For those of you that are familiar with the work of Upamanyu Chatterjee, the title of this post should bring back memories of one of the worst books ever written by an Indian, or for that matter any writer. But I thought I’d use the name anyway, since it so aptly summarizes what Reuben has said in his recent post on micro-credit. Reuben and I usually don’t agree about most things, but I’m completely with him on his attitude towards the Nagammas of the world. I’m using an extract from what he said before expanding on a few of the points he’s made:
I think the fundamental problem with the thought process is the conflation of real entrepreneurship with micro-entrepreneurship. Entrepreneurs of the Nagamma variety are forced into entrepreneurship because they have no other alternative. In other words, survival becomes entrepreneurship. That does not mean, however, that Nagamma possesses the skills required to be a real entrepreneur. True entrepreneurship is a specialized skill which requires a very high degree of risk-appetite, and I’d argue that less than 1% of the population have these skill sets and risk appetites…>
There is no point imagining this small guy sitting outside is somehow going to become the Starbucks of the chai business in India. Miracles do happen, but not with the regularity required to solve the problem of employing the poor in India. In other words, what needs to grow is the formal sector, which alone has the scale to absorb people in large numbers with reasonably paid jobs…>
While I fully agree that much like the Stree Shakti endorsed by the government, simply showering micro-finance on the Nagammas of the world will cause more harm than gain, I do believe that micro-finance will work if:
1. You bolster it with skills-training, knowledge-transfer and marketing support.
2. You abandon the notion that the Nagamma in question is the real entrepreneur sitting at the heart of your success story.
Take for instance the case of ten women I met while in North Karnataka at the beginning of the year. These women had time on their hands after their husbands had left for work and their kids to school. They had money saved away in the bank as part of the Stree Shakti scheme they were under, but didn’t really know what to do with that money or their time. It happened by accident that a bunch of students from the National Institute of Fashion Technology were holidaying nearby and met with these women. As bananas were a staple crop in the area and the women were conversant with creating paper out of treated banana fiber, the NIFT students asked them if they would like to learn how to make banana paper lamps. This was a couple of years ago, since then, students from NIFT visit the group regularly and share with them new designs and techniques in lamp making. These are then distributed through a network set up, in part by the NIFT, to various retail outlets across the country – FabIndia being one of them.
Though this merely illustrates a series of happy accidents leading to a solitary success story of ten women in a small north-Karnataka village, it also indicates the possibilities of a scenario where micro-finance when bolstered by training, access to infrastructure and marketing networks leads to the creation of a robust entrepreneurial environment in areas that have never even attempted to work outside of the agricultural framework.
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