Published Since 1961	Thursday, February 03, 2005	Net Edition
Micro and the megacorp SHGs need corporate help to go up the skill-and-sell ladder
SUNIL KUMAR
Posted online: Sunday, January 30, 2005 at 0000 hours IST

Microcredit schemes were started with the objective of promoting entrepreneurship among the rural poor, especially women. But success has been the exception rather than the norm. “Microcredit and self-help groups (SHGs) have so far been able to cover only the first mile and thereafter they have withered,” rues Ranjana Kumari who heads the Centre for Social Research.

Her views are shared by Prabhat Labh, project director, Care India. “Microcredit and self-help groups (SHGs) have been very instrumental in helping women come out of their closet and meet the world. It has helped them meet their day-to-day consumption needs and encouraged them to venture out and explore opportunities. But beyond that it hasn't been a very happy journey,” says Mr Labh.

The numbers tell the story. Today there are more than a million SHGs with Rs 40 million floating among them. “But less than 30% of them have availed the credit a second time,” adds Mr Labh. Though, SHGs and microcredit are cited as a highly successful experiment, the world over, some have also cast their doubt on its success. “There are two ways to measure the success. Most measure it in reference to the repayment of the loan. It may been a great success from the bank's point of view but has it also translated into upliftment of those involved? Not as far as rural enterprisation is concerned,” says Ms Kumari.

Where is the market?
Though efforts have been made in the past, “the absence of forward and backward linkages have let them down,” says Ila Bhatt, founder of Sewa, one of the few successful enterprises with the given model. Ms Bhatt credits the success of her organisation to its background. “Ours was basically a trade union. We followed it up with marketing cooperatives. So we have made it through with a joint action of union and cooperatives,” she says. But unlike her organisation, the small SHGs fail to get the market for their produce. Hindrances range from transportation to proper packaging and a proper marketing strategy but the result is the same: failure to compete in the market.

Absence of other support
Ms Kumari cites another example. “One of our experiments was a huge success. Varanasi has a huge market for flowers, 80 tonnes everyday. So we formed SHGs to produce flower and it went on well. Then we planned to diversify and stepped into goat rearing as well. But it was a disaster. Following the rains, the goats were infected with a disease (galmotha). This soon took the form of an epidemic and the entire goat population was destroyed. Since the women had no insurance cover, they suffered huge losses.”

Many other SHGs meet similar fate: lack of doctors, full and proper knowledge of the subject, absence of training, poor management, the list can be endless.

“In many cases it is just an assumption that credit will lead to microenterprises, but without other back-up support and escort services, it is just next to impossible,” says Mr Labh.

We want...
It is here that those involved see a role by the corporates. “We see that lack of training inhibits the participants from doing business on their own. In the long run, it also affects the very sustainability of the SHGs. Members of the SHGs need entrepreneurship and skill development to ensure a regular income,” says Ms Kumari.

“Corporates could play a crucial role in capacity building. They have so much to offer with their expertise in management and marketing,” adds Mr Labh.

Ms Bhatt sees corporates bringing the small, fragmented and scattered SHGs together to form some kind of federation. “This way they can benefit from the economies of scale while procuring raw materials, or in anything else. As a federation they can also enter into tie-ups with any organisation for anything. At the end of the day, these microenterprises need to be competitive to stay in the market,” she says. “Further, corporates can enter into buyback arrangements for SHG products, as marketing is the biggest problem,” she adds.

Corporate hijack
Says Mr Labh of Care India, “It's a one-way road for corporates at present. This may not work in the long run. There is a need for a two-way relationship.”

“The corporates have actually used the SHG route to further their own interest, often at the cost of rural enterprises. They use these SHGs to market their products and make inroads in the rural market. While this does help in income generation for women, it also monopolises the market, in fact destroying the small scale and cottage industries who find it difficult to compete with MNCs,” says Ms Kumari.

Perhaps a separate e-chaupal for SHGs is the answer? Any takers?