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Microfinance
2008-04-28
A visit to my hometown triggered me to explore the answer to the following questions: What do people at the base of the pyramid really want? Is it empathy or sympathy? What should a social entreprise aim to create?
About three weeks ago, I was in my hometown to spend a weekend with my family, as it was a long weekend to celebrate the Hindu New Year (called Ugadi in this part of India). There was also another reason for my visit – my nephew turned one that weekend. I always look forward to such regular, short visits to my hometown, not only for the time that I get to spend with my family but also for the gentle pace of life there. Davangere, a district headquarters located at the heart of the Southern Indian state of Karnataka, is a city of nearly 450,000 people. It serves as a commercial hub for the collection of smaller towns and villages around it. It used to be a textile hub once, but cheaper Chinese clothes put the local textile industry out of business. However, the city moved on to become a trading centre for agricultural products and more recently, an educational hub. The first thing that you would notice about the city is that it is always abuzz with a lot of activity – commercial or otherwise. A walk around the older and newer parts of the city makes one realize that its people are smart and savvy, if not as cosmopolitan or westernized as their counterparts in Bangalore.
I had read the Berkeley Bottom line’s posts about Skoll World Forum 2008 on their Social Edge blog and I was particularly intrigued by Mike and Omar’s posts on the session titled ‘Empathy and Ethics: Drivers of our Shifting Culture’. The posts triggered a lot of questions in my mind about what do people at the base of the pyramid really want. Is it empathy or sympathy? Of course, there are several answers to such questions in various books, but I decided to use my time during my hometown visit to find out if I can get the answers from people who comprise the ‘base of the pyramid’.
First up was the maid in my home. She hails from a nearby village and though she loved going to school as a child, she was forced to drop out by the time she was 12 and sent to work by her family. She, now in her 30s, has learnt quite a bit of English and is really good at everyday math. ‘I don’t need anybody’s sympathy’, she says, with an element of self-pride, ‘I only ask for enough opportunities so that I have a fair chance to lead a comfortable life’. She says she will happily move back to her village if there are enough opportunities there for her to make a decent living.
I then spoke to a man who works as a waiter in a small local eatery (which serves delicious ‘Benne Dose’ – Butter Dosa, a local speciality). He hails from a village in North Karnataka. He had the exact same things to say as my housemaid. I then spoke to a construction worker and a teenager who works as a helper in one of the numerous agricultural trading shops. Their opinions were the same.
I know that this exercise is not a systematic survey and it is hard to draw conclusions from it. However, the one thing that struck me was the fact that many people at the base of the pyramid want us to create only opportunities to them. They don’t ask for our sympathy. Western travellers and Indians raised mostly in urban centres carry a different image of the base of the pyramid – that of a group which expects sympathy. It’s probably not their fault. They only get to meet beggars in Indian cities and end up thinking that the entire base of the pyramid wants sympathy. However, empathy and a drive to create opportunities for them are the need of the hour. And this is what a social enterprise should am for. It is also probably true that a market-based approach to social entrepreneurship can bring in large-scale changes at the base of the pyramid and I shall explore that in a separate post.
I now appreciate C K Prahalad’s book on BOP – with all its perceived flaws - more than ever. I admire Muhammad Yunus and several others in the Microfinance sector. I now support social entrepreneurs even more strongly.
2007-12-18
Celebrating entrepreneurial spirit at the base of the pyramid
Sonalben Rajebhai Parmar’s life story seems to be taken straight out of a ‘70s Bollywood masala movie with a quintessential rags-to-riches story. From being a wandering daily wage labourer to running a successful retail business in Gujarat’s remote Nani Rabdal village, Sonalben has not only turned around the fortunes of her family but has also become a role model to several women in the village. Shaheeda Begum, a resident of the holy city of Banares in North India, turned her husband’s struggling cloth weaving shop into a profitable, branded apparel-making business. Nipu Bhattacharjee of Assam was once a school drop out but now runs a highly successful oil manufacturing business. Krishna Amin from Udupi in Karnataka, who once struggled to support his family due to his meagre income, not only runs a successful construction material supplier business now but also funds eye surgeries and healthcare for the poor.
What is common to all these men and women? They are all successful Micro Entrepreneurs who built sustainable businesses using micro-credit and are also recipients of the 2007 Micro Entrepreneurs Awards presented by Citibank’s Citi Foundation in collaboration with a Delhi-based NGO named Partners in Change. A ceremony to honour the 2007 awardees was held in Mumbai recently.
Since its inception in 2004, the Citi Micro Entrepreneurs Awards program has recognized and awarded several entrepreneurial talents at the base of the pyramid. This year, 11 worthy winners were chosen from an applicant pool of more than 1000 micro entrepreneurs. Women accounted for nearly 50% of all the applicants, indicating micro-credit’s popularity among them. Among the winners, apart from Kusum Tanwar of Delhi, all the others come from semi-urban and rural areas. A press release from the Citi Foundation says: “The awards were classified in three distinct categories- National Winner, National Runner-up and Social Responsibility. Keeping in mind the social, cultural and economic challenges in different parts of the country, awards in each category were presented to winners from four regions- East, West, North and South. Each National Winner of the 2007 Citigroup Micro Entrepreneur Awards received a cash prize of Rs.200,000/-. The National Runners-Up and winners in the Social Responsibility category received prize money of Rs.100,000/- each. NGOs, which nominated the awardees, received a special citation commending their efforts”.
The Citi Micro Entrepreneurs Awards program is a fantastic initiative that encourages entrepreneurship as a driver of social and economic change at the base of the pyramid. The program also provides us with real-life examples to understand the tremendous amount of impact that micro-credit can have at the base of the pyramid.
Here’s wishing everyone a happy holiday season! Merry Christmas!
2007-10-15
Reaching out to 500,000 households and more
At around the same time when the takeover battle for the Netherlands-based ABN AMRO Bank came to a close in Europe, with a Royal Bank of Scotland-led consortium clinching a $100-billion deal, the Dutch bank's Indian arm quietly celebrated its success in Microfinance after reaching out to more than 500,000 households in India.
ABN AMRO, which has a very small presence in India’s retail banking space, initiated its Microfinance program in 2003 and this program has grown by more than 100% every year since then. The bank’s microfinance business broke even in the very first year of its operation and seems to be well on its way to reach its target of reaching out to more than a million households in India by 2009.
ABN AMRO was among the first mainstream multinational banks to enter the microfinance business in India. Other banks such as HSBC and Citibank followed suite. Private Indian banks such as ICICI, HDFC and more recently, the state-owned State Bank of India, have also been actively pursuing microfinance. ABN AMRO delivers credit to rural households through Microfinance Institutions (MFIs) and it currently partners with 29 MFIs in India. The typical loan size is Rs. 6000 - Rs. 10000 ($150 - $250).
ABN AMRO also hosted a workshop on "Electronic banking in microfinance" in April this year and plans to offer electronic banking (e-banking) services to rural customers in remote areas of India, soon. The bank has also been presenting "Microfinance Process Excellence Awards" since 2004, together with PlaNet Finance India. According to Moumita Sensarma, Head of Microfinance and Sustainable Development at ABN AMRO India, whom I met in Mumbai a couple of months ago, microfinance is both business and social responsibility for the bank.
It remains to be seen if this focus on microfinance will stay once the RBS-led consortium completely takes over ABN AMRO.
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