Reflect Methodology: Facilitating women's empowerment through micro-finance in Uganda

By Maria Nandago, ActionAid Uganda

Lack of access to credit is often seen as a major problem for poor women in Uganda, especially in the rural areas. It is not only its unavailability, but most women do not have enough information about where, how and when to access credit facilities. They have all sorts of beliefs about the operations of the service providers some generated from their own experiences and others from hear say. This often leads them to believe that one is better off without credit, especially if at the end of it all it is going to lead you into losing the little property you have. The fear of being a debtor is especially pronounced in the rural areas. Therefore, providing women with the relevant information about where and how micro-credit operates is paramount if the issue of access is to be addressed. Micro-credit is often seen as a stand-alone venture with no integration into an education project. This means even when women do access credit, they are unable to use it to their advantage. Reflect provides a way of assessing the benefits of credit and how to make the most of it.

How does Reflect address the issue of access? In Reflect circles in Uganda issues of income and expenditure are often discussed, usually through the construction of an income and expenditure tree. Through the construction and analysis of the tree, participants may come out with an impression that their tree is 'malnourished, unbalanced with heavy branches but light roots, and actually on the verge of falling with the slightest wind blowing. If this is the case, then something needs to be done, sometimes immediately, to save the tree from falling. People will normally argue that the expenditure is on necessities like food, clothing, education and housing, which are things that they cannot do away with. What they emphasise is the need to stimulate the roots, either by multiplying them or making them bigger. Among the many options explored, participants have been coming up with the need to acquire credit as one of the ways out. This then sparks off questions like how and where can we access this credit? The facilitator, if confident and informed enough, could help answer this. Where s/he is not, s/he can invite a resource person dealing in this area to provide the relevant information. In the process all the puzzling issues, the myths people have about micro credit are discussed and analysed. During the circle discussions participants analyse why their income and expenditure are as they are. They consider their coping mechanisms and work out possible solutions to make their money more stable. This enables the participants to take informed decisions on how to use the loan once acquired and in this way repayment within the required period of time ceases to be a big issue. In our experience credit has been accessed in two different ways and has had a very powerful impact. Where such processes have taken place in Reflect circles, participants have been able to either access the micro credit facilities through the lending institutions or through the most popular rotational saving and credit started out of their own initiative. Women have used the credit to acquire land, domestic animals (cattle), to purchase household items and clothes.

Control over the credit
The level of empowerment generated during the process is central in determining whether the women have control over the credit. Stories of men taking away the money these women get from either the group or the micro-finance (MF) institutions are very common. This presents a challenge that needs to be addressed. MF institutions have increased women's access to credit but in a number of cases have not followed up to find out to what extent these women have control over the resources received. This scenario can further burden women as they are responsible for repayment as they are considered the beneficiaries!

Reflect can help women to realise their full potential, and enable them to decide how to utilize the facility. This does not rule out consultations where necessary, but the person consulted would not be taking the central role in decision making or taking all the control over the received credit.

Loan utilization
It is worth looking at loan use more critically. Since we are talking about women's empowerment through credit, should we not be very concerned with how this credit is used by the recipient? Clearly, they need support to ensure that the loan improves their economic situation rather than worsening it. Supplementary technical and other related training should be provided which could examine some of the projects that could be undertaken by the recipients of credit.

Discussing Credit and Loans Why do we borrow money? How do we feel when we borrow money? Are there certain times of year when we need to borrow money? Why is this? What different ways are there to access money locally? Who can you borrow money from? What are the dis/ advantages of different sources? How does the money repayment work? How often do we need to make repayments? How and when is the interest calculated? What happens if you are not able to make the repayment? What influences are there over the rates of interest - how are the interest rates decided, and by whom? What do we feel should change about the system? What can we do to achieve this?

In the Reflect circles, sessions that follow the income and expenditure tree analysis often look at issues of identifying viable projects. One way to do this is to look at the criteria of selecting a viable income generating activity (IGA) using the IGA matrix. Where the facilitator cannot ably handle the session, s/he invites a resource person to fill in the gaps. By the end of such a session, one would have a clearer picture which IGA to take on given the circumstances. This reduces the risk of undertaking unprofitable ventures where it could be almost impossible to repay the loan.

Loan repayment
Apart from the lack of knowledge on how to utilize the credit, non-repayment can also be attributed to the high interest rates and the unfair repayment periods. The repayment period has a direct bearing on the kind of intervention one can take on, but this is rarely taken into account. Interest rates, apart from being high, also present a challenge in that most women who access credit in these schemes are illiterate, so have no idea how they are computed. In this regard, Reflect provides participants with the opportunity to learn how to read, write and do numeracy. The participants could focus on how interest rates are calculated, so that they can decide whether to take the loan or even collectively to negotiate for better rates. The reading and writing skills enable them to keep better records, reducing the possibility of being cheated and allowing them to follow through with their income, expenditure and determine the profit.

There are many other issues surrounding access, use and control of micro credit. Targeting is another key issue. At the end of the day who benefits from the services of the MF institution? Which category of women is really benefiting? Can the poorest woman access such facilities given the conditions and terms imposed by the facility? This needs to be looked at critically or else we miss the point. Reflect could help to address some of these issues. Through engaging in a Reflect process poor people become mobilised and decide on actions that will help them attain social change.

For example, in Reflect circle discussions the beneficiaries of micro-credit made the following recommendations that should be considered if micro-credit is to achieve its objectives.

Recommendations - Introduce family loans, where the husband and wife are directly responsible and accountable for the loan issued to them. Incorporate technical and other related training to ensure effective credit utilisation Allow for flexibility- for instance repayment intervals / period could be determined according to the investment opportunities available in that community. (or seasonal variety) Ensure timely issue of credit depending on what the beneficiaries want to use the credit for. The women also recommended that loans should have a reasonable grace period to enable them to repay the loan while saving some of the credit. Achievements through ActionAid Uganda's interventions Increased access and control of credit by women Acquisition of productive assets by women e.g. land Enhanced women's empowerment Equipped women with record keeping skills, which they continue to practice. Challenges Limited involvement of men in circle activities, which leads them to either hijacking the process or undermining it. Low levels of funding - what is extended to the groups is very limited. Low levels of literacy, which makes it difficult for the women to follow through with their records. Some women have become over burdened as a result of their contact with micro credit. There are cases reported where men have neglected their responsibility as a result of their women acquiring credit. Poor caliber of facilitators who may not be able to facilitate the learning process. Use of Reflect in MF might derail the process, raising people's expectations. There is the possibility of the process being hijacked by other people coming in - beingattracted by the credit. (e.g. the middle poor) The tendency of looking at Reflect as a literacy package only limits its use. In such cases the focus would be on record keeping only, yet the analysis (which is an integral part of Reflect) could help people to look at other areas like investment opportunities and also map out marketing strategies. What added value does Reflect present for micro- finance groups? Ensures easy mobilisation of communities, especially women. The processes also ensure group cohesion. This means that women are not only brought together for credit, but generate other development ideas. Micro- credit is not an end in itself. Reflect provides an opportunity for further discussion and generation of ideas around utilization, investment opportunities available and marketing options. Reflect equips women with reading, writing and numerical skills hence enabling those involved to follow up easily on their records. The discussion process enables women to begin making their own decisions on issues affecting them. Channel for information dissemination and sharing Generate a critical mass that can lobby and advocate for their rights Build a resource base - facilitators who could be used in other development interventions

For more information please contact: Maria Nandago