Hand in Hand International: A Holistic Approach to Microfinancing

by Pirkko Juntunen (London)

In the fight against global poverty, microfinance has been hailed as one success story in a field of many failures. As microlending continues to move into the mainstream, men tend to hold the top jobs. But there are women moving up the ladder.

Hand in Hand International, a public charitable trust that works mainly in India with some activity in Afghanistan and South Africa, is a prime example. Headed by Indian national Kalpana Sankar, the organization takes a holistic approach to microfinance, believing that such an approach is necessary to make microfinance a sharper tool in combating poverty.

Ms. Sankar is a nuclear physicist with doctorates in theoretical nuclear physics and gender issues. She has been focussing on developmental issues since 1992. “I was formerly working with the Government of Tamil Nadu in India focussing on micro-finance and poverty reduction in an International Fund for Agricultural Development (IFAD).”

She joined Hand in Hand in 2004 when it had 10 fulltime and 20 part time employees. “The organization has since then reached scale and acquired a new outlook during my tenure as CEO.” Currently they have 5000 on their payroll and 19,000 volunteers working with them. Everyone on the payroll is a local in order to minimize expenses associated with expats and their families.

The Board of HiH has a broad range of committed individuals from different sectors including Mr Percy Barnevik, advisor and former chairman of ABB. According to Ms. Sankar, the diverse board members are the main reason behind this growth and transformation of the organization.

HiH can be likened to a giant educational institution with a business-like approach. The lending is entirely for business purposes and not for consumption and through this they are creating businesses and jobs for the poorest and previously unbankable section of the market.

HiH initially focused on the elimination of child labor, improving education and the empowerment of women. Now the focus is on job-creation and facilitating business start-ups for rural women.

Ms. Sankar says: “The best thing is being able to reach out to families through women and make them self-reliant. The focus of our Self Help Group (SHG) and Micro-finance Projects is to alleviate rural poverty and empower women. It has proven to be successful in Asian countries and I still feel women are marginalized and it is good to focus on women to ensure the gender balance especially in developing countries. Education and empowerment have made a big difference to the perception of the role of women in the minds of men. Assisting women actually helps the whole family, and barring a few disgruntled men, men are generally happy with the developments and we do not expect any kind of a ‘backlash’.”

HiH prides itself on a 99.76% repayment rate (the average repayment is somewhere between 95-97%) on loans. It charges an interest of between 17-18% for its loans. HiH lends only to women. “We tried to lend to men as well. But when the time to pay came we only got excuses. Women do not talk they just pay,” added Mr Barnevik.

The organization has large ambitions. It hopes to create 10 million jobs which will pull 50 million people out of poverty (on average 1 job supports 5 people either directly as family members or as employees of a small business). By doing so, the people behind HiH believe that poverty can be eliminated within 20 years.

“I feel very strongly about poverty and providing a helping hand to poor women and children. I was particularly interested by Mr Barnevik’s vision of a well-run NGO, with a focus on efficient delivery of services needed by the poor without bypassing government institutions. I am enjoying my role and I do face a lot of challenges. While it is very difficult to convince all the stakeholders on certain issues, I do not want to compromise on basic issues like total commercialisation of microfinance operations, since there have to be certain non-negotiables in the functioning of NGO’s like us,” said Ms. Sankar.

“It’s a man’s world and it is struggle for a woman to establish herself irrespective of her intellectual capacity especially in a country like India, which is highly patriarchal, where men may find it difficult to take instructions or report to women. But times are changing. In the microfinance sector, there are many success stories. Women have done exceptionally well as leaders as this program is very close to their heart. Today, at least in elite families, women enjoy equal freedom and respect and we are positive that the situation would improve.”