Saving Groups and Social Structure in a Rural
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Journal of Social Sciences and Humanities Review (JSSHR) Vol. 3, Issue. 2 (85-100) © Author(s) June 2018 ISSN: 2279-3933 SAVING GROUPS AND SOCIAL STRUCTURE IN A RURAL VILLAGE IN KURUNEGALA, SRI LANKA Rika Masuda1*, Abstract The purpose of this paper is twofold: (1) to analyse how the activities of 1The University of Tokyo, self-help group (SHG)-type ‘Saving Groups’, a type of microfinance, have Japan changed the social structure of a village in rural Sri Lanka and (2) to [email protected] evaluate whether these activities have reached the poorest of the village as m microfinance sometimes fails to include the least privileged. To achieve the aforementioned objectives, the researcher surveyed a whole village in * Research Fellow of Japan Polpithigama Divisional Secretariat Division, Kurunegala District, Sri Society for the Promotion Lanka, where ‘Saving Groups’ have been active for a long time under the of Science (JSPS) auspices of a non-government organisation. The implementing organisation of the ‘Saving Groups’ claims that exclusion does not exist in the village as it has tried to carefully include the poorest of the village during the formation of the ‘Saving Groups’. I used social network analysis to visualise the social structure of the village and conducted qualitative interviews of key informants. The survey results reveal that the structure of the village has changed as a result of the implementation of the studied interventions in the village. It was found that, although the poorest were unable to voice their opinions at meetings organised by the local community organisations, their financial situation improved as a result of the activities; their social position in the village improved and discrimination against them reduced. Nonetheless, there are two distinct geographic spaces in the village, and different castes live separately from one another. Because of these spaces, the lower caste had been excluded from availing of the services provided by ‘Saving Groups’ through their activities on a long-term basis. These effects were unforeseen and unintended by the implementing agency of the programme. The success of the activities has been confirmed by other surveys conducted by the author in this area of study. Keywords: Microfinance, Network Analysis, Poverty Reduction, Saving Groups, Social Structure This article is published under the Creative Commons CC-BY-ND License INTRODUCTION (https://creativecommons.org/licenses/bybe considered-nd/4.0/). to be playingThis license a central permits role use, Microfinance and financialdistribution inclusion and reproduction, can in commercialpoverty reduction and non,- commercia,mainly in developing provided that the 85 Journal of Social Sciences and Humanities Review (JSSHR) Vol. 3, Issue. 2 (85-100) © Author(s) June 2018 ISSN: 2279-3933 countries. Microfinance, which has its a kind of microfinance—have changed the roots in microcredit, is the provision of behaviour of the people and the social financial services to low-income people. structure of the village. The evaluation The services generally include savings and required surveying all the households in credit; however, some microfinance the village. The study also looked at how organisations also provide insurance and the activities of SHG-type ‘Saving Groups’ payment services (Ledgerwood, 1998). A affected those participating in them (i.e., central theme of debate in microfinance each group’s members), as well as how research is the examination of the effects of they affected non-participants. use of the randomised controlled trial (RCT) method in policy intervention. This paper has been organised into the When carrying out a study using RCT, the following subsections. Following the study subjects need to be separated into an introduction and research problem or issue, intervention group, which is subject to the research methodology section policy, and a control group, which is not— introduces the methodology, study location comparing the changes thereafter. In short, and outline, along with methods of data individuals who do not make use of collection and analysis. Then, the microfinance must also be included as objectives, scope and significance of the study subjects. However, the main purpose study are clarified. The latter part of the of such research is to assess the impact of paper consists of the study’s results and microfinance on its users. In addition, for findings; the paper closes with conclusions. microfinance, much of the research work centres on how microfinance impacts each LITERATURE REVIEW individual. However, in reality, Much existing research on microfinance microfinance can be assumed to impact not and society is based on the relationships only individuals but also the whole of within groups carrying out the activities society. Consequently, this paper seeks to together. For example, the Sanyal (2009) examine the externalities from survey implemented in West Bengal, India, microfinance, specifically from the examined the economic ties among perspective of social rank, and to explore microfinance groups and concluded that the potential impact that microfinance they have the potential to promote might have—not only on individuals but women’s social capital and normative also on societies. In particular, this study influence, thereby facilitating women’s examines one village, looking at how the collective empowerment (Sanyal, 2009). In activities of SHG1-type ‘Saving Groups’— addition, with regard to social connection, 1 SHGs are small, informal, economically homogenous ranging between 10 and 20 (Tankha, 2002, Premaratne groups formed by self-selection with membership et al, 2012) 86 Journal of Social Sciences and Humanities Review (JSSHR) Vol. 3, Issue. 2 (85-100) © Author(s) June 2018 ISSN: 2279-3933 Karlan (2006) discusses default risk and particularly in social rank, come into play. relationships in group lending. Feigenberg, et al. (2010) discuss how the collateral in The purpose of this research is to analyse group lending has a negative effect on the whether all the households, especially the maintenance and construction of social poorest were given the opportunity to join capital. All of these studies focus on the the activities. To this end, this paper will internal groups’ relationships pertaining to first examine existing literature on the microfinance. exclusion of the poorest from microfinance structures and the Sinhalese caste system. Thus, there is actually very little research that examines how microfinance affects As mentioned earlier, the exclusion of the societies as a whole. For example, poorest has been highlighted in the Kurosaki & Yamagata (2017) state that microfinance literature. In the initial nearly all assessments of microcredit Grameen Bank loan system, which is said utilising RCT ignore general equilibrium to be the pioneer of microfinance, groups effects on anything other than the were formed and the members of these borrowers themselves. General groups then shared joint liability. Therefore, equilibrium effects include increased there was mutual selection of members regional wages for individuals not when groups were formed, which is participating in microfinance as a result of perhaps a reason why the poorest might its propagation and increased wages for have been excluded. Even if the poorest workers who are themselves not directly could become members, they are involved in its activities. Thus, it can be considered risky loan recipients and are expected that the people in regions where thus excluded for that fact, or they are RCT intervention has been carried out have excluded because loans disbursed to them been impacted by the externality effects of are considered to involve high levels of microfinance. Yet, this fact is not repayment risks when loan specialists are considered for RCT. In addition, research involved. This combination of factors can discussing regional impacts of be considered to be a reason why microfinance tends to focus on whether the microfinance has difficulty in reaching the poorest are included, with little discussion core poor (Montgomery & Weiss, 2005). of how shifts in social structure, However, there are also reports that suggest that the poorest are not always excluded is as follows: the highest Sinhalese caste is from the services (Mersland & Strøm, the Govigama. The Govigama constitute 2009). approximately half of the total population of Sri Lanka, and it is said that the majority A simple overview of the Sinhalese castes of farmers are Govigama (Suzuki, 87 Journal of Social Sciences and Humanities Review (JSSHR) Vol. 3, Issue. 2 (85-100) © Author(s) June 2018 ISSN: 2279-3933 2013:241). A stated feature of highland exists at present (Suzuki 1996:61-62). In Sinhalese is that there are only a small addition, social status in modern village number of castes within each village, with societies is often formed independent of only one or two castes in almost all villages castes (Suzuki, 2013:90). On the basis of (Takakuwa, 1983). However, this is these examples, we can presume that the premised on villages being formed around subject village in this study was possibly the Govigama caste. Moreover, in formed mainly around the Govigama caste, Sinhalese society, each caste used to live with potentially one or two other castes collectively, so a single caste tended to living in separate areas of the village in form a single village, with each region some cases. It is also inferred that social having a high degree of independence and status