...from small beginning

Like with many established big ventures, it is sometimes difficult to imagine that they had actually started as a small single step.

Here are two stories of small beginnings:

"In 1971, migrant women working as cart-pullers in the city’s cloth market came to me in TLA, where I had started my work life working for textile mill workers of Ahmedabad. The women who lived on the footpath, were seeking help for better living conditions. Next month came the head loader women of the same cloth market, feeling agitated about very low rates of payment (30 paise per trip carrying the bale of cloth from a wholesaler to a retailer). They felt exploited by the traders. Then followed the used garment dealer women in search of credit facility... That was 1971. Some of these urban, poor, self- employed women workers came to the meeting that I called in a public garden where we formed our trade union (1972). We called it the Self Employed Women’s Association, SEWA."

That was the beginning of SEWA

"Yunus had never met Sufiya Khatun on his many walks through her village. Sufiya, a widow, was trying to support herself by constructing and selling bamboo stools. She earned two cents a day. When Yunus asked why her profit was so low, she explained that the only person who would lend her money to buy bamboo was the trader who bought her final product--and the price he set barely covered her costs.

Yunus's instinct was to dig into his pocket. But first he wanted to see if there were other villagers in similar circumstances. He and a few students canvassed the village and compiled a list of forty-two people whose capital requirements, in order to buy materials and work freely, added up to about $26.00.

Through the years he would recount that story hundreds of times. A decade later, testifying before the U.S. Congress Select Committee on Hunger in a hearing devoted to micro-enterprise credit, he recalled what had gone through his mind: "I felt extremely ashamed of myself being part of a society that could not provide twenty-six dollars to forty-two able, skilled human beings who were trying to make a living."

...that is how the Grameen story started

Are we....?

Ingrid Srinath, CEO of CRY was at here last week, and signed an MOU with XLRI to partner with us for their projects in this region.


In her address to the students, one slide made a lot of sense:


Are we...?

An "Invisible" Revolution... 400 Poor Women/ Hour!!!

"Invisible" people create revolutions that too remain invisible from the sight of most - specially the MSM...

The following is a glimpse into one such revolution, which is happening in India.

Perhaps the best introduction to this phenomenon is this desciption from the preface of The Lights and Shades Study:

"I recall a time in Jharkhand, India in the forest town of Chandwa, sitting with a self-help group under a mahua tree. We ate the mahua’s large raisin-like berries, soon to be turned intocountry alcohol, while a few of the women recounted their story. A well-meaning organization (WMO) had come to empower this self-help group, which had formed on its own about a year earlier. The WMO advised the group that its members would have moremoney if they were to pickle and pack their garden harvests to sell to customers in Calcutta. The organization helped the group with recipes, with bottling and labeling. For several weeks the WMO and the women applied themselves day and night to the task. Somewhere along the way, the WMO lost the group’s savings and never did find a market for the chutney. The women pointed to a houseful of jars as evidence.

Invincible, the group forged ahead, without the benefit of the WMO. Group members met each week, deposited cash savings into a box, then lent the cash to one another for emergency needs. The group fund began to accumulate once again. Some members had helped other newgroups form in the village and they too began to increase their savings. A few groups had linked to a local bank for more credit. Women members were checking into benefits they might receive by connecting to a government programme.

I asked the women what activity might have been more lucrative than chutney production. Several said they preferred to work on their own, not in a group business. Working alone, except for harvesting activities, was less risky than putting all their eggs – their hours - into one basket. Yet they did cite one exception, an enterprise which they found to be most promising if undertaken as a collective. On occasion, together in the night after the children had fallen asleep, they would gather at the railway tracks to remove coal from the parked cars of the local freight train. Several women would stand guard while the others skimmed the goods. The next day they would sell the coal to nearby shops. There was no cash-outlay, justtheir time as a cost. They laughed as they confided their secrets.

Empowerment seemed less like a quaint watercolor of women pickling fruits and vegetables in the countryside, thanks to the benevolence of an empowering NGO, and more like guerrilla survival in a setting where self-help meant fending off assistance whenever possible. This group was pure inspiration – entrepreneurial, full of humor, immune to whatever good intentions might come its way...."

This Self-Help Group (SHG) is only one among the 2.6mn SHGs that spread across Indian villages.

What are SHGs?
Self Help Groups (SHGs) are informal associations of up to 20 women (their average size is 14) who meet regularly, usually once a month, to save small amounts (typically Rs 10 to 50) a month. While they are formed with the encouragement of NGOs and other self-help promoting agencies (SHPAs) such as government agencies and the banks, they are expected to select their own members, and are therefore sometimes called affinity groups. After saving regularly for a minimum of six months, and using the funds to lend small amounts to each other for interest, which is ploughed back into group funds, and satisfactorily maintaining prescribed records and accounts, they become eligible to be "linked" by the local bank branch under a NABARD-sponsored programme called the SHG-Bank Linkage Programme.... On-time loan repayment to the banks has been very high, above 90 percent, and there have been no defaults so far.

Some facts:

Started as a pilot project of 500 SHGs, by Nabard in 1992, they grew slowly. In last 5 years, they have grown 10-fold.

Now, they reach 31mn rural households (out of the 191mn total Indian households).

Of these, about 14mn households are linked to bank credit though SHGs

According to The Lights and Shade Study, overall, 51% of SHG members fall below the poverty line; another 32% are ‘borderline’ (above the poverty line but vulnerable to risk). Scheduled Castes (SC) and Scheduled Tribes (STs), recognised as structurally poor, are 55% of members. Widows, also a vulnerable and under-privileged group, were found to be 10% of SHG members.

, 38% of SHG members work as casual labourers - 29% work in own agriculture, and 17% are engaged in a non-farm enterprise.

74% have no schooling, 11% have some adult education to become ‘neo-literate’, 15% have some schooling (mainly at primary level).

SHGs also represent an antidote to the "Access Denied!!!" phenomenon...

And perhaps also explain the fact that:

In India, there are 400 women, who join an SHG every hour!!!

Cross-posted at Altenative Perspective

The Sensitization Challenge

I had posted this elsewhere before I started this blog. Am binging it here because it fits with the theme of this blog

Here are the excerpts from the The Sensitization Challenge:

...."Voluntarism can also be termed as a study of attitudes. While there is much ado about the need of volunteering people's time and efforts towards social causes and societal development, we have in the past seen the percentage of responsiveness, indicating scope for change.

"25% aren?t even interested to know anything beyond their nose. For example - any person untouched by happenings beside him/her!

Out of the balance 75%,

- 40% are information seekers to wet their souls. They are overwhelmed listening to social issues and talk a lot about them, nothing beyond. For example, retired persons, especially from the Government, housewives and some academicians!

- another 30% would like to involve in " known" organizations, have elements of doubt and limitations of thought beyond "feeding" or helping ORPHANS! They eulogize the Sacrificers of Lives (demigods who run "charitable" organizations), visit these places and are satisfied with the beaming smiles from the "beneficiaries" and go back, hearts full. For example, individual donors.

- 20% progress to give time due to internally driven or externally driven motives, and study projects and their progress and support organizations and causes that fall in line with their thoughts. For example, funding organizations, Lions, Rotarians and their likes).

- 5 to 8 % are more keen, they start organizations themselves - a group of them, for instance, to promote and advocate a cause. They involve greater time, but in isolation work independently to cause pockets of change, with replicable programs and very little interfacing with Governmental or other Service Providing Agencies. For example youth groups, bank employees, corporate staff groups)

- Less than 2% feel the need for interdependency and networking. They understand the dynamics of social change and the possibility to work in tandem with existing systems. They are motivated when they hear about problems, and work within their area of control and influence to bring about model systems of interdependency in their community, tapping local resources, and utilizing it to develop their community with an idea of sustaining the growth, without "patronizing" and increasing the dependency factor. For example local leaders, Facilitating Organizations and individuals).

What about you!!??

The Power of an Idea

30 years back, a young professor of economics went for a walk in a village adjoing his university in Chittagong (Bangladesh). While there, he met a poor widow, Sufiya Begum, who tried to make a living by constrcting and selling bamboo stools. She worked hard the whole day, and yet her daily net earning was just $0.02 (2 cents).

Why?... because she had to take a daily loan for buying bamboos from the local moneylender, who charged exhorbitant interest, and whose lending condition was that she sells her produce to him at a price decided by him!!!

She was poor - not because she lacked skills, or because she was lazy - but becasue she did not have access to her own working capital. All she needed was $0.27 (27cents) to get out of this vicious cycle of:

Low income => No working capital => High interest loan => Low income

The professor gave her 27 cents... but then, also went on to find out how many others in the village lived on an income of less than $1/day. To his amazement - and dismay - he found that there were 42 such able-bodied skilled working people, whose cumulative requirement to end their poverty was just $27!

He gave them that sum as loan, which they could use to break out of the cycle of poverty... and they returned the loan in due course.

It was such a simple solution to end the poverty. Poverty, the professor realised, is not caused by people; it is caused by the system. Much later, he described his first insight through an analogy:

"You take the best seed of the tallest tree from the most fertile forest, and plant it in a small flower-pot. The seed does not grow into the tall tree..." not because the seed was bad, but because it got planted in the wrong place.

Academically, this simple insight had a simple solution. Get the banks to give loans to the poors.

But the banks refused: how can you give loans to people who have no collaterals to offer? what if they default? and since they own nothing, you can't take back anything from them, can you?

Failing to convince the regular commercial banks to lend money, the professor decided to become the "guaranteer" for their loans with the bank. If they default, he would pay the banks - but they did not default!

But this experience led to the second insight:

The commercial banking system works on a premise that the more you have (i.e., as collaterals), the more you get; the less you have, the less you get... and of course, if you don't happen to own anything, that you are forever condemned out of the banking/credit system.

...Like the local moneylender, the commercial banking system imposes its own conditionalities in which the rich become richer - and the poor become poorer.

And thus the the third insight: Create a bank for the poors!

This simple idea led to the establishment of Grameen Bank - the "barefoot bank" - in 1983. The professor of economics, you guessed, was Professor Muhammad Yunus, who was awarded the Nobel Peace Prize 2006 this week... The rest, as they say, is history...

Today, the Grameen Bank:

has 6.6mn borrowers ("poorest of the poor" - including beggars), of which 97% are women

has 2,226 branches operating in more than 71,000 villages of Bangladesh, supported by a staff of around 18,000.

is owned 94% by the borrowers (the rest 6% is with the government)

offers loan without any collaterals, legal instrument, group-guarantee or joint liability

has provided loans of about $5.7bn since its inception

provides loans for micro enterprises, housing, education, scholorships, life insurance and pension funds for the borrowers, disaster loan funds, etc.

has remained profitable all through its existance, except for 3 years (1983, 1991 and 1992)

does not rely on external funding or donations since 1995 (has paid back its loans since then)

has helped about 58% of its borrowers to cross the poverty line

and has a loan recovery rate of 98.85% (the other 1.15% constitute the defaulters on deadlines of payment - not on payment itself)

Perhaps more importantly, the contribution of Prof Yunus was The Power of the Idea:

that the poor are "credit-worthy" (or the reverse: the commercial banking establishment is not "people worthy")

that poverty eradication does happen by handing out "doles" through the top-down subsidies, donations, grants or investments (by govt/IMF/WB, etc.)... In an article in WSJ (Oct 14,'06), he noted:
"...one of our most successful tools for rebuilding businesses is not government handouts, but rather, small loans packaged with practical business and social advice.... very little of the cash so generously given ever gets all the way down to the very poor. There are too many "professionals" ahead of them in line, highly skilled at diverting funds into their own pockets. This is particularly regrettable because very poor people need only a little money to set up a business that can make a dramatic difference in the quality of their lives."

Instead, eradicating poverty requires innovating systems for economic empowerment... By giving the poor that elusive access to the "first dollar that gets you the next dollar."

that there is another model of development that is far superior to the "trickle-down" economic model... That perhaps "the rising tide will lift all the boats" is a merely a myth in the minds of the owners of those few boats who have "access rights" to the tide!

It was this power of idea, that has mobilised a global movement for providing "access to credit" to the poor during last 30 years. There are now:

about 3,100 MFIs worldwide

who service 92mn clients and

about 330mn people from the "poorest of the poor" families

across more than 100 nations

... and are growing in numbers, and innovating new solutions.

----
Cross-posted at:
http://alternativeperspective.blogspot.com/

The Price of a Cauliflower

...an interesting example of the difference between the "physical" and "economic opportunity" distance.

- From where I stay, if I drive a couple of Kms towards the local private airport in the evenings, just before the airport, I find people - mostly farmers from nearby areas - sitting on the roadside. They are the small farmers who come from the other side of Swarnarekha river, sit on the roadside and sell vegetables that they have produced. I can buy a cauliflower from them for around Rs.2/- or less (if I negotiate, I can even get 4 for Rs.3/-)

- Past the airport, I take the right turning, and after about 0.5Km, is the Gudari Bazaar, which in the evenings, becomes a sort of large vegetable mandi. The price of the cauliflower there ranges between Rs.5/- to 7/-.

- The place from where I buy vegetables is Dhatkidih, which is slightly tangential to the above, but within a range of a couple of Kms. I, and others, buy vegetable from the shops, and pay Rs.12-15/- for a cauliflower.

The guy sitting on the roadside before the airport does not have 'access' to mandi - or to customers who will pay Rs.5/- (or Rs.12-15/-) for the cauliflowers without a second thought...

even though
...he is within a range of a couple of Km from both the mandi and Dhatkidih shops, and

...he is the person, who used his land, time and toil to produce the cauliflower in the first place

(cross-posted at Alternative Perspective)

Structure of Opportunities

The other day in my class on Social Entrepeneurship, I had made a reference to the 'Structure of Opportunities' in a society. Opportunities are not equally distributed in a society, i.e., for some of us certain 'opportunities' come easily, while for others they never do - and therefore, the achievements are not always a function of just 'merit' and 'capability'.

"...e.g., suppose, you go to Chashire Home or School of Hope - or a T-Shirt manufacturer, etc. - and give a bulk-order of their produce, so that you can sell it in the campus (or elsewhere), make some margins and share it back with them. The chances are that, if you ask, they may give you the products on credit, simply because you come from a "background". That is, you can do this venture without 'working capital'. Morevoer, you also have an easy access to the 'market' (batchmates, campus people, etc.) to sell these products.

Now, imagine that instead of you, it is one of those construction workers who are there on the campus these days, who approaches the same suppliers (Chashire Home, School of Hope, T-Shirt Manufacturer, etc.), with the same "business plan". S/he will need the 'working capital' and even though being in the 'market' (XL Campus),his/her access will not be as smooth...

This difference would remain irrepective of the "ability" of the person...

Around the same time, Thanks to Annie's post on HTOHL, I came across this insightful listing by "M." about these 'opportunities' (or as she puts them 'undeserved privileges') on her blog.

This is a list worth looking at. Social Entrepeneurship essentially involves creating access to these and similar 'opportunities' for those who don't have them...