Assessing the Impact of Microenterprise Services (AIMS) Management Systems International 600 Water Street, S.W. Washington, D.C. 20024-2488 Tel: (202) 484-7170 • Fax: (202) 488-0754 E-mail: [email protected] MANAGING RESOURCES , ACTIVITIES , AND RISK IN URBAN INDIA : THE IMPACT OF SEWA BANK SEPTEMBER 2001 Submitted to: Monique Cohen, Ph.D. Office of Microenterprise Development Global Bureau, USAID Submitted by: Martha A. Chen, Ph.D. Donald Snodgrass, Ph.D. The Hauser Center for Nonprofit Organizations John F. Kennedy School of Government Harvard University The AIMS Project is implemented by Management Systems International (the prime contractor) in partnership with Harvard University, the University of Missouri, and the Small Enterprise Education and Promotion Network. The Project is a technical resource of the United States Agency for International Development, Global Bureau, Center for Economic Growth, Office of Microenterprise Development (Contract No.PCE-C-00-95-00036-00). TABLE OF CONTENTS Acknowledgements..........................................................................................................................v Executive Summary....................................................................................................................... ix Section 1 – Introduction: Purposes and Overview of the Study.....................................................1 Section 2 – Program Context: Ahmedabad City, Gujarat State, India.............................................5 A. General Description ................................................................................................ 5 A.1. Location and Physical Environment .............................................................. 5 A.2. Economic Position of Gujarat and Ahmedabad............................................. 8 A.3. Historical Background ................................................................................... 8 A.4. Ahmedabad’s Textile Industry........................................................................ 9 A.5. Population and Social Structure................................................................... 10 A.6. Government and Politics.............................................................................. 12 B. Economy ............................................................................................................... 12 B.1. India’s Economic Development................................................................... 12 B.2. Employment Changes in the Indian Economy............................................. 14 C. Informal Sector Employment in Ahmedabad ....................................................... 16 C.1. Characteristics and Dimensions .................................................................... 16 C.2. Informal Economic Activities ....................................................................... 22 D. Conclusion ............................................................................................................ 35 Section 3 – SEWA Bank and Its Sister Institutions.......................................................................37 A. Introduction ........................................................................................................... 37 B. SEWA Bank.......................................................................................................... 39 B.1. Financial Services ......................................................................................... 39 B.2. Management.................................................................................................. 45 B.3. Financial Position.......................................................................................... 45 C. Sister Institutions .................................................................................................. 47 C.1. The SEWA Union ......................................................................................... 47 C.2. Other SEWA Institutions ............................................................................. 48 Section 4 – Research Design, Methods, and Sample.....................................................................51 A. The Sample Survey............................................................................................... 51 A.1. Questionnaire Design.................................................................................... 51 A.2. Sample Design .............................................................................................. 51 A.3. Data Collection in Round 1.......................................................................... 54 A.4. Data Collection in Round 2.......................................................................... 55 B. Quantitative Data Analysis ................................................................................... 56 C. The Case Study Research...................................................................................... 62 C.1. Sampling....................................................................................................... 62 C.2. Procedures .................................................................................................... 63 C.3. Analysis of Case Study Findings ................................................................. 64 D. Description of Sample........................................................................................... 64 D.1 Survey Sample .............................................................................................. 64 i D.2 Case Study Sample......................................................................................... 68 Section 5 – Survey Findings: The Impact of Microfinancial Services on Households, Individuals, and their Economic Activities...............................................................71 A. Introduction........................................................................................................... 71 B. Economic Patterns and Trends among Sample Households................................. 71 B.1. Respondents’ Primary Economic Activities ................................................. 72 B.2. Patterns and Trends in Household Income.................................................... 72 B.3. Credit and Savings in Sample Households ................................................... 77 B.4. Poverty Levels in Sample Households.......................................................... 79 C. Results of Hypothesis Tests.................................................................................. 82 C.1. Household Level Impacts............................................................................. 82 C.2. Enterprise–level Impacts.............................................................................. 94 C.3. Individual–level Impacts............................................................................ 101 D. Conclusions and Indications for Further Analysis.............................................. 107 Section 6 – Case Study Households: Managing Resources, Activities, and Risk.......................109 A. Case Study Households....................................................................................... 109 B. Household Economic Portfolios ......................................................................... 117 B.1. Resources .................................................................................................... 117 B.2. Productive Activities................................................................................... 121 C. Financial and Risk Management......................................................................... 124 C.1. Financial Needs or Risks............................................................................. 125 C.2. Financial and Risk Management Strategies ................................................ 137 D. A Virtuous or Vicious Cycle?............................................................................. 150 Section 7 – Case Study Respondents: Balancing Household Needs, Individual Self– Interest, and Worker Solidarity...............................................................................157 A. Microfinance, Poverty Alleviation, and Women’s Empowerment..................... 157 A.1. Alternative Schools of Thought .................................................................. 157 A.2.SEWA’s Empowerment Approach .............................................................. 158 B. Measuring Women’s Empowerment .................................................................. 159 C. Women’s Economic Empowerment ................................................................... 162 C.1. Increased Income and Wellbeing ................................................................ 162 C.2. Economic Security ...................................................................................... 163 C.3. Individual Voice and Agency...................................................................... 167 C.4. Perceived Contributions and Respect.......................................................... 170 C.5. Female Mobility and Social Status.............................................................. 172 C.6. Collective Voice and Agency...................................................................... 174 D. Lived Experiences and Voiced Perspectives ...................................................... 177 Section 8 – Conclusion: Emerging Themes and Lessons ............................................................179