Creating a shared prosperity

9 Feb

Last month we visited Ajiwika, our first partner microfinance institution based out of Jharkhand, India. We were very keen to meet some of the entrepreneurs from Ajiwika. We were joined by Tanay Chakravarty, the CEO of Ajiwika and some of his staff.

Our first visit was to Chakri Pahar which is around 10 miles from Deoghar where Ajiwika’s main office is located. We were greeted by several entrepreneurs and their families including Barki Devi and group, and Bandana Devi and group. Many of the entrepreneurs belonged to the Santhal tribe and we received a traditional Santhal welcome where they offer a pot of water with flowers to their guests, which was a wonderful experience. Shortly thereafter we started talking to the entrepreneurs on how the microloans had helped them – Barki Devi bought a bullock with the loan, Bandana Devi increased the inventory in her shop, Juba Hembram and a few others bought a cow.

Most of the stories showed signs of incremental progress, but we were impressed how Shaila Devi and her husband Naresh Murmu had quickly grown their business of making ventilators for houses. Naresh Murmu had been working as a mason for sixteen years. He had the skills but he did not have the money to start his own business. On getting the microloan, he started his business and now he has also employed two other people.

We were also delighted to learn that all the children in the neighborhood were going to school. In some cases, some families who were now enjoying a higher income after taking the microloan were enrolling their children in private schools instead of the government run schools which offer free education. While most of the women could only sign their name but could not read and write, their determination to make sure that their children have a good education was truly noteworthy.

As we were about to leave, Barki Devi sang a Santhal song to mark the occasion. The song was about coming together to create a shared prosperity for everyone. The experience was truly overwhelming and I still cannot fathom how she could choose a song so apt and profound on that occasion.

We visited more entrepreneurs at Nilkothi. Nilkothi is in the neighboring state of Bihar, which has recently experienced very good economic growth. The entrepreneurs here including Shanti Devi, Savitri Devi and other members were mainly involved in agriculture. All the entrepreneurs were highly appreciative of the fact that the microloans are disbursed quickly at their door step. They were excited to see pictures of guarantors coming from all over the world to support them.

We also visited Ajiwika’s branch offices and their head office. The branch offices are very functional and consist of two rooms with a kitchen and an attached bath. One of the rooms serves as an office and has a computer, two desks, a few chairs, a cupboard and a white board for keeping a scorecard of the loans. The staff involved in running the branch sleeps in the office at night.

The impact of the guarantee on Ajiwika has been remarkable. Six months back most of the smaller microfinance institutions like Ajiwika were struggling to raise funds because of the financial crisis. While development lenders such as FWWB and SIDBI were making some loans to smaller microfinance institutions, most of the banks had become extremely conservative in their lending. Banks often tend to work in an informal syndicate. If one bank lends then other banks are more inclined to follow. The converse also holds true, if the more development oriented banks become conservative, then the rest of the banks follow suit.

UnitedProsperity.org’s guarantee enabled one bank to lend to Ajiwika. Now that a mainstream bank was lending to Ajiwika, over the next six months several other banks have approved loans to Ajiwika.

The guarantee has had a catalytic effect. Not only did we directly support the entrepreneurs on our website, but we also provided the spark for freeing up funds locked with other banks to support many more entrepreneurs who are not listed on our website.

Barki Devi’s song of coming together to create a shared prosperity is apt indeed!!

3 Responses to “Creating a shared prosperity”

  1. Gautam Rege February 10, 2010 at 4:20 am #

    Hi Bala,
    Great post! Feels good to be a micro-part of things benefitting others! 🙂 Thanks for United Prosperity. Good work Ajiwika!

  2. Raj Melville February 10, 2010 at 12:21 pm #

    Great Post Bala. I think you have identified another great benefit of United Prosperity’s guarantees over other direct lending models – The catalytic multiplier effect when you bring in one BIG Bank that breaks the logjam and motivates other banks to follow suit and lend to Ajiwika! This is huge! I am guessing our dollars have 10X to 20X worth of impact because of this. (2X thru the guarantee and another 4 – 5 times the amount thru 4 – 5 other banks participation).

  3. Andreas Stephens February 11, 2010 at 12:44 am #

    Amazing! It is too easy to loose sight of the actual transformational power of microfinance when only interacting with a website most of the time. To see and read what the entrepreneurs have to say and what a difference the loans make to their lives highlights that these are REAL people, making REAL and meaningful progress in their quest for prosperity!

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