Keya Sarkar: Awarding micro finance

OUT OF FOCUS

Sometime early next year, Finance Minister P Chidambaram is scheduled to honour a dozen micro entrepreneurs from across India. Micro-entrepreneurs, who have been able to exhibit performance that has helped them emerge from below the poverty line, create jobs and demonstrate social responsibility.

The Citigroup Micro Enterpreneur Award was launched last year to honour leadership, entrepreneurial skills, and best practices of micro entrepreneurs in India. While last year the contestants were only from urban areas, this year the list has been expanded to include those from rural India too. This year, having been designated as the "Year of Micro Credit" by the United Nations, the award this year will be in association with the Global Micro Entrepreneur award launched by the UN across 38 countries. In India the UNDP, the UN's global development network, is partnering Citigroup for this year's award.

The award has been conceptualised by Citigroup and implemented by Partners in Change, which is a non-profit organisation set up for promoting and deepening corporate social responsibility. The award process is designed to be democratic through independent screening organisations, four juries (one in each zone), and the National Advisory Council, which guides the award process to align with its goals. The advisory Council boasts of celebrity names like N R Narayana Murthy, Deepak Parekh, R Gopalakrishnan, Ranjana Kumar, and Shabana Azmi.

There is little doubt that the award is a significant goodwill-generating opportunity for Citigroup at the national and international levels, among corporate and political circles. Given the hype that currently surrounds micro finance, there is huge mileage in awards to those that have availed themselves of credit to emerge out of poverty.

Unfortunately, the way the NGOs and micro finance institutions (MFIs) work in India currently, it is difficult to have a fair representation of such micro entrepreneurs. The process entailed a nomination by NGOs and MFIs of their borrowers/partners, which ensured a first level of screening. Partners in Change, the implementers of the process, wrote to NGOs and MFIs directly and made available nomination forms as well as advertised the awards on sites like www.indianngos.com and www.karmayog.com.

But given the fact that there exists no comprehensive database of NGOs or MFIs, the award process does get a little skewed. Of the 855 nominations that came in, over 500 were from the southern zone. While it is common knowledge that the south has the largest number of active NGOs and MFIs, it was also the area where Partners in Change held workshops to advertise and explain the award process.

Even within the nominations that came in from each zone, there were huge disparities within the zones. In the East, for example, of the 66 nominations, while there were 48 from Orissa, only six were from Bihar and four each from West Bengal and Assam. The reason for this is probably because some NGOs and MFIs invested time to fill up nomination forms and other didn't bother. With no restrictions on the number of nominations that each organisation could forward, each state too was dominated by nominations from one or two organisations.

Over time, as this award gets more known and Citigroup and Partners in Change fine-tune the process, these anomalies would get rectified. But what probably would need less of an effort is for juries to take this seriously. Speaking for the Eastern Zone selection process, of which I was a member, it was a little disappointing that two jury members (out of a total of five) could not attend and there was no senior management participation from Citigroup, despite the fact that all the hard work (that of short-listing ten out of all the nominations for the juries to select from) had already been done by the screening authorities along with Partners in Change. Given that most of the micro enterprises which were nominated are not formally audited, those involved in the screening process had to sift through a lot of qualitative data to arrive at comparable financial frameworks. This not only meant travelling to remote areas but also getting a feel of the person, the enterprise that he/she has set up, and the demonstration effect that it has created in the village or town.

The dozen winners that have emerged from this process from across India have set up varied enterprises: from bag manufacturing, tyre inflator manufacturing, organic fertiliser manufacturing, ice cream making, chalk and black-board making to tailoring units. What is impressive is how each of them has analysed its business scenarios, plugged in personal and environmental constraints, and maximised opportunities""all this with the tiniest of seed capital from savings or borrowings from family and friends. For all those laptop carrying, excel experts involved in project financing, the simplicity of thinking would indeed be educative.