SHGs: Bridging Social Capital for Livelihood Improvement
A group of women with strong social ties form Self Help Groups (SHGs) to collectively save and lend money to each other. These women share intimate knowledge, high trust levels, and common values about appropriate actions, which ensures timely loan repayments due to the value embedded in their relationships.
The term for the financial advantages that SHG members gain from these strong social ties is social capital, which comes in two forms: bonding and bridging.
Bonding social capital emerges from the strong connections within SHG members, creating a network of "people like us" (PLUS), while bridging social capital connects diverse individuals. Linking social capital, on the other hand, arises when SHG members form connections with influential individuals or entities, like the government.
Unlike bonding social capital's strong ties, bridging social capital involves weaker connections, leading to different financial outcomes for SHGs.
Bonding social capital permits SHGs to deal with particular challenges, such as coping with the vicissitudes of life by pooling money and lending to members. This social support enables SHGs to stay where they are, not get ahead in life. To get social leverage from social ties, bridging and linking social connections have to be cultivated.
Bridging social capital can enable SHGs to improve their lives beyond maintaining their current status, necessitating government policies that foster the development of these connections for income enhancement opportunities.
There is no universal strategy to develop bridging social capital in SHGs; a tailored approach is essential where the touch point is the SHG. Strategies should vary based on the nature of SHGs' income-generating activities, as follows:
Households having pre-existing businesses
Households already having that already have micro-enterprises will require social ties that provide more than mere emotional support and everyday favours. Bridging contacts are required, which can help them to get a crucial new idea, news of an impending market downturn, or provide political and managerial access. The value of such bridging networks lies in the fact that they are not passive bridges, but are active links relaying important information, and are also capable of endorsing (vouching for) the poor having who have limited access to money and other scarce resources.
Households with little propensity to do business
Households with hardly any experience of doing business would require linking social ties, as a first step, for training and other hand-holding support. For example, several of these households will be constrained by the lack of formal schooling/language skills and “public life skills”. The deployment of digital technology will allow households to leapfrog the conventional way of teaching in classrooms. Research increasingly points to the contribution of such linking social ties to help the poor expand their opportunities, for example, getting jobs through external contacts.
Households with a high inclination to engage in income-generating activities
These households will require tailor-made training aligned to the specific needs of individual households/SHGs. For example, linking social ties with banks/financial intermediaries would enable these households to locate funding sources to meet their complete fixed and working capital needs.
A contextual policy would aim to enhance SHG members' livelihoods by recognizing that social capital is unique and comes in varied forms. Unlike other forms of capital, social capital is freely accessible to the poor and the common availability differentiates it from other forms of capital. Current policies mainly support bonding social capital, helping SHGs navigate life's challenges without advancing. To empower SHG members, targeted development of bridging and linking ties at the household/SHG level is crucial.
