Indigenous mobilization of resources by community credit union could be an effective model to arrest the poverty trap and community development at local and regional level.
By Surendra R. Devkota
Historically, Nepal is one of the richest countries in terms of social, cultural, and ecological capitals with the exception of the human and economic capitals. Though contemporary modernization paradigm exclusively upholds the economic capital, strong influence of modernization sprouted and injected in cities seems to relegate other forms of capitals. In fact, other forms of capitals are also equally important that complement to socio-economic development. But a very false impression of modernists that economic capital will substitute other forms of capitals is ruining our social values and beliefs.
Capital is a contentious conception as Marx outlined in the classical theory of capital, which emerges out of social relation between a capitalist and labor; whereas Adam Smith’s neo-capital theory relies on human capital. In simple terms, capital has a potential either to produce profits or to reproduce or both. Unlike economic capitals, socio-cultural and ecological capitals are primarily non-marketable. Nevertheless, how non-marketable goods and services like social capital can be made marketable is a challenging task.
The belief of social capital is intensifying with respect to humanity. In general, social capital resources include trust, norms, and networks of association representing any group. It is an investment in social relations with expected returns in the market place as Nan Lin defined in his “Social Capital”. The neo-Marxists believe that social capital is a sort of individual dominance of a certain privileged class to maintain its hierarchy, whereas advocates of neo-capital theory believe that social capital is a public good. The collective assets, hence, should be available to all members of the group.
Nepal is proud to have many forms of social capital, and contemporary sociologists and anthropologists have enlisted their characters elsewhere. In a broad sense, our social capital may be categorized broadly into two groups: Traditional model, and Modern model.
i. Traditional model
The Chattis Mauja irrigation system developed by local Tharus about 150 years ago in Rupandehi district is considered as a global model of our social capital being transformed to economic capitals over the period of time.
The traditional model of social capital in Nepal is mainly based on the diverse ethnic communities such as Gurung, Magar, Tamang, Thakalis, Rai, Limbu, Tharu and others. The Central Bureau of Statistics (CBS) estimates that there are 61 indigenous nationalities: 21 in the Mountain, 23 in the Hill, 7 in the Inner Terai, and 10 in the Terai regions. Each ethnic community has unique social network, and exhibits different social norms and rituals. One of the commonest approaches is formation of an association of ethnic members, and help each other during the period of social rituals and crisis that may include marriage, death, assisting to building or repairing a house, and public buildings. Further, it also helps to poor member of the association by providing some investment incentives. Members of such associations will maintain their credit by paying off the debt in due course of time. Such ethnic associations truly exemplify the notion of social capital, and it has been utilized for economic gains at the local level as well.
The other traditional model of social capital is Guthis – a homogenous association of certain tribes or castes such as Newars, and Bahun- Chhetris. In many societies, Guthis were established by the family altruists which could be of either physical property like land, temple, or monetary. But, in recent years, for instance, there is a decline of social obligation of elite members of the Guthis who deceived their economic transaction to other members, and resulted in the bankruptcy of the fund. There are many instances where so-called elite members had also seized non-monetary property of the Guthis. Since the law of the land did not bother to investigate such misuses on common trust, people simply lost faith in the Guthis. Moreover, there are plethoras of examples that government has been unable to keep the public Guthis intact. On the other side, in some ethnic communities, where people have maintained a common trust among the members of the Guthis, all members have got an opportunity to be better off. Examples include the Newars communities that have a strong accountability in their Guthi system.
Another example of a traditional model of the social capital in Nepal is farming activities. In many areas, farmers still practice a barter system and society is greatly dependent upon mutual trust between peasants and farmers. Farmers have been following a long tradition of managing the water resources in such a way that all downstream households will be better off by cooperating each other. They share a common vision of betterment in terms of equity and efficiently allocating resources. Farmers managed irrigation system at local or regional levels are very successful models of both agricultural development and enhancement of social capital. The Chattis Mauja irrigation system developed by local Tharus about 150 years ago in Rupandehi district is considered as a global model of our social capital being transformed to economic capitals over the period of time.
ii. Modern model
Modern model of social capital in contemporary Nepal includes forest management by local community by forming forest users’ group (FUG). Different aspects of the community forestry have been discussed elsewhere. Essentially, the community forestry has gained all forms of capitals: social, ecological and economic and enhanced strong sustainability model. FUGs are trying to reverse the phenomenon of “the tragedy of commons” based on their social structures, and values. Local people are building up their social capital in order to enhance the natural capital through a game of cooperation. Real faith on the fact of forest preservation emerged only after local people got some legitimacy. Now, they could get not only the direct forest products like fuel wood and fodder, but also benefited by the other indirect use and non-use values of forests like improved local micro-climate, resilience of greenery and bio-diversity. People in different regions are experiencing the resilience of the local ecosystem over a period of one decade. Local people are taking not only the interests from the forest, i.e., fuel wood, food and timber, depending upon the harvest rate, but also are committed to increasing forest stock – a capital enhancement. FUGs in Nepal are flourishing based on the real human behavior, whereby maximization of self-interest as an economic man is replaced by the community interest, since economic man does not represent the true human nature.
Future model:
Both prototypes reveal that Nepalis have pioneered in their social trusts and transactional behaviors. Further, the traditional social trust and activities need to be revitalized by integrating contemporary philosophy of social equality, openness, and inclusiveness, so that a heterogeneous social structure will evolve that will be able to drive socioeconomic development at local/regional level. One of the options could be establishing a community credit union at the local/regional level in order to satisfy the demand of capital vis-à-vis break the vicious circle of poverty. Though poverty alleviation has been a sole mantra for many decades poor are getting poorer due to paucity of resources and deprived opportunity of building their human capital. Injection of foreign loans and resources has yet to reach to them. Meanwhile, indigenous mobilization of resources by community credit union could be effective model to arrest the poverty trap and community development at local and regional level.
In general, credit union is an important tool for economic growth in urban centers, where resourceful agent can easily take advantage of it. But, in the context of Nepal, city based financial institutes rarely make appearances at the rural areas for their profit maximizing motives, and they should not be encouraged to siphon off rural credit also. Hence, there exists an indigenous alternative that is community owned and managed credit union at rural areas. The structure of community credit union could be an extended model of community forestry or irrigation system or any ethnic association, but it must be accessible to all members of the society. In other words, it will be a community owned credit union for community development. Its mission is not to maximize the profit, rather to minimize social inequalities. It will basically complement to the socioeconomic development at local level by mobilizing local resources. Pierre Bourdieu, a pioneer scholar of social capital, mentions that since economic capital is the root of all forms of capitals, credit unions will try to convert their socio-cultural, ecological and human resources into economic capital. Initial endowments could be in terms of both monetary and non-monetary resources accumulated at local level. For example, capital gains from community forestry could be mobilized. Local social entrepreneurs and farmers need to be encouraged so that resources will be utilized properly. Trading between or among the community credit unions could be another source of the revenue at the regional level. Community credit unions can be initiated without any outside funding, but they must be protected by laws so that they won’t be other examples like city based fraud financial institutes, Guthis for elites, and rural savings scheme of the Panchayati regime.
The existing constitution lacks provisions related to rights of economy, socio-cultural, and ecology, and accountability at local level and does not grant as well as protect social capital. Henceforth, people oriented constitution is an urgent need that empowers people in real sense and revitalises their different capitals in order to foster the social sustainability of the Nepali society in the 21st century.
(Dr. Devkota is a Faculty at the World Learning, Vermont, USA. Views expressed in this article are based on his research paper on marketing the non-marketed goods and services. Please send your comments/suggestions to [email protected] or [email protected])
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