Livelihood and microfinance

We, as a country, have come a long way in meeting the financial needs of the poor. We are witnessing a transformation of micro-finance as a growth industry. More and more women are mobilized into SHGs all over the country. They are further mobilized into higher order federations. Bank linkages are growing rapidly. Some banks have started to offer cash credit lines of Rs.5 lakh per group. Credit Cards to farmers, weavers etc., are not uncommon now.




While a lot more poor still need to be reached out with access to microfinance services, and some more services can be loaded onto microfinance bandwagon, many a poor and their organizations are struggling to find ideas to invest the funds in remunerative activities. The problem moves from the lack of funds to the lack of ideas to invest the funds. The sector moves from the microfinance to microfinance plus all across. Each one is exploring the ‘plus’. The ‘plus’ may include insurance, loans and repayments in kind, food loans, businesses by the groups and federations themselves, public services for fee etc.



Most of us, who are and continue in the development sector, are essentially livelihoods workers and their intent is to ensure that everyone including the poor have a decent portfolio of livelihoods. The livelihoods are a play of six capitals – natural, physical, social, human, financial and spiritual, within the four contexts – ecological, techno-economic, patterns of distribution of capitals and patterns of investment and expenditure, resulting in four arrows – income, expenditure, employment and risks. The livelihoods interventions are at the level of one or more arrows, capitals, contexts and/or a combination thereof. Thus, the intervention resulting in enhancing livelihoods may happen with information, knowledge, skill development, infrastructure, access to finance, collectivization, access to storage, technology, value-addition processes, direct reach out to the market/consumer, risk diversification, minimum assured returns, etc. Therefore, the livelihoods interventions range from extremely simple actions to extremely complex sets of activities. Thus, microfinance activities are a small subset of the large livelihoods domain. Microfinance plus ways are expanding this subset to an extent.



Microfinance activities have become fairly systematic and the processes have become ‘standard’ for easy replication and scaling-up. The communities have responded well to these processes and are endorsing them with 99%+ repayment rates. The investors and the bankers are responding with increased investments for microfinance. It is able to attract a good number of human resources into it. The remunerations, it is able to pay, are comparable with the corporate sector. Bright and young minds are getting attracted to give a try.



Livelihoods activities are too large in number to attempt any standardization and/or systematization. For example, a small village of 100-200 families may have a number of crops, some once a year, some twice a year and sometimes thrice a year. It may have some plantation crops and some horticulture crops. It may have some trees and some fruit-bearing trees. It may have fisheries and produce a variety of fishes. It may have livestock including sheep and goats, cattle, buffaloes etc. It may have handlooms and handicrafts. It may have stone cutting, bidi rolling, and other miscellaneous activities. There may also be some support services like transport, trade, education etc. The people may be casual labour, skilled labour, self-employed, enterprise owners etc. Some may be full-timers and some part-timers. Some may not be engaged in direct income generation activities.



We have very few people who can appreciate and support these livelihoods in toto. In fact, there are very few who can appreciate and support a single value-chain in its entirety. The so-called experts master a bit of the value-chain. Yet, the poor and their collectives cannot afford them.



Some elements in the way forward for enhancing the livelihoods of the poor include organizing women and youth around savings, credit and micro-insurance into SHGs and their higher order federations; undertaking participatory livelihoods planning appreciating livelihoods current reality, gaps and opportunities; facilitating bank linkages and convergence with other programs to realize these plans; organizing people around livelihoods activities; organizing shops that sell essential items; building skills of the youth for meeting the services required; exploring employment opportunities outside and providing training; and building human resources for working in the people’s institutions.



The way forward gets further complicated when we contemplate about the people whose lives and livelihoods are threatened and affected by disasters. A variety of disasters and crises are looming large. This gets further amplified in many an ecologically fragile and marginalized zone. This further gets fuzzy for the poor with globalization, liberalization, privatization and climate changes.



In this dynamic context, we, the ‘blind’, should ensure that all the ‘blind’ come together and unravel the ‘elephant’ first, and explore the solutions. We need to reach the ‘ant’ when the ‘fish’ does not dry-up (as in the seven fish and the ant story). We need to recollect the sane advice of Seattle, the Red Indian Chief of conserving and living sustainable livelihoods.



As the pace of life is dramatically faster than what our grandfathers had, the most prominent issue is how we could offer ‘metafishing’ skills to the community, in addition to offering ‘fishing’ skills, in stead of offering fish. This is the need of the hour. The entire country and the world have to gear up for this effort. And I understand that this takes time, may be 10 years or 20 years. This can begin with appreciation of current reality and pooling up knowledge-skills-resources in people’s domain with K-S-R in our domain and outsiders’ domain. This in turn generates a variety of informed choices for the community to choose from. The community implements the plan so developed. In these iterative and repeated rounds, the community acquires metafishing skills and, I guess, learns to adapt to the changing needs and changing contexts.



Vast majority of the poor have to become partners in the high growth of the country. The issue is how we take some poor out of the existing traditional activities so that the remaining poor have better returns. What kind of vocations we can think of offering to them so that they come out and prosper? The situation at migration is not ‘great’. How do we address the plaguing issue of the equity in many parts of the country? How do we ensure that minimum wages come to workers? How do we address the issue of education and literacy on which the long-term solution to the poverty lies? How do we ensure that the poor have access to public services like health which form the most of the family’s expenditure? We still have lot of gender disparities to cope with and address. Civil Society efforts are, at best, weak.



MFIs are spreading across the country. SHG movement is growing rapidly. The proble of access to finance is being addressed. The need for the Governments and the Civil Society is to move into livelihoods domain. These efforts require large number of human resources at the community level, grassroots and at higher levels – paraprofessionals, professionals and volunteers, with passion, commitment and best brains. The poor need to have a hope for better life and this support can give that hope. Further policy support in terms of institutional framework like Mutually Aided Cooperative Societies’ Act, increased research into areas of livelihoods of the poor like dry land agriculture, minimum support prices for all products of the poor, ensuring minimum wages for all workers, risk covers for a wide variety of livelihoods of the poor etc., are important.



Finally, let us appreciate the reality – when in crisis, what matter the most are air, water and food. The rest is a matter of opinion really. Today the crisis is that the poor are struggling with lack of ideas for investing the funds they can access. It is time, we all jump in to help them out. Rest will be history made by us.