Making Entrepreneurship a Rural Affair 18 Nov, 2008

With entrepreneurship penetrating every sector of the Indian market, rural India is not far behind.

In fact, the government, NGOs and the private sector unanimously agree that rural entrepreneurship = rural development. For the government and the NGOs, this is possibly the best way to uplift the rural community, and for the corporates, it provides value addition by giving them the opportunity to reach into remote areas.

There are a number of platforms in the urban areas that have a positive impact on the entrepreneurial environment – there are investors who are looking out for that one great idea that deserves their money; and there are networking events, where various entrepreneurs come together to understand various business models, and to discuss their own. A quick glance at the rural market, in comparison, shows that though entrepreneurship is headed in the right direction, there is still a long way to go.

The most critical factor in this context is the availability of viable and sustainable investment opportunities, and the lack of communication facilities in remote areas. The most common businesses that are initiated are those that are started by external groups, and entail textile production, agri-tourism, small retail businesses, craftsmanship etc. However, even though the NGOs and government bodies have collaborated to establish self-help groups to alleviate rural poverty, the lack of confidence amongst most of the rural population has proved to be a deterrent to the idea of innovative rural entrepreneurship.

Some of the main issues that the rural community faces while setting up their unique businesses include lack of knowledge about profit yielding industries, and of access to capital. Limited knowledge and experience about the resources available to build their business has also stopped the already apprehensive rural community to embrace the spirit of entrepreneurship.

I’d like to give a couple of examples of successful rural entrepreneurship – one that is led by Unilever, and the other which is a self-driven initiative by an individual in Tamil Nadu. Unilever connects self-help groups with business opportunities through Project Shakti. It specifically gives the women groups a chance to become small-scale sellers of its products, wherein each entrepreneur buys a small stock of items that are then sold direct to consumers in their homes. In association with the local district authorities, Unilever also provides free training on the basics of business management and sales. Piloted in 2002, Project Shakti saw immense popularity with more than 45,000 entrepreneurs covering 3 million homes in 100,000 villages in 15 states in India.

The other interesting instance is about a rural entrepreneur: T. Mariappan, a banana grower in a village close to Tiruchi, who designed a banana dehydrator by trial and error method, to produce a type of sweet from the fruit. Impressed by what Mr. Mariappan had to offer, the Indian Overseas Bank has sanctioned Rs. 11 lakh for his project. Currently marketing the produce in 400-kg packs and in sachets, the rural entrepreneur’s future plan is to use a solar energy-operated dehydrator for large-scale production.

According to a report by Food and Agriculture Organization (FAO) on entrepreneurship;

“From the perspective of the process of entrepreneurship, whether the location is urban, semi-rural or rural, is not important in itself. For example, the needs of a would be entrepreneur or an existing small business do not differ much from those in an urban area. To realise their entrepreneurial ideas or to grow and sustain in business, they all need access to capital, labour, markets and good management skills. What differs is the availability of markets for other inputs.”

And it is exactly this gap that needs to be filled if the rural entrepreneurs are to walk shoulder-to-shoulder with urban entrepreneurs.

Further reading:


Micro Finance, Macro Growth 22 Oct, 2008

With spirits down and low in urban areas (largely because they have reached a saturation point, and partly due to the credit crunch), the next phase of development in India will come from the tier II cities and the rural parts of the country.

Whether it’s the retail, banking or telecom sector, everyone has their eyes glued on the next billion users of their facilities and services.

What is fueling this phenomenal growth? Micro finance. Two simple words that promise to change the rural landscape.

Let’s begin with telecom itself, where close to 60% growth is expected from rural India. By collaborating with micro finance institutions (MFIs), telecom operators, and equipment and handset manufacturers are helping benefit the self employed population in Indian villages. Anytime, anywhere connectivity now enables rural entrepreneurs to deliver their services on call.

More specifically, rural entrepreneurs have chosen to use credit provided by MFIs to start their own ventures or to become associated with established corporates that aim to reach the rural hinterland through local partnerships.

In the last couple of years, banks such as ICICI have also made headlines for reaching out to rural customers through its customized loan portfolio. Microfinance is seen as a mutually profitable venture that provides new business opportunities for banks, and opens up new avenues of opportunities for the rural banking customer. For example, the Financial Information Network and Operations (FINO), in association with the World Bank, is expected to run pilot projects with microfinance institutions, banks and government agencies to make use of IT in rural banking.

To ensure that microfinance is successfully implemented, it is also important for rural bankers to understand its true role. In fact, in Philippines, there are foreign-funded programs that aim to teach the rural bankers how to effectively design their microbanking-related business.

Anticipating the retail boom in the country, various agri-business consultancies and big names in the retail sector have opened the doors to microfinancing and are inviting people from rural regions to join them in taking the business of retail to hinterland. Apparently, Reliance Retail is eyeing partnerships with existing MFIs as part of its supply chain with rural and semi-urban markets. Retail biggie Bharti is also believed to have shown interest in exploring the MFI route for supporting the retail supply chain, contract farming operations and dairy sourcing.

There are as many opportunities in the rural sector, as there are industries in our country. With external factors such as the sub-prime crisis affecting our bread and butter, perhaps focusing on our internal strengths and opportunities is a good option!

Further reading:

The microtelecom revolution starts here 1 Mar, 2008

Billions of people have never made a phonecall. Ever. And wealth follows phones – it’s estimated that a 10% increase in a country’s mobile penetration results in a 1.2% increase in GDP.

But current expensive and power-hungry infrastructure is not made for areas where there’s no grid power, where people are only able to pay $3 per month for communication, where climate is demanding and road access is scarce.

Fortunately, for operators and rural & remote citizens alike, there’s now a solution to this dilemma. That both assists operators in reaching new customers and involves rural communities in their own ascent.

Introducing Microtelecom

VNL has coined the term microtelecom to describe the market we are pioneering. Microtelecom is the optimization of telecom infrastructure for a very specific application: serving the low-income, hard-to-reach communities in rural areas.

Like microfinance, microtelecom is based on the belief that “bottom of the pyramid” consumers can be profitably served — as long as the product or service is designed appropriately.

Microtelecom refers to technology that has been designed from the ground up for low-income rural users, not just adapted from solutions for the developed world.

A call to action!

This blog will discuss the environmental, social and financial benefits of the Microtelecom Revolution.

We want to inspire and involve mobile operators, handset manufacturers, equipment vendors and rural entrepreneurs alike.

Microtelecom stretches far beyond VNL – it is a new industry segment and a new way of looking at mobile telecommunication.

To reach the billions that have yet to make a phone call – to connect the unconnected – we all need to cooperate.

We are looking forward to continue the discussion with you!