MPRLP UPDATE SERIES NO. 4 NURTURING MICROENTERPRISE
Nurturing microenterprise in remote areas of Madhya Pradesh Making wooden toys. Photo: © MPRLP/Singh Rajawat
In India, small labour-intensive enterprises rank second (after agriculture) in terms of providing employment. MPRLP is therefore working with Gram Sabhas to encourage microenterprises. It diversifies rural economies, makes use of local skills, creates significant employment and improves the income of the poor, especially women, as they are around half the workers employed by microenterprises.
How we work Our strategy for nurturing microenterprises is two-pronged. First, the project channels money through Gram Kosh, or village accounts, into 'revolving funds', from which individuals, livelihood-promotion groups and self-help groups can borrow to launch or develop their microenterprises. Second, MPRLP's multi-skilled team helps rural entrepreneurs gain the technical skills and business knowledge that they need to thrive.
Service-based enterprises Village enterprises (such as carpenters and barbers) selling services catering to other villagers at a very local level. Business clusters Where a large number of people in an area separately producing the same thing, such as wooden toys or agarbatti (incense sticks) work together to sell to markets further away. Here, the project facilitates both the forward linkages (selling the product) and the backward linkages (getting the raw materials).
Gram Kosh revolving funds to encourage start-up and growth
The way forward
Encourage more Gram Sabhas to provide support to self-help groups (SHGs) in developing microenterprises. Use the cluster approach when supporting microenterprises. Engage the private sector in promoting new technologies and linking the poor to markets. Provide continued support for skill development and job placement (this is an ongoing process).
Developing products that sell
The project's microenterprise work focuses on three key areas:
Working with Gram Sabhas, MPRLP helps set up reliable sources of funding through Gram Kosh village accounts. This opportunity to take small loans gives the rural poor the chance to start up or further develop their microenterprises. For example, mahua collectors who took loans from a Gram Kosh revolving fund were able to store and process the flowers rather than selling them immediately. This meant they were paid much higher prices.
Local markets Village enterprises such as local shops selling goods catering to other villagers at a very local level.
"MPRLP's team helps rural entrepreneurs gain technical skills and business knowledge"
But even when credit is available, many start-ups fail because of other factors, such as weak technical and business skills or poor knowledge of how to profit from wider production or supply chains. MPRLP therefore helps bridge these gaps by organising business fairs and drawing on NGOs to provide training and improved equipment, such as better looms. NGOs also set up
MADHYA PRADESH RURAL LIVELIHOODS PROJECT
business-support services and business centres. All these facilities help microenterprises develop quality products that meet demand in particular market niches.
Example achievements by cluster
Forming self-help groups Rural households have always sold or traded traditional crafts or natural products in local markets. But as both have become more popular, there has been a surge in demand from middlemen. MPRLP therefore helps to set up self-help groups to help individual producers get better prices. For example, when MPRLP brought together mahua flower collectors to negotiate prices for their products, these collectors collectively doubled their income.
Building business clusters MPRLP takes its support further by encouraging self-help groups to band together into producer clusters or small business groups to buy supplies and organise services. For example, MPRLP has helped hundreds of non-timber forest product and mahua collectors to set up producer groups. Eighty-four poultry producers have also established a cluster.
1020 women trained to make incense sticks in Anuppur; 650 of them have started commercial production. 165 artisans trained to make wooden toys in Shahdol and Sheopur, with another 60 still in training. 500 non-timber forest product collectors organised into 30 groups, which will be federated into a producer company in Mandla. 114 families trained to grow sisal in Mandla and Dindori. 253 women trained to make sisal handicrafts. 100 started producing handicrafts by December 2010. Two centres set up and running, one in Mandla and one in Dindori. 497 mahua flower collectors organised into 28 smallbusiness groups in Mandla. A cluster of 753 lac producers established. 400 mahul leaf collectors trained and organised into 20 self-help groups in Shahdol.
Accessing business support services Self-help groups and business clusters also help individual producers access business support services, such as skills training, or advice on business planning and marketing. Often provided by NGOs, these services help producer clusters to standardise their products and, in some cases, become accredited as, for example, certified organic vegetable producers. Producer groups are now breaking new ground by selling products under a brand name or partnering with private companies.
"MPRLP helps set up self-help groups to help producers get better prices"
Contact Telephone: +91-(0)755-2766812, 814, 815 Fax: +91-(0)755-2766818 Email: mprlp@mprlp.in Website: www.mprlp.in MPRLP is funded by the UK Department for International Development (DFID). This publication does not necessarily represent the views of the Department for International Development.