Self-Help Groups in Singapore

I was trying to finish up "The Fortune at the Bottom of the Pyramid" the past two days, when I came across, again, the story on ICICI Bank's efforts in granting Indian villagers access to micro finance and credit.

Out of the many, well, superfluous, cases the book presented, and the idealistic tone the pages were soaked in, this case stood out to me as something practical and, now that I know the word, sustainable.

I used to think that any efforts in alleviating poverty necessitated donations and compassion. And while I found it a noble calling, I often had a nagging sense that charitable efforts were an end in itself, and from all perspectives, uncertain.

Forgive my naivety, for I was not more than a teenager when those thoughts first took root.

ICICI's story was what made me stop and reflect.

Central to their outreach efforts was this concept of Self-Help Groups (SHG). It is somewhat similar to the neighbourhood tontines Singapore used to have in the 80s, but with the additional backing and oversight of a bank. In these groups of 20, women were pooled together by the bank to contribute regular amounts to a group savings account. They had their own internal systems which pressured members' attendance at their monthly meetings, timely contribution to the savings account, and collectively decided on issues such as the allocation of funds to a certain member for pre-specified emergency needs.

Of course, the process carries much more complexity than the quick summary I have given. The amount of local knowledge needed to select suitable candidates for one is an aspect that cannot be easily captured in quick writing.

What sprung out to me in this endeavor is the bank's initiative to build a culture of saving in rural India. ICICI outlined this in 3 steps:

1. Learn to save.
2. Learn to lend what you have saved (referring to the SHG as a whole).
3. Learn to borrow responsibly.

That, is banking on the right foot.

And I could not help but wonder if I were to bring the SHG idea into Singapore, what would it be?

In our context, I feel that the government's commitment would be key to the success of this idea. So instead of having a bank as the main organiser, it would be a government body supervising the project, with the partnership of a local bank.

Similar to India, the SHGs will be formed based on proximity, that is, an SHG is made up of people from the same neighbourhood, and filled with people who have similar experience in poverty.

Granted, I think most Singaporeans know how to save. But what I like from the SHG is the use of "social collateral" to push for savings, and this social collateral is what I think many of the poor in Singapore could have. With the way it is structured, the SHG becomes somewhat of a support-cum-pressure group, acting as a constant reminder they are not alone and that there are people walking the same road as them.

And I will take this further, and have an insurance company cover these SHGs with Group Health and Group Life Insurance. My aim here, is such that any one member's sudden medical emergency will not adversely affect the group as a whole, and to lower the premiums so that it is cheaper than any individual who buys it alone. Because we are talking about the poorest of the poor here in Singapore, government subsidies must also kick in quickly and efficiently when health emergencies arrive (which is why the state plays a big role in this adaptation).

The book also mentioned how the women took out uncollaterized loans from ICICI after they have proved their mettle to save to make improvements to their village. Since HDB estates are well-charted for development, there is no much need for such community projects. In that case, my idea for any surplus (meaning any amount left over after adequately covering for all emergencies) would be for small treats to every member's household, such as a top-up to their water and electricity supplies, another fan for each house, or bread and Milo for every family.

The cost of living and cost of business has made the government paramount to any effort to help the poorest group of people in Singapore. We don't have a vast market of untapped bottom of pyramid consumers that allows for an exponential growth of SHGs, something that ICICI has also stated is necessary for profits to be made. And we don't have goods or space that are cheap enough so that a small bank loan is enough to help someone start a small business and thereafter increase his income.

Singapore, has become too rich to afford that.

But now that we know the government's importance in helping the low-income people, can we be sure that the wards that did not vote for white-on-white would get the necessary assistance as well?
(Think: lift upgrading, communal space rental, People's Association, grassroots advisers)