Dickey Fellowship Report

Shazia Amina Ahmed'01

September 8, 2000


The Social Impact of the Micro Credit Program

.As I arrived near the village Gazipur, I had to leave my car and walk, as the dirt roads, bumpy and eroding, were too rough to drive upon. It’s a wonder that the villagers manage to bring everything into and out of the village on cow driven carts. Children wearing scraggly loincloths around their waists were surrounding me, curiously scrutinizing my attire, my books, my camera, while I walked to the center of the village. I found the lady who was to be my host, the leader of the Village Organization (VO) which I was to work with. Her teeth were stained red, and her lips were dry and cracking, her dark hair was pulled back into a casual bun sitting high atop her head. She smiled joyously and I could see, behind the folds of her red ragged sari, her three year old son. She led me towards her home. The cows and chicken in the area reminded me of the income generating activities of the village. I saw that many colorful pieces of cloth lying on the fields - laid out to dry. They had been dyed and were awaiting a keen hand to stitch them into women's clothing. Paddy fields were scattered around us, along with occasional mud houses, with thatched roofs. These houses, built by the villagers, were temporary. Every monsoon swept them away and new homes had to be made - the wild weather would spare nothing. It was only as she described the painstaking labor which shadowed each rainfall, that I began to realize the resilience and courage of these women.

The Dickey Foundation offered me a Fellowship to work with BRAC and get involved in powerful poverty alleviation projects in rural regions of Bangladesh. My aim was to help where I could and gain an understanding of the social and psychological impact of grass roots banking, with a possibility of using the research later to prepare a thesis in Social Psychology. The experience was beyond all my expectations!

I have learned a great deal about people, from my experience in Bangladesh. In silent admiration I witnessed the resilience of the village women, the hope and courage with which they channeled their energy to improve their standards of living and offer their children a brighter future. I have been reminded of my own dreams to do more for others and seen that there is so much scope to make a difference in the real world of hardships and suffering. I have learnt that there is hope and that change, though slow, is on its way. I am a psychology major, with a concentration on social psychology. This Fellowship has given me a chance to add practical depth to my academic pursuits.

Before I proceed, I shall give you some background on BRAC and its theory of grass roots banking. Understanding the philosophy behind the loan structure and group networks involved with micro credit is essential to appreciating why its effects are so far-reaching, economically, socially and psychologically.


Background on BRAC

BRAC - Bangladesh Rural Advancement Committee - is the world’s largest non-government, non-profit organization. Currently BRAC is working with over 3 million households! Their programs span over three main areas: rural development program (RDP), education, and health. I worked in the RDP department. The RDP concentrates on the socio-economic development of underprivileged rural women through access to credit, capacity development, savings mobilization, institution building and awareness creation. To support the micro credit project, BRAC embarked on different income generating programs such as sericulture, silk production, agriculture, poultry, livestock, fisheries, tissue culture for producing quality vegetables and crops, high yielding seed production, handicrafts manufacture and non-traditional enterprise related activities. Some of the products are marketed through BRAC’s own outlets, while others are exported to countries such as England, Canada and USA.

BRAC as an NGO, has done significant work for the emancipation of women. BRAC’s main objective is to enlighten oppressed village women and help them gain financial independence. Starting off in the 70s as an infinitesimal NGO, with critics predicting its failure everyday, BRAC is now the largest NGO in the world, and is also a model NGO for all other NGOs around the world.

BRAC has set up 10 commandments, which all the member women are meant to repeat every single day. These are meant to shift the paradigms instilled in them from the time of birth. Wife beating is rampant in these villages. The women either accept this as normal, or they have no where else to turn to , so they are forced to endure these tortures. BRACs various programs are teaching these women that they can stand on their own feet, and speak up for what they believe in by giving more than one million women the opportunity to work, and earn a living.

Background on the Micro Credit Program

To begin the process of village banking, BRAC surveys all the villages in a district and chooses identifies those villages which have a minimal involvement with government efforts or other NGO involvement and are in the direst of states to begin work in. (This was BRAC’s initial goal, to reach out to the remotest of areas. However, in all honesty, BRAC has expanded to such a great extent, that really it has plunged into almost all the villages of Bangladesh now.) Members of the targeted village are surveyed and an inventory of the women eligible for the micro credit program is taken. If there are enough women, groups of 15-20 are chosen and approached to see if they are interested. These 15-20 women are then brought together and a Village Organization (VO) is formed. The VO meets biweekly and during these meetings an area manager comes to "pep talk" the women, speak to them on various topics, guide them in money matters, collect loan payments from loan takers, and collect a Tk 20 (US $0.35) from each member to add to their compulsory savings fund. A president is selected from within the group and the women are split into five subgroups, each with a member selected to be the group leader. This group structure plays a large role in the psychological impact of this program, as you shall soon see.

BRAC does not give group loans, unlike many other NGOs. Group loans are given to 3-5 people jointly and they become jointly liable for the loan repayment. BRAC gives each woman an individual loan, under the philosophy that each woman must learn to stand on her own. However, though each woman is solely liable for her loan, if one member of the group defaults, no other member can take out a new loan till the defaulter repays her loan. This encourages group members to help each other out and adds an extra incentive to never default on a loan. Thus the VO and group structure is a powerful force, creating group pressure encouraging loan takers to act ethically and in the interest of the entire group’s credibility. As a result, members look out for each other and make sure no single person cheats BRAC or falls into troubles that will prevent her from repaying her loan. Destructive competition is minimized and the forces of peer pressure ensure that the loans are repaid properly. The default rate, even though these women are in the direst of poverty and have no collateral to offer, is below that of any bank in North America! I worked in a huge Canadian commercial bank's risk management department last summer, working with fraud checks and defaulted loans, and had become very suspicious of all loan-takers! I was delightfully surprised to see how well the system here works. This is evidence of social pressures working in a positive way within the VOs.

Furthermore, this group structure leads to greater autonomy within each VO, thus breaking away from huge hierarchies, empowering the women at the grass-roots level. The ability to take out loans gives the women added power in the villages and in their homes and more respect in society. The financial assistance also gives women who are often oppressed by husbands, fathers, brothers, a chance to be independent. These loans, along with the social power they represent, are giving these women a chance to escape from their crippling poverty and oppression.

My Research

I had hoped to identify and assess the social impact of the micro credit program in Bangladesh. This program entails a great deal more than simply the disbursal of loans. It creates social networks and communities of its own, increases awareness on a vast multitude of issues through group discussions, provides inter-village communication, opens opportunities for income generation and capital accumulation, and leads to the gender-empowerment of women. There has been dramatic change resulting from this program, and it is beyond the scope of any single paper to analyze or encompass all the factors of social change that may be related to this program. Of the vast range of revolutionary effects, I chose a few to concentrate on according to how important, descriptive and representative of social change I felt they were. I am particularly fond of the leading Social Psychologist, Henri Tajfel, and modeled much of my research on his studies.



My hypothesis was that I expected the micro credit program had had a significant positive influence on social and personal issues of the women involved with the program. I believed the overall effects on a societal level have also been positive, but to a lesser degree. Lastly, I believed the program had had a significant and negative impact on the lives of the women in the village who are not affiliated with the group. I thought they may be suffering from lower self-confidence, lower esteem and lower social support in general.

Research Methodology

Case study. I did a case study of a village that has been involved with grass roots micro financing for several years. The particular village I chose to work with - Bhogra, was approximately one hour away from the capital city, Dhaka. This village has three Village Organizations (VOs, groups of 25 women who meet biweekly to collect loan repayments, discuss issues of concern, share learning experiences, etc).

Observation. Through my association with these women, I learnt about social changes possibly resulting from the micro credit program. I was at an advantage being Bengali as it allowed me to understand cultural nuances that other researchers may not have picked up on. I am fluent in the language and I think I got a more honest representation of their real lifestyles than an outside researcher might have, as they were comfortable sharing their thoughts with me, a young un-intimidating Bengali girl, not an NGO official hired to research for the company itself.

Survey and Interviews. I created a complex survey as well several structured interviews, to help me assess the degree of change that has taken place. (Enclosed is the working version of the survey.) I was hoping to compare the dynamics of the groups and attempt to ascertain how members feel towards each other as well as towards non-affiliated village peers. Furthermore, I would to gage the attitudes of loan recipient family members, especially husbands, as well as other members of the society in general, in order to gain an understanding of the effects the program has had, as well as how pervasively these effects have resonated through the village.

The following are areas I analyzed:

  1. Social mobility. Social Change.

To what extent has micro credit led to social mobility and to what extent social change? Tajfel describes: Social mobility consists of a "subjective restructuring of a social system." Social change is the other extreme where the only way for the subject to "change his position or conditions of life... is together with his group as a whole, as a member of it rather than someone who leaves it.") I expected to find that micro credit has given the women who receive loans the chance to move up in the social spectrum. I found that the loans were not usually utilized efficiently enough to lead to an economical change significant enough to change someone’s income bracket, but it did relocate the women socially. The loans gave the women a certain degree of confidence and courage to demand respect. They were more aggressive and more outspoken. In comparison, the women who did not take loans divided themselves into two categories. There were the women who seemed to look down upon the women taking loans, as they felt their husbands cared more for them and were more manly as they were able to carry out their responsibilities as the head of the household - providing for the entire family alone. The second group of women who felt they were not economically active because they were subjected to the force of chauvinistic husbands, or because they did not feel competent enough to raise the means of repayment, looked down on themselves and then were in turn looked down on by all others. This strange self-selection process is similar to self-fulfilling prophecies where what the women see themselves as becomes what they become and thus what everyone else perceives them to be.

How many women from outside villages have migrated to/from the village recently? Has access to micro credit given loan recipients more geographical mobility? I was interested in assessing the extent to which women were relocating in search for greater opportunities (eg to villages closer to Dhaka or market outlets where there is more wealth generating abilities.) Was the micro credit giving them increased courage or the financial means to reduce the restrictions of geographical bindings which poverty may otherwise impose. Upon research on head counts and migration data at district’s regional the head office, I learned that there has not been a significant change in the statistics regarding migration. I had expected the access to funds would give women more courage to move about, but found this was not the case. It turns out the effects of the group system are rather quite the opposite, they have a geographically binding effect on its members. The only women who move into villages they were not born into, do so for the sake of marriage. Unmarried women are not given BRAC loans, hence unmarried women do not have the financial strength with which I had expected they would move around in search of greater profits. And the married women who are given the loans become deeply involved with their particular VO and find it less than appealing to leave behind this already built up network of support.

To what extent has this program raised the awareness of its members and non-members?

Have affiliated women's attitudes towards less local issues changed in comparison to unaffiliated women? It turns out that the community is so small that whatever is discussed with members quickly dissipates outwards so that all the villagers have access to the same knowledge base as one another. However, there has not been a marked change in attitudes towards local and regional issues, as these topics are not discussed as extensively as they are meant to be. The VO leaders who visit the groups once a week to collect their loan repayments that are due in small sums weekly, and the compulsory savings the women must submit, also have the responsibility of discussing money matters, recent news issues and other topics of interest with the women. In practice however, the loan collector is eager to move on with his work and go home quickly and the women all have nagging children by their sides and subsequently are equally as eager to finish the meeting quickly. Thus BRAC is sadly not meeting its potential in the realm of bringing the community up to date with local and regional issues as it had planned.

As far as gaining an understanding of the state of the economy and the larger community to which they belong, they have not gained an increased awareness. That may be a substantially long-term goal.

  1. Social Relations.
  2. The benefits of human relationships are diverse and numerous. The prominent psychologist, Robert Weiss, identifies them as "attachment, integration, reassurance of worth, a sense of reliable alliance, guidance, the opportunity for nurturance" suggesting that a rich, healthy lifestyle requires a network of social relations to satisfy a gamut of human needs. I was interested in analyzing how social relations contribute to a person's mental, emotional, and physical health, by comparing affiliated women to unaffiliated women. I was also curious to see if micro credit gave women more freedom in choosing which relationships were beneficial to them.

    Has the increased financial independence allowed more women to feel comfortable remaining single? How has micro credit influenced marriage and divorce rates? Have the recent marriages/ divorces that have taken place in village, been viewed as "aki poishar lok" (equal-status merges) or not? Has the wealth of either party been an issue? I learned very quickly how naïve my questions were. Firstly, BRAC only gives loans to married women. This is due to several reasons — they have seen that unmarried women tend to be less stable in life, tend to be more likely to move out of their loan group region, and they tend to attract men who may not have been willing to engage in marriage otherwise. To avoid these problems, and to help households rather than single individuals, BRAC focuses their attention on married women. As a result, my questions about women remaining single on the assistance of loans are not valid. However, it turns out, women who are widowed and have taken out loans from BRAC are much, much better off. They are able to sustain themselves rather than becoming a "burden" on their in-laws and siblings. In this way the loans allow widows to continue to have an identity in a society that previously used to pin every woman’s identity upon a man. This is a significant achievement!

    I was hoping to gain knowledge on the rate of divorce and changes in the marital happiness of loan recipients — and this too was naïve. Divorce is not a phenomenon in this culture. The women accept their marriages as "till death do us part" and compromise on all issues to make marriages work, there just is no alternative. This made me wonder how unhappy some of them must be, but there was no way of assessing this, the matter is so private, no one would ever admit to me their marital woes. Furthermore, I realized that it takes a certain degree of awareness of what could be an alternative to actually even begin to analyze one’s own conditions. As they never even wonder about the alternative of being out of the marriage, no one is ever discontented with theirs. There are bad days and good days but no bad marriages. Also, from what I understood, their lifestyles are so different from that in the western world where people spend the majority of their time with their spouse. In the village it is very close to communal living. The women spend most of their time with other women and with their own children. The men leave for work and do not return till late night. They then eat and sleep. There is very little interaction between partners and almost no conversation. This must be very difficult to conceptualize, and came to me as quite a shock as well, but it seems to work well for them. I cannot say the system we follow in USA, with divorce rates over 50% is necessarily much better.

  3. Stereotypes. Gender Roles.

According to social psychologist, Shelley Taylor, two factors that influence stereotypes are information and salience of the person's group membership. By teaching and educating women in traditionally non-female roles, allowing them to be income-earning, credit-worthy individuals, the micro credit program has done a great deal to change the preconceptions many villagers had regarding what women were capable of doing. Even the women themselves did not realize they were capable of such money management. I had hoped to assess the extent of change in attitudes and stereotypes through surveys of the women involved, the women who have chosen to remain uninvolved, the men of the related household, and the rest of the local society.

Do unaffiliated members of society shun them for their interactions with money-lending institutes, or does this association earn them respect and increased credibility? Do affiliated / non-affiliated women feel limited by societal gender roles? Are unaffiliated women abstaining due to rigid ideas of gender roles? To what extent have the attitudes of other members of the local society changed? It is difficult to understand to what extent attitudes have really changed. No one objects to women taking loans and earning money. There is no social stigma against these activities as I had thought there may be. In societies so starved for money, no one ever stands in the way of any income generating activities. However, if these loans were taken away, I believe women would still be allowed to work, now that the villagers are aware of their income earning capacity. Thus the attitude towards behaviors and gender roles has subtly changed, without any discussions or talks. In societies of such poverty, all that matters is money. Several women I spoke to regarding how their spouses and families felt about them earning incomes and receiving loans, all said the same thing, no one could object to activities that would bring money to the house. Thus by giving them financial significance they have achieved social acceptance as money earners. Traditionally perhaps these gender barricades were difficult to cross as women did not have the brute strength to do much which would be more monetarily productive than devoting their time to children (especially sons) who would later be able to earn money. But with the changes brought about due to micro credit, the people have been able to move away from traditional agricultural, strength-based production and labor and so women have been able to contribute more effectively, to which no one has any objection.



I found it much more difficult to gather data than I had anticipated. I imagined my knowledge of Bengali would give me an advantage over foreign researchers as I would be able to speak to the villagers directly, rather than rely on observation or a translator. I was surprised to find it almost impossible to research through conversation. I had written out a survey (in English) and when I set about to translating it I realized for the first time that most psychological terms did not have a Bengali counterpart. In retrospect perhaps it is not so odd that there is no niche for psychology in Bengali, as it is more of a western/ European study and perhaps also a luxury of wealthy, academic people. Where one is fighting to satisfy the basic human drives — the need of food and shelter, one pays considerably less attention to emotions and mindsets motivating their behavior. Furthermore, among these illiterate, uneducated, agriculture based people, of a very conservative, private culture, there is limited conversation regarding feelings and attitudes. Perhaps it is in their thoughts, but such introspective thoughts are not linguistically accessible to a researcher such as myself. So, my surveys were not as successful as I had hypothesized, but I was able, nevertheless, to gain an understanding, through observation and conversation, of the social and psychological differences that have emanated from the micro credit program in the Gazipur district of Bangladesh.

I may not have been able to answer the specific questions I had, but I have learned with great certainty, that the social and psychological impact of the micro finance program have been large and far-reaching. The changes in attitudes and lifestyles are significant and for the first time, there women are beginning to feel the liberating power of independence! I not only enjoyed my term as a Dickey intern, I feel it has deeply motivated me to achieve my own financial independence and then return to Bangladesh soon to contribute to this great program!

Thank you Dickey!



October 26, 2000