Since the theoretical discussion of institutions and institutional change in the NIE, historical institutionalism and new economic sociology are very broad, it was necessary to look for an intermediate framework through which to investigate rules and norms and how they are operating at the group level. As outlined in the previous chapter, Ostrom’s (1990; 2005) framework for analysing collective action institutions offers a useful tool because, savings groups are indeed a form of collective action and the focus of SG interventions is on enabling these to operate more effectively. Ostrom’s action arena consists of the actors (participants) and an action situation. In this study the action situations are the saving group meetings and other interactions that the SG group members have because of the SG activities or responsibilities. Actors are the group members. However, as noted earlier, Ostrom’s framework for analysing action situations does not include an external intervener. In the case of savings groups the external intervention is undertaken by the implementer (CARE) and the trainers it introduces to train the groups, even though it can be argued in line with Boettke et al.
that whereas the some of the rules were “exogenous”, perhaps the trainers the “indigenous”
introducers.
Ostrom’s approach offers two dimensions for analysis. First it offers a specific categorization of the types of rules that a collective action situation must have in order to operate effectively.
These were listed in their general form in the previous chapter, and can be more specifically applied to the case of SGs in order that the study can proceed to identify the rules of the action situation, as follows:
• Position rules define what positions groups have which in savings groups are the positions for example of the chairperson, secretary, treasurer, members etc.
• Boundary rules or exit and entry rules define who is eligible to enter a position for example to become a member or become a chair. Boundary rules also determine through what process potential participants enters and how the individual may leave a position e.g. some groups have a limitation how long the same leader can remain in the position.
• Choice rules specify what a group member in a particular position, e.g. chairperson, secretary, or member must, must not or may do.
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• Aggregation rules determine whether single participants can make the decision or whether several and all participants are needed to support the decision.
• Information rules determine how information should flow between participant, what information should be communicated to members and what information should not be shared with non-members and in what form should the information be communicated, for example, in financial records, minutes or just verbal communication.
• Payoff rules determine the rewards (incentives) and sanctions to specific actions that have happened, in SGs this includes the way loans are allocated and the share out is made.
• Scope rules are outcome targets that regulators would set for the collective action situation. In savings groups scope rules might be (financial) performance targets that the trainer or the group itself has given to the group.
The second dimension Ostrom (2005) offers is the design principles for robust collective action institutions. However, four of the eight design principles are not so central to the analysis of SGs and the groups could not be clearly differentiated based on these four design principles. The first design principles, clearly defined boundaries are self-evident in the case of SGs in the sense that it is the members that save and borrow that are within the boundaries and the members are outside of the boundaries. Although occasionally groups do lend to non-members, this is as non-members so there is no difficulty in identifying this boundary.
Regarding the second design principle, the proportional equivalence between benefits and costs, this is also rather clear: members invest time in attending meetings, invest their funds in the group and can borrow a multiple of their savings so that again the relationship between their costs and benefits is fairly straightforward and does not bear similar levels of uncertainty to that involved in managing and maintaining common property resources. Regarding the seventh design principle, the minimum right to organise, this is certainly the case and in fact SGs were encouraged and are able to register with the government’s Ministry of Culture and Social Services which gives groups certificates of registration. The last design principle did not apply to SGs since they were not designed to be or in fact directly nested into a larger system.
Hence, the analysis will proceed by focussing on Ostrom’s third, fourth, fifth and sixth design principles.
The following adapts the four principles to the specific case of savings groups:
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• Participation: Whether the savings-group methodology has enhanced the participation of those involved in making key decisions in the group?
• Monitoring: Who is monitoring that the group rules are followed and do they face appropriate incentives given the challenge of monitoring?
• Sanctions and enforcement: What are the sanctions that the group is authorizing and can they be adjusted so that someone who makes an error in a small rule infraction is sufficiently warned so as to ensure longer-term compliance without our trying to impose unrealistic sanctions? And are sanctions graduated in the sense the more serious the offence against the group, the more serious is also the sanction? For example if the loan is late by a week, is the member warned but if the loan is late by three months, are her assets confiscated?
• Conflict resolution: What local mechanisms exist to resolve conflicts arising over the use of savings group resources?
The categorization of rules and the design principles capture her analysis of what is needed for collective action institutions to operate effectively and so offer a first basis for the analysis. It allows the analysis to explore, first, what rules are in existence and, second, what the dynamics around their introduction and operation are. Through this the dynamics of participation, monitoring, enforcement and conflict resolution can be determined.
There is a wide literature that examines participation in development practice pointing out the problems and pitfalls. As White (1996) has noted this can result in very different outcomes ranging from it being purely of a nominal form to genuinely transforming that when carried out in an unsatisfactory way, participation or lack of it can reinforce exit. Indeed, Cooke and Kothari (2001) claim that the advocates of participation do not deal properly with the issue of power and unequal power relations are highly problematic for participation, but Ostrom does not problematize her design principle. . While participatory interventions are supposed to be bottom-up and empower the poor, Cooke and Kothari argue claim that participatory interventions often tend to be top-down and reproduce “dominant power structures” (Cooke and Kothari 2001, 171) In some case local communities “ask for what they think they will get” in others “development partners are able to project their own various institutional needs onto “ recipient communities (Cooke and Kothari 2001, 24).
However, there are other authors that claim that participation is not necessary “tyrannical” and can be empowering. The collection edited by Hickey and Mohan (2004) is a response to Cooke
69 and Kothari’s work and claims that participatory approaches can also be transformative. The starting point for Hickey and Mohan is that politics matter. They claim that “understanding the ways in which participation relates to existing power structures and political system provides the basis for moving towards a more transformatory approach to development; one which is rooted in the exercise of a broadly defined citizenship” (Hickey and Mohan 2004, 5). The way Ostrom describes the process of participation indicates that she expects participation to be transforming because in her models participation has the ability to achieve effective organisational structures. However, Ostrom does not share Cooke and Kothari’s starting point that politics matter, and does not explicitly deal with how power structures underpin and influence the quality of participation.
Ostrom pays particular attention to the biophysical and material conditions in which the collective action arena is operating as these are clearly central to the natural resource common property situations with which her analysis was primarily concerned. In the context of financial arrangements to provide social insurance, Platteau (1997) argues that the nature of these arrangements is affected by the interaction they experience as a result of their livelihood activities. For example, that in agrarian societies there is more likely to be balanced reciprocity than conditional reciprocity (i.e. social insurance) when these interactions are less frequent.
Hence biophysical and material conditions might also impact the operations of the groups and their rules and norms in rural areas that are frequently affected by drought. However, since the inquiry will be undertaken in areas which are not hugely bio-physically diverse, that is, the agricultural activities are somewhat but not hugely different, this may not be a strong feature of this study.
Moreover, the aim of this analysis is not just to understand whether the design principles work or not, but through the analysis of social relations and social embeddedness to understand what the influence of these is on how the design principles work. As pointed out in the last chapter, these aspects are subsumed into her category entitled “attributes of community” but are attributes to which this analysis will play much closer attention. As has been shown in the discussion of informal financial groups in Chapter 1 and the discussion of social embeddedness in Chapter 2, there are a range of social relations that might affect the way the institution is operating. For example:
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• What role do the social and cultural practices of different ethnic groups play in explaining differential group performance - for example, do different ethnic groups have social or cultural practices which support the implementation of some rules more than others?
• What is the impact of gender relations on rule implementation, monitoring and enforcement? This includes not only how gender differences affect the ways in which rules are implemented, monitored or enforced but whether the mix of men and women in groups affects how this occurs.
• What is the effect of kin relationships on the performance of groups? For example how are rules enforced between members when their relatives are also in the groups?
• What is the role of differences in wealth among group members on its performance
Ostrom’s framework therefore offers a starting point for a focussed and in-depth analysis of the SGs with a focus on the rules in use, the extent to which the design principles are in operation, but one which will be enhanced by a much stronger on the “attributes of community” in terms of the social relations and power dimensions at work in their operation.