Income is only part of the equation: Sustainable outcomes involve the whole person not just the pocketbook


Microcredit has proven it’s potential to generate results and has received broad recognition since Muhammad Yunus, the godfather of microcredit, was recently awarded the Nobel Peace Prize for his accomplishments.  However the microcredit world may be underestimating the deliberating effect of one issue – the mental health and stability of the borrower.  There is increasing evidence of an association between poor mental health and the experience of poverty and deprivation whether at the individual level or the ecological level (Burgess et al, 1992; Jarman, 1992; Kammerling and O’Connor, 1993). There is also a growing body of literature exploring the association between suicide, parasuicide and deprivation (Gunnell et al, 1995; Congdon, 1996). Research has also discovered that factors such as the experience of insecurity and hopelessness, rapid social change and the risks of violence and physical ill-health may also explain the great vulnerability of the poor to common mental disorders.

Heath experts are sending out an international alert that mental health problems are dramatically increasing worldwide with the World Health Organization (WHO) warning that depression is set to become the main cause of disability and second leading heath problem by 2020.  The direct and indirect costs of mental ill-health worsen the economic condition, setting up a vicious cycle of poverty and mental disorder. These findings suggest that common mental disorders need to be placed alongside other diseases associated with poverty by policy-makers and donors, a position that we at SalusWorld high support.  Women, in particular, are apt to face significant barriers to achieving sustained increases in income and improving their status, and require complementary support in other areas, such as training, marketing, literacy, relationship strain, grief and loss, empowerment, social mobilization, psychological support and other financial services (e.g., consumption loans, savings).

Change, even when welcomed and eagerly anticipated, requires adaptation and adjustment to unforeseen consequences, emotional, logistical and interpersonal.  This adaptation can range from a welcome challenge to moments fraught with unhappiness and discomfort.  Anticipation of these unintended consequences and support during their impact can compound the growth that occurs not only for the individual for whom change is occurring but also reaching beyond the individual to the family, the community and beyond.

This post is aimed at highlighting some of the core issues that have surfaced in the body of ‘lessons learned’ documents within the microcredit world.  It is also aimed at sparking discussion, and creating increased awareness about the psycho-social impacts of microcredit lending and suggesting a multidisciplinary model that will support the individuals and communities undergoing the welcome challenge of micro-credit lending.

According to an analysis of outcome data, microcredit produces stronger results in combination with other interventions.  This makes sense since poverty is not solely a matter of lack of income or lack of access to sustainable financial services. A UNESCO report states that “The complex process of poverty eradication cannot be resolved by successful intervention in any one area. Today, one fifth (more than a billion) of the world’s population deprived of the means to meet basic human needs, are struggling to cope, to survive. To reduce the vulnerability and the insecurity of the poor and to bring lasting improvements in their lives, they must have not only a secure livelihood but must also benefit from investment in education, health and other essential services, which are all interrelated and important to well-being.”

An effective strategy for poverty alleviation would thereby be achieved, going beyond financial and economic considerations and taking into account the social, cultural individual and community dimensions of development.


Psycho-social implications of Change

Poor people stress the anxiety and fear they experience because they feel insecure and vulnerable when their conditions worsen. Security is defined as stability and continuation of livelihood, predictability of relationships, feeling safe and belonging to a social group.  The psychological impact of living in poverty is mediated by shame, stigma and the humiliation of poverty.

In a touching and informative book, Voices of the Poor, the World Bank describes this complex process of change.  “Social norms and institutions are the key obstacles faced by poor women and men as they attempt to eke out a livelihood against the odds. Poor people’s experiences demonstrate again and again that informal rules or social norms are deeply embedded in society, and that “rules in use” override formal rules.  It is precisely because of the embeddedness of social norms that change in one part of a bureaucratic social system cannot bring about [lasting] systemic changes. In fact, a change in one part of a system merely creates resistance in the system until “order” is restored. This phenomenon is evident at all levels from the household to national level.  Poor people’s experiences reflect fundamental inequities in power among different social groups, and a lack of “bridges” or horizontal linkages between those more powerful and those without power. This unprecedented study, published in 2000, was an effort to gather the views, experiences, and aspirations of more than 60,000 poor men and women from 60 countries.
Their findings were organized around the themes they found in these interviews.  Among the most important were

  • Troubled relations within the household
  • Gender inequity on all levels: family, community, state
  • Limited presence and outreach of NGOs
  • Organization of the poor
  • Difficulties based on lack of holistic, interdisciplinary change strategies

While we, at SalusWorld, do not advocate interventions without knowledge of a specific community, we do advocate paying attention to how these subjective factors (or others) affect the recipients of Microcredit programs.  With increasing suicide rates and domestic violence in households where there has been a shift in power and control secondary to microcredit programs, we think it is necessary to consider a more holistic and systems approach to look at and facilitate change and transition.


Collaborative Strategy

Despite the efforts of many committed individuals within governments, civil society, and international organizations who work in partnership with poor people, institutional encounters, rather than providing essential services and opportunities, leave poor people disempowered, excluded, and silenced. It is this crisis that has created the opportunity for rethinking development strategies to reach the poor.  Changing poor people’s lives for the better is inherently complex because poverty is never caused by the lack of one thing. It involves many interrelated elements which speaks to the need for organizations who help the poor to be interrelated.  It is for this reason that our strategy calls for an approach that is not an add-on to existing programs but is fully integrated across micro-finance activities in the field.

Signs are already evident that the trend is away from social mobilization, and leaning towards minimalist credit. BRAC, for example, has shortened the conscientization stage and reduced savings provisions and time pre-requisites before disbursing loans (Wood and Sharif 1997, p.35). Montgomery reports a shift in BRAC “from a relatively egalitarian and participatory mode to a more hierarchical and managerial mode” (Montgomery, 1996, p. 299). He refers to this as a shift from `bhai` (brother) culture to `sir` culture, and warns that this may be a forewarning of the possible institutional changes as organizations grow. Even authors who argue in favor of microcredit’s “empowering” impact readily admit that “other components such as social and political consciousness-raising, literacy training and skill development have been increasingly downplayed” (Hashemi et al., 1996).

This joint effort can prevent that shift from happening without taking resources away from growing microcredit programs.  It would also alleviate many of the shortcomings found in NGO’s (like us) and larger institutions (like banks) and emphasize the strength of both.  Some of the problems experienced by NGOs are due to uncertain, short-term funding and limited capacity to fulfill well- meant promises.  At the same time NGOs are identified as the only ones “who really care.”  Often, larger social institutions that shape civic and economic life can lose touch with the day to day more personal contact so necessary to evaluate and facilitate long term change.  Yet, they are the ones who are in positions of power and economic solvency.  We propose that this would be a good marriage.


SalusWorld’s Role

Throughout the course of our deliberations we have identified a number of critical issues that could benefit mircocredit borrowers and guide the lenders practice in micro-enterprise support. First, it is essential to start with poor people’s realities

So that any applied program is relevant and applicable.  Secondly, we all must work within the current social norms.  Thirdly, we must support the development of the entrepreneurs and organize this group in such a way that a new and healthy support system is made for this individuals who are now playing a new role in their family and in their community.  Finally, we must create links and relationships between the poor and larger social systems whether this is the community, the microcredit lender, or the state, thus giving the poor a voice and a venue.

SalusWorld works as consultant and a context bases assessment of the issues before presenting a menu of options for the lender to support country-led efforts to achieve the goal of successful transition out of poverty.  Our group of mental health clinicians is developing an innovative consultation program aimed at addressing the mental, emotional, and spiritual and relationship problems of microcredit beneficiaries and their families, using culturally sensitive psychological approaches.

Our programs will invite your borrowers to join one another to share experiences and stories, struggles and breakthroughs in an atmosphere of mutual support, safety and trust; to learn new tools such as mindfulness meditation for reducing stress and anxiety and enhancing well-being; to improve communication and relationships; to speak what can not be spoken; to address a continuum of problems, including those that may or may not meet the criteria for a diagnosis of PTSD, depression or anxiety; and to tend to the wounds of heart, mind, identity, spirit, and relationships that can shatter the foundation and meaning of our lives.  Depending on context and community, we work with families, spouses who might be effected by the new gender roles, children by the new family roles

Our interventions would start with a needs assessment and interviews with key informants from your established programs.  Together, with the community of beneficiaries, we would work on creating ways to raise awareness and appreciation for the impacts of service on the lives of your business growers and developers.