Micro-credits, pioneered by Grameen Bank in Bangladesh has been an effective way to bring poor people out of poverty, not by depending on politicians, but by allowing people to take control over their destiny. In this program, small loans are provided mainly to women for self-employment projects that generate income. While traditional money lenders charge large interest rates, these micro-credits provide loans at reasonable rates.
Big businesses are also involved in this. While they advertise and market for an urban audience, they are missing the rural population, which forms the majority in India. While there were women availing micro-credits, they needed businesses to run and the companies stepped in.
When executives at Hindustan Lever were plotting how best to reach untouched markets in rural India in 1999, they noticed that dozens of agencies were lending microcredit funds to poor women all over the country. These would-be microentrepreneurs, the company thought, needed businesses to run.
So Hindustan Lever approached the Andhra Pradesh state government in 2000 and asked for access to clients of a state-run microlending program. The government agreed to a small pilot project that quickly grew. The initiative, dubbed Project Shakti (which means strength in Hindi), has expanded to 12 states. Agencies such as CARE India, which oversees one of the subcontinent’s biggest microcredit programs, also have teamed up with the company.
Mrs. Nandyala has repaid her start-up microloan and hasn’t needed to take another one. Today, she sells regularly to about 50 homes, and even serves as a miniwholesaler, stocking tiny shops in outlying villages a short bus ride from her own. She sells about $230 of goods each month, earning about $16 in profit. The rest is used to restock products.
For NGOs, such commercial link-ups have meant shedding distrust of big business. “At first we were unsure about it,” says Vipin Sharma, director of CARE India. “But in the long run, we think the poor will benefit from learning about retailing, distribution and marketing.” [Microcredit helps women entrepreneurs in India]