 13

broaden their impact and affect change. Through the assessment and planning process, organizations recognize their own potential and are able to make informed decisions for 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 and organizations serving community interests are challenged to incorporate new skills and strategies to scale-up their impact in response to social challenges. In an increasingly interconnected and information-intensive environment, strategically managing information and knowledge resources is rapidly becoming as important as sound financial management to an organization's effectiveness and sustainability. Pact's Information and Knowledge Networking (IKN) services offer a customized approach 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's pressing social, economic and environmental problems. At the same time businesses increasingly see planned investments in social issues are in their long-term best interest in achieving bottom-line benefits. In response to this recognition Pact, with funding from USAID, formed a strategic alliance with the Prince of Wales Business Leaders Forum. This alliance supports businesses and local communities to gain from active partnerships in sustainable development. Pact is also pursuing linkages with individual businesses that represent resources to support our development mission and programs while meeting the needs and interests of business at the local level. In each case we and the business partner seek new ways of doing business together that contribute to sustainable development through principled best use of our comparative advantages. Financial services Pact is known for its excellence in grants management and financial operations and markets these services to a range of program managers in both PVO and donor organizations around the world. Over the last three years Pact has managed over 3000 subgrants in its program portfolio totaling more than $41 million in USAID funds. 2.1.3. Development intervention approach The main focus of Women’s Empowerment Program (WEP) is women’s empowerment. 2.1.3.1. Primary target group and development focus Pact’s livelihood promotion programs target poor and vulnerable sections of the populations. Depending on the local program context, these can be women, the rural poor, and other vulnerable groups, who are being reached with microfinance, microenterprise development, education/literacy or health services, to name the most prominent ones.

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2.1.3.2. Specialized in MF/MED or multisectoral Pact does not specialize in one single approach in microfinance or microenterprise development, but instead has built up expertise and capacity in various models of MF and MED, as well as in non-economic development areas. 2.1.3.3. MF/MED model Pact’s approach to economic challenges faced by the poor depends on local country context and ranges from savings mobilization, microenterprise development, and market-based livelihoods development activities that increase household income. This approach aims to provide sustainable financial services, which can be savings-led or focused on microcredit. In Myanmar Pat is running a large traditional MF program (credit-led). This approach uses a group lending methodology and stimulates small business ventures through a range of small business support services. The savings-led approach (as it originated in WEP and continues to evolve in WORTH) helps poor people (usually women) establish and operate their own village banks and acquire skills in managing microand small enterprises. In other cases Pact practices market-based livelihoods development, assessing and developing a market for local products, improving the local production capacity and strengthening supply channels. 2.1.3.4. Other sectors Pact doesn’t usually implement multi-sector programs directly, but focuses on capacity 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/Nepal’s country office worked with a variety of local organizations to train and monitor the village banks. In total 240 Nepali organizations were recruited, trained and enlisted 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-governmental organization, which played a key role in creating the program's innovative curriculum and training field staff. ECTA, which means "unity" in Nepali, was founded in 1997 with a goal of promoting rural development strategies and programs that can be done at low cost by village groups without extensive outside aid. The following sections focus on Pact’s partner NGOs that implemented the WEP program in the field. 2.2.1. Organizational development (S) Table 2.2. Institutional Background
Issues

Observations N/A Most partner organizations are local (ranging from district – to village level) NGOs, CBOs Registered Not regulated Various Mostly not specialized in MF or MED At time of WEP introduction Community mobilization Donor-dependent N/A Varies upon capacity Variable

2.2.1.1. Name of the organization or institution 2.2.1.2. Geographic area of operation 2.2.1.3. Legal structure 2.2.1.4. Registration status 2.2.1.5. Regulation status 2.2.1.6. Date established 2.2.1.7. Specialized (MF/MED) or multisectoral 2.2.1.8. Start of MF/MED activities 2.2.1.9. Core business (f.i. credit, savings, …) 2.2.1.10. Business model 2.2.1.11. Target market – MF/MED 2.2.1.12. Number of clients/participants – MF/MED 2.2.1.13. Number of staff 2.2.2. Organizational development (S) 2.2.2.1. Mission and vision N/A
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It is important to note that the WEP project also selected a significant number of women’s groups that were affiliated with other agencies, such as the Ministry of Forests and Soil Conservation through its Park People Program (PPP), Nirdhan, a Grameen replication MFI, as well as several Cooperatives. Since these groups operated differently according to the approach of these other institutions and did not evolve into Village Banks, the focus in this section is on Pact’s more traditional NGO/CBO partners.

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2.2.2.2. Brief history N/A 2.2.2.3. Objectives Many of the local NGO/CBO partners are engaged in community mobilization on a range 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 this purpose. Their education level is at least 8th grade, but preferably up to 12th because of the required math skills needed for training and monitoring the accounting of the groups. 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 as the women’s groups and had the same ethnic and linguistic background. Given the required education level, they often came from a higher caste background than most group members. Most local NGO partners had no more than three EWs. Literacy volunteers received ½ day of training – and were not paid by Pact; they were literate members of the groups themselves who helped guide their fellow group members through the WEP self-guided training manuals. The EWs were trained by Pact Nepal and their job description included biweekly visits to each of the ten groups that each was serving, attend the training sessions and provide coaching to the adult learners. They also administered the baseline and followup 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 poverty outreach (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 the WEP training manuals, from forming a strong group to starting regular savings, lending out accumulated savings among members and improving microenterprise activities. 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 to mobilize communities within their usual target areas. Each NGO received the same amount 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 the village banks themselves. They received training to do so, and each group elected its own management committee. WEP had EWs, Trainers, Lead Trainers, and Regional Supervisors. All of these people 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 services N/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 criteria N/A 2.2.3.4. Use of poverty assessment tool N/A 2.2.4. Resources and external assistance The majority of Pact’s NGO/CBO partners had limited resources, and their programs were often donor-driven, i.e. they were involved in health, literacy, natural resource management, and other programs, that were being funded by external donors. Pact Nepal was careful not to overload these NGOs, and typically no more than three Empowerment Workers were assigned for any given NGO. A large majority of NGOs were drawn from the pool of NGOs that had collaborated with Pact Nepal in WORD, Women Reading for Development, a literacy project that had been implemented by Pact just before WEP started. WORD worked with 1,100 local NGOs/CBOs in 70 of Nepal’s 75 Districts to enroll more than half a million women in literacy classes. As a result the WEP partner NGOs were already familiar with Pact’s reporting and funding requirements. Yes, we used standard budget templates and grant fees. 2.2.5. Relationships (networks, partnerships, other institutions) 2.2.5.1. Networks N/A. Most NGO partners had been involved with Pact’s WORD program, and were organized in an NGO network.

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2.2.5.2. Partnerships Some local NGO partners also implement local development programs in partnership with 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 conditions All WEP group members are women, whose economic status both in the household and the 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, women’s access to education and training—and, consequently, modern avenues of income—are limited. Property is inherited only through the male line. 90.5% of women are engaged in agriculture as against 74.9% of men. Women contribute considerably to household income through farm and non-farm activities. 3.1.1. Gender 100% women 3.1.2. Age N/A 3.1.3. Disability and chronic disease N/A 3.1.4. Culture or religion Not different from overall population in same area. 3.1.5. Ethnicity Not 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 status The following data are for households/women in general in the Terai, and are most likely similar for those reached by WEP. In the rural Terai households count on average 6.5 people per household. The average number of children per household is 2.8 and the average 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. Literacy Most 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 of the WEP savings groups already existed as literacy groups in Pact’s previous WORD program. 3.1.9. Education N/A, except about 39,000 of the 125,000 women in the program could already read and write at at least a third grade level.

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3.2. Socioeconomic conditions

3.2.1. Refugee or IDP status None 3.2.2. Economic conditions (F, C) 3.2.2.1. Underemployment 3.2.2.2. Income Sources 3.2.2.3. Land ownership 3.2.2.4. Asset ownership 3.2.2.5. 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 the better-off (20%) reached by WEP. The poor often rent their homes or live with relatives, and their per capita income is less than $75 annually. They are much more likely to speak a language other than Nepali 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 eight years of schooling. The schooling most received was not enough to significantly increase their ability to read, which was little higher after completing the WEP literacy curriculum when compared to those who had never gone to school. Half of the poor surveyed were able to feed their family on what they grew for more than seven months last 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 the area 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 to 9%); and to have only one economically active adult per child. In the better off households the ratio is 1.6 economically active adults per child. This puts a heavier burden on poor adults to provide for their children, as well as forcing the children into working roles earlier in life. The poor have on average less than 5 of a list of 20 household items (representative for Nepali households), of which only one was a high value item. That the poor are struggling to meet their most basic needs is reflected in the answer to this question: “How did you use the income from your business?” The poor answered food, clothing and school expenses; while the better off mentioned school 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 the poor), and of these, 2.4 are on the high value list. The emerging poor generally own their homes, have enough land to produce what they need to eat for the year (threequarters of the group are self-sufficient regarding food, compared to only half of the poor). 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 21

poor. 41% of the emerging poor had never been to school, while a third had as much as eight years of schooling. The better-off own on average 13.3 items on the list of 20, and of these 4.5 are high value 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 Nepali and more than 80% are high caste Brahmins and Chetris. Per capita income is often above the $210 average for the country. The better off are, not surprisingly, the best educated 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 conditions 3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density Most groups live in rural areas, with varying degree of distances from urban trading centers or access to good roads. Population density is high. 3.2.3.1. Access to markets N/A 3.2.3.1. Access to banks In some areas of the Terai, especially in and around the bigger towns and trading centers, some Grameen Bank model MFIs exist. Some other banks are present as well, but the women reached by WEP did not have access to these institutions. In addition to banks, Savings and Credit Cooperative Societies (SCCS) are present in some areas, but few tend to serve the poor and disadvantaged. 3.2.3.1. Access to doctors and clinics N/A 3.2.3.1. Proneness to natural disasters N/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) in Research on risk and vulnerability of rural women in Nepal (December 2001). Primary risks found - listed in order by frequency and costliness: illness, death of an income earner, enterprise risks (e.g. death of livestock, crop disease, fall in market prices), life cycle needs/risks (e.g. marriage, building homes, festivals, education). Both ex ante and ex post coping mechanisms are found. Women with greater financial means were somewhat more resilient to risks because they had savings and assets to draw upon. They were more proactive in mitigating risks. For the poorest people a severe crisis situation can be economically devastating. With few savings or assets, they often turn to coping strategies, often borrowing from moneylenders. Risks were dealt with differently depending on a person's age, marital status, income level, and geographic location (i.e. proximity to medical facilities). Ex post, women were 22

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

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4. Poverty Targeting and Assessment
4.1. Poverty measurement practices

4.1.1. Poverty data collection 4.1.1.1. 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/A 4.1.2.3.2. For client screening? N/A 4.1.2.3.3. For client targeting? N/A 4.1.2.3.4. For impact monitoring/assessment? N/A 4.1.2.3.5. For other uses? N/A
4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection method N/A 4.2.2. Poverty data from a recent poverty and/or impact assessment study 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 the better-off (20%) reached by WEP. See section 3.2.2. for a qualitative description of these poverty categories. Jeff Ashe also produced this table:

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ECONOMIC LEVEL OF GROUP MEMBERS Staff perceive village is: Prosperous Average Poor Very Poor Status of group members is: Among better off in the Village About average Poorer than most other Villagers Among the very poorest Group members mostly or entirely landless Most members do not speak Nepali or speak Nepali poorly Distance to market 5 or more kilometers

Village Bank 3.7% 67.9% 23.5% 4.9%

Economic Group 2% 49% 37.3% 11.8%

Coop/ MFI 0% 50% 39.1% 10.9%

Weighted average 1.5% 52.8% 35.5% 10.2%

2.5% 75.3% 17.3% 4.9% 17.9% 24.1% 15.5%

0% 64.7% 27.5% 7.8% 27.5% 29.4% 21.2%

0% 64.1% 26.6% 9.4% 12.3% 13.3% 37.5%

.4% 66.4% 25.3% 7.9% 20.2% 22.4% 26.4%

4.2.3. Poverty Data obtained through use of USAID certified poverty tool N/A 4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was used: $1 a day or bottom 50% below poverty line? N/A 4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample size and selection. N/A 4.2.3.3. 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 data N/A 4.2.4.2. Organization’s own interpretation of poverty outreach N/A
4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool? 25

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 outreach How is staff trained in poverty targeting? N/A 4.3.3.2. Staff incentive schemes N/A 4.3.4. Issues with poverty targeting (S,F) N/A

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5. Products and Services
WEP has a three-pronged approach to empowering women: 1) action-oriented literacy; 2) legal rights awareness training and advocacy; and 3) microfinance and microenterprise training. All three components are meant to provide women with the tools to take their fate 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 (and institutionalizing) financial services or products, perhaps WEP’s most important service has been to build the capacity and confidence of poor, illiterate women to deliver these services (saving and lending) to each other. WEP uses an approach based on Appreciative Planning and Action (APA), based on appreciative 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 the opportunities they have to improve their lives and 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 an immediate first step. Appreciative Planning and Action Using a logically sequenced process that takes participants from a 'discovery' of their best, 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 empowers people and organizations to take independent action. The approach has been found to build self-confidence and pride, mobilize institutions toward the achievement of their future-oriented visions. APA aims to empower communities and individuals to take pride in what 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 comes from making commitments and taking the first step. At the same time APA is simple enough that anyone can do it and profound enough to change people's lives. APA seeks the root cause of success (not the root cause of failure). This would involve countering the prevailing negative images that rural people have of themselves and their communities, their preoccupation with their poverty, remoteness, and lack of visible modernization. It would be replaced by seeking instead validation and learning from what is valued, beautiful, successful, working. From: Appreciative Planning and Action – A trainer’s guidebook. (CARE Nepal, 2000) WEP provides no traditional subsidies, but women themselves pay for whatever is needed: loans for income generation activities, lanterns and even the self-guided WEP manuals (although at a subsidized cost). WEP worked with newly formed groups as well as existing ones. For instance, about 25 percent of the groups had already been formed as 27

literacy groups in Pact’s previous WORD project. Another significant proportion of groups were solidarity groups, who were clients Nirdhan, a Grameen-type microfinance institution. Group members trained themselves through a four-book literacy program, which introduced WEP’s objectives, group strengthening, basic business skills, empowerment and activism in the community. Literacy and savings were the focus of a first two-part series, Women in Business. The first book in the series, Our Group, utilizes the key word method and teaches women basic sounds, letters and numbers, and principles for developing 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 the growth of savings. Practically all of the more than 6,000 groups went through this first phase and were called Economic Groups. Most groups started to disburse their first loans within several months of formation. Groups choose their own savings and interest rates based 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 groups manage their loan fund, set policy, and do the needed bookkeeping. The fourth manual, Village Bank Entrepreneur, teaches women how to manage their microenterprises. Building small businesses is a key component of WEP, and women are encouraged to build businesses on what they already know how to do, gearing their businesses to the local markets. Many women familiar with subsistence farming choose to grow market 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 be able 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, and technical assistance (especially in bookkeeping) to the groups. Approximately ten groups based on geographic proximity were being visited twice a month by an Empowerment Worker (employee of partner NGO paid by the project) to backstop the group’s efforts, troubleshoot issues as they arose, and mentor group members. In addition to regular biweekly visits to each group, Empowerment Workers also held periodic mobile workshops where two representatives of each group in the cluster of ten share experiences with each other and receive extra training in village banking methodology and financial monitoring and evaluation. These workshops are called “mobile” because each group in a cluster takes a turn hosting the meeting. While the project’s original aim was to help each Economic Group transform into a Village Bank through the self-guided training manuals and mastering the bookkeeping system, this proved unrealistic even with ample additional training and handholding by the EWs. The training strategy evolved over time as PACT started to realize that groups were 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, 28

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 village bank accounting system. By the end of the project funding, 1500 (almost 25 percent) of the Economic Groups had graduated to Village Banks. In order to qualify as a Village Bank, 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 as three cents per woman per week. Women are highly motivated to save not only because they want to put aside resources, but because their savings generate interest when they are 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 to 35 members (average 21). Contrary to other village banking schemes around the world, the WEP model is savings- rather than credit-led. Participants contribute their own savings to a group loan fund and do not have access to external funds. Through these village 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. WEP’s village bankers meet weekly - at least theoretically -, and every meeting is used for literacy, management skill-training, or other topics of interest to members. Custody of cash is handled in lockboxes (of all sizes, materials, colors), secured with three separate padlocks, each opened by a different key in the possession of the group’s chair person, secretary, controller, and treasurer. Usually keys are held by all but the treasurer and the treasurer keeps the box between meetings. Loans are made for a wide variety of uses: business, personal emergency, schooling, etc. Each village bank is entirely responsible for 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) Flexible loan duration: usually the loan duration was a multiple of 4 weeks, up to 16 5.1.1.2. Loan terms (maturity, interest weeks. rate, interest type, flexibility) Interest rate = decided by group, but commonly set at 2% per month 5.1.1.3. Loan source Group’s own accumulated funds WEP materials strongly recommended that women take loans only for income-producing 5.1.1.4. Loan use activities, but each group set its own loan policy and many groups gave loans for consumption and emergency needs. 5.1.1.5. Loan size (first loan, average Average loan (2002) = $33 (outstanding) loan, maximum loan size) 5.1.1.6. Meeting requirement and Weekly meetings frequency 5.1.1.7. Mandatory savings requirement Weekly savings requirement and amount 5.1.1.8. Collateral requirement No – but often a collateral form signed 5.1.1.9. Other eligibility requirements Meet group’s weekly savings requirement 5.1.1.10. Loan default policy Decided by group Groups were expected to give loans that required pay back in weekly installments – that was the strong recommendation so that 5.1.1.11. Repayment flexibility the money would be worked very hard. In fact, women did a variety of things, gravitating to a monthly or end-of-term payback system. 5.1.1.12. Other N/A 5.1.2. microsavings 5.1.2.1. Individual or group Individual savings into group fund Mandatory savings amount decided by group 5.1.2.2. Savings Type itself 5.1.2.3. Deposit/collection location Lockbox 5.1.2.4. Deposit frequency, amounts, Weekly (and same amount for each group flexibility member) 5.1.2.5. Meeting requirement and Weekly frequency 5.1.2.6. Savings terms (interest rate, No interest on savings, but each village minimum deposit, …) member receives interest income from loans.

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Product Features and Policies Mandatory Savings cannot be withdrawn. 5.1.2.7. Withdrawal and savings use Motivation to save and earn interest on funds policies driven by access to bigger loans. Groups keep their own written records – 5.1.2.8. Record keeping and accounting passbooks and ledger account Deposited savings are used as group loan 5.1.2.9. Investment of deposits fund 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/A 5.1.3.5. 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 and N/A deductibles 5.1.3.12. Pricing – other fees N/A 5.1.4. microgrants 5.1.4.1. Individual or group product N/A 5.1.4.2. 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 matched N/A savings arrangement 5.1.4.6. Straight grant, no interest or N/A partial repayment 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 and Yes management 5.2.1.3. Marketing Yes 5.2.1.4. Recordkeeping and Yes bookkeeping 5.2.1.5. Skill development Yes – management skill, not technical skill Yes (by Empowerment Workers and Pact 5.2.1.6. Technical assistance staff) Appreciative inquiry, self-training, cascading 5.2.1.7. Training method ToT model 5.2.1.8. Other? N/A Participants teach themselves and run their own programs. They pay a recommended enrolment fee Rs 10. They also paid a 5.2.1.9. Costs to client minimum of Rs 7 per book – all of which was kept in the group fund to boost the fund. No money was collected by NGOs from the groups. 5.2.2. Business Consultancy and Advisory Services Group sessions, self-instructional and 5.2.2.1. Individual or group sessions reinforced by Empowerment Worker Self-training every week, and EW visits every 5.2.2.2. Frequency other week 5.2.2.3. Topics Business management This is probably the strongest outcome of the work of Empowerment Workers, who help 5.2.2.4. Confidence Building women identify their strengths and provide them with technical assistance as well as continuous 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 No 5.2.3.2. 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 33

Service Types and Features 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 of the 240 NGO partners. However, only routine non-financial services of WEP are mentioned in the table below. Table 5.3. Non-financial Services Details Service Types and Features 5.3.1. Nutrition

5.3.2. Health and Sanitation

Literacy Legal rights

5.3.3. Education This is the program entry point Awareness training and action

5.3.4. Social Capital Development Social capital strengthens significantly when women, who were often restricted to their homes, join groups and support each other in literacy training and savings/credit. Many of these groups also took action on a variety of issues (such as alcoholism, HIV/AIDS prevention, child trafficking) through campaigns, visits with the district authorities, group gatherings, street dramas, and even advertisements in newspaper or radio. 5.3.5. Other To encourage women to build on their Training in Appreciative Planning and strengths and take charge of their own Action (APA) development, to monitor their efforts themselves

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5.3.6. Empowerment and confidence building As the name of the program implies, women’s empowerment is the overall objective underlying the three components of the WEP approach: literacy training, legal rights awareness and advocacy, and increased access to economic opportunities. Improved literacy increases self-worth and opens up new opportunities. Women are not given any handouts; they engage in an appreciative inquiry process, facilitated by empowerment workers, to take control of their lives by saving and increasing their incomes. They do not depend on an outside institution for these services, and set their own rules for savings and credit. Women are also encouraged to discuss their circumstances and to take collective action to make positive changes. Women’s empowerment in WEP is not a hollow claim based on access to credit for women, but is at the core of the project’s design. Training manuals focus on empowerment, and empowerment workers are trained in empowerment exercises, such as confidence building, understanding empowerment, forming a sisterhood, making decisions, initiating collective action, eliminating violence against women… Access to savings and loans is only one part of empowerment. 5.3.7. Graduation of very poor clients into mainstream MF/MED services Graduating to mainstream (institutional) microfinance is not part of WEP’s design. However, two of the biggest local partners of PACT in Nepal were Grameen-replication MFIs. Their solidarity groups, trained by WEP, were obviously linked to a formal microfinance institution. But that was a peculiarity and not intended as a model for the expansion 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 women’s empowerment is the overriding objective of WEP. 5.4.1.1. Main issues and challenges of very poor clients which the organization seeks to address The WEP framework takes as its point of departure the World Bank multidimensional definition of poverty. This goes beyond income poverty to encompass the broader concerns of poor people: opportunity, security and empowerment. Empowerment is an explicit part of this framework, defined in terms of voice in decision-making at different levels. Women’s empowerment is seen as an integral part of WEP’s definition of poverty reduction. The definition of empowerment itself, however, sees as its centre challenging 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 impacts WEP began as a program to increase women’s incomes and status in the household and community on the understanding that challenging gender inequality was an important 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 circles in Figure 1.

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Figure 1: Poverty reduction indicators INDIVIDUAL FAMILY OPPORTUNITY Women’s Household economic activities livelihoods Women’s Income Freedom and mobility Literacy and access to information Women’s savings and assets Health Friendships and support networks Freedom from domestic violence Reduced wasteful expenditure on male luxuries Children’s literacy and education Food security and improved nutrition Improved health Social capital Economic and social inclusion

COMMUNITY Diversified markets Removal of alcohol and gambling houses Roads and infrastructure Education facilities Water and sanitation facilities Health facilities Community cohesion Civil peace Transparency in local government Political participation

SECURITY

VOICE

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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 empowerment process (represented by the figure at the centre of the circles), and also having direct impacts on specific dimensions of women’s poverty, which then have an impact on the poverty in their families and communities.

NATIONAL DEVELOPMENT

Roads and productive infrastructure

COMMUNITY DEVELOPMENT Water and sanitation facilities Food security and improved nutrition Improved health Women's savings Sustainable savings-based micro-finance organisations Health facilities

Expanding and diversified markets Loans Business training

Improved family livelihoods

FAMILY POVERTY REDUCTION

Women' economic activities

Power to: Building assets, incomes and capacities

OPPORTUNITY

Freedom and mobility
Literacy and access to information

WOMEN'S EMPOWERMENT
Power within: Confidence and self-respect

Friendships and support networks Freedom from violence Social capital Mutual aid and social insurance

SECURITY

Literacy training Education facilities Children's/ girls' education

Rights Responsibility and Advocacy training

Power over: Control and decisionmaking

Power with: Economic and social inclusion Mutual support and Collective Action Political participation

Community harmony and peace Appreciative Planning and Action

Transparency in local governance

VOICE

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5.4.2. Concept development 5.4.2.1. Client Survey Demand/Needs assessment No formal needs assessment was undertaken. But Pact Nepal had learned from the literacy groups that had been established nationwide in Nepal through a previous Pact program, WORD, that almost all groups wanted savings and enhanced income generating activities. Many had already set up a small savings fund on their own initiative. 5.4.2.2. Competition analysis No 5.4.2.3. Self-assessment N/A 5.4.3. Product/Service design 5.4.3.1. Product/service design process The WEP design focused on women learning together in groups and literacy. Good practices for curriculum development were combined with certain principles: all issues (of livelihoods, savings/loans, group formation, etc.) revolved around questions and stories posed to the groups rather than prescriptions and mandate. The group process was very participatory, through which women make their own decisions based on their own information gathering and understanding the trade-offs. It was clear from the WORD project that women were interested in safe savings. WEP opted for mandatory fixed savings, rather than voluntary savings, because the accounting system had to be kept simple enough for everyone to understand. The WEP implementation team thought that if voluntary savings were introduced early on, this would be very complicated for women. In fact, evidence from WORTH in Africa showed that this is not the case. 5.4.3.2. New versus modified products/services for very poor clients N/A 5.4.3.2. Risk assessment and product design N/A 5.4.3.1. Prototype development and testing N/A 5.4.4. Pilot testing When the first self-guided training manual, Our Group, had been developed, WEP staff introduced these materials to women’s group in the Western Terai. Some groups were given training on how to use the books, while other groups did not receive any training at all. At first, the groups without training were very confused and did not even how to hold 39

the books upright. However, only 6-8 weeks later, both trained and non-trained groups had progressed to almost the same level. The non-trained groups somehow managed to understand how to use the books by themselves and did fine. When new training materials are first introduced to WORTH groups, the pilot testing is more comprehensive and women are surveyed to obtain feedback, and observers in the groups provide their feedback as well. 5.4.5. Rollout One of the great achievements of WEP is that it managed to reach more than 125,000 women and trained more than 6,500 groups, within 2 1/2 years. Few, if any, microfinance programs reach such large scale in such a short time period. Given this enormous scale, which was required under the USAID funding, the ‘rollout’ of the program started. PACT signed the agreement with USAID in December 1997 and began to sign subgrants with NGOs in the fall of 1998, after extensive planning and materials development took place. Real fieldwork began to roll out in early 1999. Once the bulk of the groups had started the first training manual, the remaining manuals were still being developed and translated. 5.4.5. Product/Service review and assessment Product review needs to be understood within the transition from the first-time (pilot) WEP project into Pact’s current WORTH model. The basic model remains the same, but some changes have been made, including improvements based on lessons learned in WEP and additions to respond to new challenges and conditions, especially HIV in Africa. One of the most significant changes to the service (process) of WEP resulted from the realization that despite the literacy training, the village bank accounting system remained very challenging for the majority of WEP participants. In order to graduate to Village Banks, the management committees of each group had to undergo additional intensive training to use the village banking accounting. Within WORTH all groups become Village Bank, thanks in part to this change. Some of the main differences introduced in WORTH: - bigger groups, if possible 20-25, not 12 – 20 - increased cluster size, where possible – to clusters up to 17 in Zambia - four books reduced to two - removed material out of the books that was to lead to all women learning the bookkeeping system - training has been moved forward so that women get much more, sooner - included one half-time NGO person in the sub-grants for training and outreach to groups - expanded beyond NGOs for implementation with faith-based groups Presently, research is being conducted in Nepal to review the model, which might have implications in terms of adaptations of the core product for new WORTH. Among other the following research questions have been investigated: 40

• • • • • •

Which aspects of the savings and loan procedures continue, which are changed and why? Which of the governance and leadership norms continue, which are changed and why? Has literacy been continued or ceased, why and what have been the effects? Has the business training been continued in any form? Have the rights and social action discussions been continued in any form? What are the implications for future WEP core programming?

Preliminary findings expected by end 2007. 5.4.6. The Product Development Cost 5.4.6.1. Total cost N/A 5.4.6.2. How were they funded? WEP and WORTH are grant-dependent now, but PACT would like to move to a feefor-service, but have not yet done that. 5.4.6.3. Outsourcing during the development process Education, Curriculum, and Training Associates (ECTA), a small Nepal-based nongovernmental organization, played a key role in creating the program's innovative curriculum and training field staff. The rationale for this “outsourcing” was to work with an NGO that would have an identify separate from Pact’s so that there could be sustainability for the group as a Nepali entity. 5.4.7. Feedback loop The following information was collected on each WEP group: - Savings activities: number of women saving regularly, total amount of group fund, savings rate, etc. - Microenterprise information: number of women involved in microenterprises, gross sales - Loans: number of women with loans, loan arrears, loan use, interest rate, loan amount - Women’s mobility: visiting district authorities, leaving village for work, etc. - Number and type of collective actions and campaigns. In addition, scores on standardized literacy tests were being monitored for all WEP participants.

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5.5. Implementation Process

5.5.1. Process Step One – Pact Partners with Local NGOs Leveraging partnerships with local NGOs and civil society institutions gave WEP its rapidly scalable nature and low cost. While other microfinance/microenterprise development models require NGOs to learn how to operate as a bank or otherwise act as a financial intermediary, WEP asked local partners to do what they know best: mobilize communities. Once identified, Pact entered into agreements with each local partner to codify their responsibilities. Step Two – WEP Groups are Mobilized at the Community Level In the second step women in local communities are encouraged to form into small groups of 15-25 members, if they had not already done so (through WORD for instance). An individual community may have one or many WEP groups. Groups are responsible for setting their own meeting rules and electing their own officers. The were guided in this by what they were reading together in their groups. In addition, WEP recommends that each woman pay a nominal program entrance fee and periodic book fees that can be used to increase the group’s savings fund. Once mobilized, WEP groups are ready to begin learning and saving together. Step Three – Participants Self-train and Start Savings-led Village Banks The first book of the Women in Business series, Our Group, utilizes the key word method and teaches women basic sounds, letters and numbers, and principles for developing strong groups. Women work through this first book together with the help of local literacy volunteers, often already-literate group members. Through this process women develop the strong reading and technical skills needed to create savings-led village banks and micro-enterprises. The second book, Road to Wealth, instructs women on how to set aside mandatory savings and use simple math to track the growth of savings; learn responsible lending and borrowing; and study basic bookkeeping principles that enable the group to function as a self-sufficient village bank. In supplementary materials entitled Selling Made Simple, women learn about good management of microenterprises. Step Four – WORTH Groups Build Linkages and Share Success In the fourth step of the WEP cycle, Pact works to build linkages and knowledge sharing between groups. This component begins almost immediately after groups begin to save. In order to provide extra technical support to each village bank, groups are organized into Empowerment Clusters of approximately ten groups based on geographic proximity. Each cluster is linked with one Empowerment Worker, employees of partner NGOs, who visit each group approximately twice a month to backstop the group’s efforts, troubleshoot issues as they arise, and mentor group members. In addition to regular biweekly visits to each group, Empowerment Workers hold monthly workshops where two representatives of each group in the cluster receive extra training in village banking methodology and financial monitoring and evaluation. These workshops are called 42

“mobile” because each group in a cluster takes a turn hosting the meeting. WEP Coordinators on the Pact staff oversee the work of Empowerment Workers and help plan trainings and facilitate knowledge sharing among groups. Due to involvement of local NGOs in the implementation process, when the project is over many NGOs continue to be involved with their groups and assist in organizing networking and training opportunities. Workshops bring the Empowerment Workers and group leaders together, providing an important forum for problem solving, sharing, and interaction. The ties formed sustain the individual groups and create dynamic networks for social action. This is an explicit component of WORTH which is not always found in many microfinance programs, particularly those operated using financial sustainability as the sole or main signifier of success. In addition to the workshops, success stories about women’s businesses and social actions are also included in newsletters and disseminated. These stories provide an ongoing source of energy that helps groups, NGOs, and WEP staff overcome obstacles and turn problems into learning opportunities. Step Five – Pact Solidifies Linkages and Exits to a New Area In the final element of the cycle, groups graduate to full independence and Pact exits. One of the strongest elements of the WEP model is the rapid fashion by which it invests women with the capacity to start, manage and grow self-sustaining village banks. Using a savings-led approach taps into local sources to fuel the growth of each group’s loan fund, rather than depending on constant infusions of external capital. Literacy and training in bank management enables members to operate their village bank, rather than relying upon a cadre of outsiders to make decisions. Knowledge sharing between WEP groups and the presence of Empowerment Workers provides a constant source of technical assistance, support and dissemination of best practices. 5.5.2. Logistics Logistics was an enormous issue. For Pact this was one of the most complex programs overall. To achieve scale so quickly, a fairly hierarchical network was set up: headquarter office in Kathmandu (25 staff) in charge of contract management, training, procurement, M&E; three regional offices (Central, East and West Terai), with each a regional supervisor, a total cadre of 100 lead trainers, who trained the 840 Empowerment Workers, recruited by the NGOs. Each regional office possessed a vehicle; the regional supervisors had a motorcycle, and the trainers had a bicycle or used public transportation. One especially challenging task was to have all training manuals printed and distributed. Training of the EWs had to be designed and implemented via the supervisors and lead trainers. Lots of unforeseen developments took place. Contracts with some local partner NGOs were ended for various reasons. Monitoring and evaluation was an enormous task. 5.5.3. Information System EWs every 6 months gathered information in a results survey for each group. The unit of analysis was the group, but information about each member needed to be gathered in order to compile group data. Those record sheets were checked by the lead trainers and 43

regional supervisors and then sent to Kathmandu, where a team of data entry consultants entered the data. WEP had a full-time MIS manager who oversaw this entire program. Most of the analysis consisted of no more than frequencies. Although started with a 100% survey, in December of 1999 WEP moved to a sample, with a 95% confidence level.

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6. Results
In less than two years 110,000 women have learned to read and all WEP women began saving actively. More than 30,000 have loans, 55,586 have started micro-enterprises, and 45,467 are meeting their income targets. WEP women have taken 45,667 collective actions for social change. WEP uses an approach based on Appreciative Planning and Action (APA) that encourages women to build on their strengths. It provides no traditional subsidies (e.g., seed loans, subsidized interest rates, lanterns, books)-women provide whatever is needed (including enrollment fees and the cost of books). WEP is 100% demand-driven - women set their own priorities and run their own programs. Simplified study materials eliminate the need for facilitators - the women teach themselves or recruit their own literacy volunteers if needed. In its first two and a half years the program had mobilized more than $2 million in savings and retained earnings, it has self-financed loans for $1.5 million to more than 45,000 group members (average loan $33), and 74,000 women have learned to read and write.
6.1. Method of measuring results

6.1.1. Type of data What information does management use to track results (effectiveness), performance (efficiency), client feedback and impact? - Group capacity: use of village bank accounting system, regular meetings, weekly savings, election of management committeee - Savings activities: number of women saving regularly, total amount of group fund, savings rate, etc. - Microenterprise information: number of women involved in microenterprises, gross sales - Loans: number of women with loans, loan arrears, loan use, interest rate, loan amount - Women’s mobility: visiting district authorities, leaving village for work, etc. - Number and type of collective actions and campaigns. In addition, scores on standardized literacy tests were being monitored for all WEP participants. 6.1.2. Data analysis and use Group capacity data were used towards the end of the project to gauge which groups were capable to graduate to village banks. Most other data were used for reporting and outcome assessment purposes.
6.2. Impact

6.2.1. Poverty Impact N/A 6.2.2. Client satisfaction and feedback 45

One measure of client satisfaction is dropout. Compared to lending programs worldwide, dropout is relatively low. A study at the end of the project found that 8% had left the group over the previous six months. When a woman leaves a group, often to get married and move to another village, another local woman generally replaces her.
6.3. Cost Effectiveness and Sustainability

6.3.1. Scale and replicability 6.3.1.1. Strategy for scale? The original project mandate as funded by USAID was to reach 125,000 women within the limited time period. The project is believed to have reached more than 130,000 women directly, and (even though precise numbers do not exist) many new (850 estimated) groups were formed without any Pact support but with the assistance of an existing WEP group. Pact had gained significant experience in obtaining this type of scale. In fact, its previous program 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 Nepal already had a huge network of local NGO partners, it was very familiar with the subgranting process, and it already had developed ample (literacy related) training manuals for the Nepal context. Though the WEP literacy materials were different from the Naya Goreto materials developed earlier. 6.3.1.2. Replicability of program or service As a savings-led self-managed village bank model, WEP is easily replicable in different country contexts, as has been demonstrated through 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 or other organizations (such as a church community-based network to build upon). - The program works especially well in near-urban and relatively densely populated rural areas, but would become significantly more expensive in remote rural areas. Actually we developed WEP to be a program in rural areas, where MFIs won’t be going in the foreseeable future. - The self-guided manuals are especially effective for semi-literate groups (more so then illiterate groups). 6.3.2. Financial and operational self-sufficiency (if applicable) 6.3.2.1. Financial expense ratio N/A 6.3.2.1. Operational expense ratio N/A 6.3.2.1. Cost per client $42 6.3.2.1. Clients per staff member 46

On average, there are 10 groups and 200-250 group members per Empowerment Worker. 6.3.2.1. Average loan balance per borrower $33 average outstanding loan balance (three years into the program) 6.3.2.1. Average savings balance per saver $24 (three years into the program) 6.3.2.1. Portfolio at risk N/A 6.3.2.1. Tailoring of product/service N/A 6.3.2.1. Other? 6.3.3. Cost-effectiveness of non-financial services? The cost of literacy training is imbedded within the overall program operational cost. 6.3.4. Strategies to cover/reduce costs? The enormous scale of the project, achieved in a short time period is the biggest factor responsible for the low cost of WEP. This scale was relatively easier to obtain in the densely populated Terai of Nepal compared to WORTH in much less densely populated areas in Africa.

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