ROSCAs and Microfinance in Pakistan: Community and Culture

This study uses ethnographic and discourse analytical methods to investigate the socio-cultural settings of microfinance and ROSCAs (Rotating Savings and Credit Associations) in Pakistan. The fieldwork was conducted in the city of Dera Ghazi Khan in Pakistan from May, 2009 to October, 2009. The data was collected through participant observation, interviews and pictures with ROSCA participants and microfinance borrowers. Interviews were conducted, transcribed and analysed in native language and key concepts were examined. The study found that economic and cultural factors were interwoven. It was found that financial discourse was influenced by, and influenced, the socio-cultural settings. The prevailing socio-cultural context shapes the behaviours and actions of users of microfinance and ROSCAs and also, in turn, is reshaped by ROSCAs and microfinance. The principal findings are as follows. ROSCA formations are based on the existing social structure and play a vital role in creating and maintaining communities. Moreover, part of the establishment of a community is found to be predicated on the exclusion of others. Microfinance also draws upon existing social structures but it is a commercial financial system and this commercial discourse of microfinance permeates the various cultural norms and obligations to enable instrumental objectives to be achieved. A widespread discourse of exploitation and vulnerability was found and this suggests that microfinance has a negative impact on the lives of some individuals and communities. On the other hand, unlike micro-borrowers, ROSCAs members do not talk about coercive mechanisms to influence behaviour and, indeed, the greater embeddedness of ROSCAs in the socio-cultural context makes undesired actions, such as defaults, a rare phenomenon.