Rebuilding and Sustaining Livelihoods after a Natural Disaster: An Evaluation of a Microcredit Program for Poor Women in South India

Purpose: Mixed reactions exist regarding the success and sustainability of microcredit programs for empowering the poorest of the poor. We investigated the perceived psychological, social, and economic impacts of a self-help microcredit program for widowed and abandoned women in South India implemented shortly after the Indian Ocean Tsunami. Specifically, three research questions were addressed: 1) How did the women use their loans to build their assets? 2) Did the amount of loan and type of investment made affect their psychosocial and economic outcome? 3) Were there differential outcomes based on the woman's age, level of education, number of children, length of self-help group participation, and the geographic location of program?

Methods: A survey was conducted with 109 women randomly selected from 20 self-help micro-credit groups from five geographic zones. Data were collected on their investment patterns, loan amount, demographics, group participation, location of residence, and their overall well-being. Four distinct indices were created to measure the self-perceived economic, communal, familial, and psychological effects of the microcredit program. A series of multivariable regression analyses were performed, examining each index.

Results: We found that the women in this program were able to choose both the loan amount and loan use according to their own needs. In fact, they used their loans in many different ways, including getting out of debt. However, the amount of loans and the way loans were used were not significantly related to the women's overall well-being. The length of the group's existence was negatively related to the women's economic and communal outcomes. Having children was negatively related to the women's psychological well-being. We also found regional variations in the impact of the program on the economic, social, and psychological well-being of participating women.

Implications: Drawing from the study's findings, a number of implications are suggested. The lack of impact of both loan amount and loan use imply that the microcredit program model may need adjustment. The incorporation of an educational component focusing on numeracy, literacy, and business skills, could have a positive impact on outcomes for women and program sustainability. Economic, psychological, and communal outcomes could also be enhanced if a group-savings and rotational credit component was added to the program's loan repayment model. Further, we found that, compared to self-help groups that have been in existence longer, more recently formed groups had a significantly greater impact on the women's well-being. Future research may consider exploring the factors that contribute to the benefits associated with recently formed groups and examine the means to maintain positive program effects over time.