Microfinance for Microenterprises - An Impact Evaluation of Self Help Groups

This report describes an impact evaluation of self help groups (SHGs) that was conducted in three districts in Andhra Pradesh, India. The study aimed to assess the impact of group dynamics within SHGs, and members' economic and social graduation processes. It also examines the economic viability of microenterprises promoted by SHG members and their impact on income and employment generation. The study found that:

• Number of members in SHGs varied from nine to sixteen;
• Homogeneity in living standards was the main criteria for group formation, followed by proximity and activity;
• SHG age was directly linked to volume of savings;
• Bank loans constituted a major share of SHG resources;
• Participation in the SHG- bank linkage program helped women access financial resources to cater to consumption and family needs;
• SHG membership helped increase savings volume per household by 184 percent;
• Older groups had members who graduated to taking loans for asset creation and microenterprises;
• All SHG members had graduated to increasing amounts of bank loans;
• Sustainability of microenterprises depended on availability of linkages and enabling infrastructure.

The report concludes with recommendations to support SHGs and their microenterprises.