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Category: Sustainable Livelihoods

Skilling the unskilled: Why should companies get involved? | Part I

A look at how companies can align their CSR strategies to the Government’s Skill India Mission, increase programmatic impact and invigorate the economic well-being of India’s unskilled and unemployed workforce.

The announcement of the Skill India Mission on the 15th of July 2015, a Government initiative that aims to train 500 million people by 2022 in different skills, created a high level of expectation from corporate India, implementation agencies and the individuals who badly need those skills. For many, the Government’s drive to skill India couldn’t have come at a better time.

In 2020, India is set to experience a ‘demographic dividend’ where 65% of the population will be under the age of 35[1], which will give the country the unique advantage of having one of the world’s youngest populations.

However, this is only an advantage if new entrants to the workforce are properly trained and given access to skilled employment opportunities. The National Sample Survey currently estimates that of the 470 million people of working age in India, only 10% receive any kind of training at all[2].

While many believe that the Mission could potentially close this gap and help meet the Indian Government’s ambitious target of skilling 550 million people by 2022[3]; translating these expectations into action is a significant challenge that can’t be overestimated.

The National Skill Development Corporation (NSDC) has identified over 24 high-growth sectors for which people need to be skilled. Of these manufacturing, textile, construction, automotive, retail, healthcare and transportation are expected to witness the highest growth. Companies operating within these sectors stand to gain from investing in skill development as they can strategically align with the Mission to train workers with skills that are needed in their respective sectors.

To harness the country’s 2020 demographic dividend and move a step closer to making India ‘the human resource capital of the world[4],’ there will need to be a concerted effort from multiple stakeholders across the livelihood ecosystem – within which companies will need to play an integral part.

Setting standardized benchmarks for skilling

While the Indian Government has instituted a number of constructive policy measures under the Skill India mission and allocated Rs. 5,040 crore (770 million USD) to skilling programs[5], it has failed to do something fundamental – and that is to define what a ‘skill’ in this context is.

This is problematic for a number of reasons. People are considered to be ‘skilled’ whether they have taken part in training that involves short 2 day workshops, or extensive 3 year courses. Without setting standard benchmarks for different skills taught, which include the nature of the training, the duration and depth of courses and a mechanism to measure the program’s success – any future statistics on the number of skilled workers created as a result of this initiative will have significantly reduced value.

Furthermore it is important to have appropriate levels of training for appropriate skills which will be critical for the effective implementation of programs.

Skill development ≠ livelihoods

The widely accepted definition of livelihoods, developed by Chambers and Conway, reads as follows, “a livelihood comprises the capabilities, assets (including both material and social resources) and activities required for a means of living.” Livelihood interventions therefore aim to build the social, physical and financial capital and capacity of people with the aim of bettering their employability or income generation prospects.

Skilling programs, on the other hand, are concentrated on building the capacity of individuals and communities and do not necessarily tackle other aspects like creating assets or resources for communities and providing access to employment opportunities.

It is therefore crucial to place skill development within the larger context of livelihoods and encourage companies, NGOs and social enterprises to think about skilling as a means for people to access livelihoods and not as an end in itself.

In order to design and implement impactful programs it is important to realize that training forms just one aspect of creating livelihoods and does not automatically translate into a means of livelihood. While training people in new skills is critical, companies need to look at skilling through the lens of creating livelihoods and ensure that there are support mechanisms in place after training.

A holistic approach to skill development

To do this, what really needs to change is the way in which skilling programs are currently implemented. Conducting isolated training with no follow-up and no connection to market demands will reduce their effectiveness. Adopting a lifecycle approach to skilling is the only way to ensure meaningful, long-term impact. A lifecycle approach looks at all aspects of skilling, from the aspirations of people before training, to counselling and following up with beneficiaries during their employment. Skill development programs conducted in this manner will ensure that the training received has an impact on livelihoods and contributes to the economic well-being of communities.

The role of companies

The Skill India Mission aims to actively involve companies in skilling the country. In July, at a conference in New Delhi about engaging the private sector, Pawan Agarwal, Joint Secretary at the Ministry of Skill Development and Entrepreneurship, Government of India talked about the government’s drive to involve companies and said, “private sector engagement is part of the DNA of the Skills Ministry of India.” By consolidating its efforts under the Ministry of the Skill Development and Entrepreneurship and increasing the budget of the National Skill Development Fund (NSDF) managed by the NSDC, the Government is pushing for the active participation of companies[6]. Engaging with the NSDC through public-private partnerships (PPPs), CSR programs and scaling up skilling operations is critical to the success of Skill India.

Why should companies get involved?

Align with government priorities

At this point, publicly funded initiatives are just not enough to create significant impact. Companies shape industry demands, set trends and therefore, have a greater understanding of what is needed in various sectors. Currently the Indian Government is only able to train 3.1 million of the 12.8 million entrants into the workforce each year and it is vital that companies step in to close the gap. Kalyan Chakravarthy, Executive Director at the PanIIT Alumni Reach for India Foundation (PARFI), reiterates the need for companies to get involved, “The government does not have the resources to train 40 crore people (500 million). India cannot afford this kind of budget, not unless it’s on a grant basis. Ultimately, (skilling) has to be market driven.”

As part of CSR

Luis Miranda, a Board Director at Samhita, sees the CSR mandate as a win-win opportunity for companies to invest in skilling without worrying about profitability, “because you are training people for your own business, if you’re doing good that’s great if not, you spend 2% and it goes against your CSR.”

Companies can design training programs that align to their business and use such programs to create a pool of skilled workers that could be potential future employees.

Many companies have expressed reluctance to spend money on training as this involves high costs and trainees often leave for higher salaries after training is complete causing companies to lose out on their investment. By including skilling under the CSR mandate, companies that were previously reluctant may be encouraged to contribute to the cause.

Increasing employability

Skill training programs also need to be linked to market demands so that trained individuals are seen as valuable assets and are employable. Establishing links with the private sector is a good way to do this. An evaluation of one of the programs run by Gram Tarang Employability Services, a social enterprise that trains people in underdeveloped regions of the country, showed that due to the extent of private sector links built into the initiative, 100% of the beneficiaries were placed at the end of the program. (The study was published by GSE research and Practical Action Publishing.) Programs that do not have such corporate connections as the Gram Tarang, may not necessarily be as impactful, as people might not see the opportunity for employment afterwards, so it becomes important for companies to step-in and provide those much-needed links.

How can companies engage in skill development?

Through Public-Private Partnerships (PPPs)

The National Skill Development Corporation (NSDC) is a not-for-profit company administered jointly by the Indian Government and the private sector. This unique public-private partnership (PPP) initiative aims to narrow the skills gap between demand and supply in India. It acts primarily as a funding organization that catalyses the creation of large, quality, for-profit vocational institutions. The NSDC acts a facilitator by providing capital for start-ups to set up skill development centres and training programs. It has also set up 38 Sector Skills Councils (SSCs) that connect the needs of industry with the training that is done on-the-ground and builds capacity in respective sectors.

Companies can work directly with or leverage the NSDC in a number of ways.

  • Fund the creation of quality vocational training institutes – this can also be done in partnership with social enterprises that have developed high-quality, low-cost business models
  • Assess the validity of programs run by accredited organizations, contribute to NSDC’s curriculum design and ensure that it is regularly updated
  • Work with the SSCs to ensure that training meets market needs and is updated accordingly
  • Work with NGOs or SEs that are affiliated with the NSDC (as part of their CSR)

Train students through apprenticeship programs

Germany’s highly successful “Vocational Education Training (VET)” apprenticeship model is a good example of how companies can train people to build industry capacity. Companies work with vocational centres to train students that enroll in various courses. This system incorporates a ‘dual-training’ approach which allows students to split their time equally between the classroom and workplace. Companies give students a minimum wage and can absorb them into the existing workforce once fully trained. Students benefit from the training and salary and companies eventually get skilled and qualified workers that meet their requirements. While the Government of India has established a bi-lateral working group with the German Government to promote this system and the Ministry for Skill Development and Entrepreneurship has made provisions for a similar model under the Apprentice Training Scheme (ATS), active participation and interest from companies will be needed to drive these initiatives forward.

Get involved at the policy level

Policy level reforms are also an avenue under which companies can contribute to Skill India. The government needs the presence of corporations on their boards to advise and help shape curriculum so they are aligned to market demands. Rajesh Kaimal, Business Head of Manipal City and Guilds, an education service provider that trains and certifies people across the country, believes that companies need to get involved at the governance level for effective impact. According to him, the formation of the Sector Skills Councils are a good move by the government but needs active participation from companies; “The idea is that the Sector Skills Councils should have a healthy representation from the industry itself – [appointments to the board] should not be political but representative of the industry body and have key players from industry. Otherwise what will happen is the certification will lose its relevance. [For example] If someone who has a certificate from a certain SSC and is hired to operate a crane, but he doesn’t know how to do this – tomorrow nobody will hire from that SSC.” The SSC needs to make an effort to attract industry participants to their governing boards and constantly revise their curriculum in consultation with companies to stay relevant and become a key resource for employers.

What are companies doing?

The Skill India Mission is an opportunity for companies to give some serious thought to how they can play an impactful role in bridging the skills gap in the country. Wide-scale impact cannot occur without the active involvement of the private sector. By leveraging the Skill India Mission and engaging with the government and implementation agencies, companies can work to provide much-needed training programs to the vast number of unskilled people, which will ultimately benefit industry and contribute to the growth and development of the country in the long-term.

About the contributors:

Praveen Aggarwal, Chief Operating Officer, Swades Foundation, a foundation that focuses on creating livelihood opportunities for rural populations across India.

Kalyan Chakravarthy, Executive Director at the PanIIT Alumni Reach for India Foundation (PARFI), a not-for-profit registered society of IIT alumni committed to execute and scale self-sustainable business models that enhance incomes of the underprivileged sections leveraging PanIIT and other like minded networks.

Rajesh Kaimal, Business Head, Manipal City and Guilds, a joint venture between Manipal Education and City & Guilds, UK that trains and certifies people across the country.

Luis Miranda, Director at Samhita Social Ventures and Founder & ex-President, IDFC Private Equity

[1] (Planning Commission, XII Five Year Plan, Employment and Skill Development, pp 140-141)

[2] Ernst & Young, Knowledge paper on skill development in India

[3] (Planning Commission, XII Five Year Plan, Employment and Skill Development, pp 140-141)

[4]http://www.ey.com/Publication/vwLUAssets/FICCI_skill_report_2012_finalversion/$FILE/FICCI_skill_report_2012_finalversion_low_resolution.pdf

[5] http://www.theguardian.com/world/2015/jul/16/narendra-modi-unveils-bid-to-make-india-the-hr-capital-of-the-world

[6] http://www.livemint.com/Opinion/9zdTIPwwRT7VXd2Cv6Lu7L/Skill-India-How-we-can-spend-less-and-gain-more.html

Skilling India: Getting it right | Part II

What companies need to keep in mind to ensure that their skilling programs are effective and impactful.

According to Labour Bureau of the Government of India, 90% of the 450 million jobs in India require vocational skills. And right now only 10% of the workforce receive any kind of vocational training at all, formal or informal.[1]

Compare India’s present scenario to those living in developed countries, where 75% undergo formal skill training and it’s clear that we need to do a lot of catching up.

The Skill India Mission presents a unique opportunity for companies to leverage their core business competencies and contribute to skilling India. Part I of this series on Livelihoods and Skill Development, discussed why it is critical for companies to align with the Mission and join together in a concerted effort to close the skills gap in the country’s labour force.

In Part II, we look at what companies need to keep in mind when implementing training programs as part of the Skill India Mission.

The Mission is a new opportunity for companies as it is different from past efforts by the government in a number of ways. Most critically it has consolidated the skilling effort in India by replacing the 20-odd ministries that were previously engaged with training programs with one focused and central Ministry for Skill Development and Entrepreneurship (MSDE). The MSDE has its own budget and is mandated to drive skill development efforts in the country, by co-ordinating the programs of State Governments and other Ministries. The MSDE also collaborates with companies in the private sector, developing frameworks for vocational and technical training and planning for skills that may be required in the future.

The Skill India Mission prioritizes aspects of skilling that were previously ignored, like the recognition of prior experience and entrepreneurship skills. Rajesh Kaimal, Business Head of Manipal City and Guilds, an education service provider that trains and certifies people across the country, points out that under the new initiative, “there is a special focus on RPL (Recognition of Prior Learning), which is a drive to recognise people who are already well-versed in a trade but don’t have any formal certification.” Under the PMKVY, a scheme under the MSDE, there is an equal emphasis on RPL skill training programs. Out of the 24 lakh (2.4 million) people that the scheme aims to train each year, 12 lakh (1.2 million) has been earmarked for training and assessment and 12 lakh for the recognition of prior learning.

Praveen Aggarwal, the Chief Operating Officer of Swades – a foundation that focuses on creating livelihood opportunities for rural populations – commended the creation of a separate policy to encourage entrepreneurship.

Under the mandate, the MSDE is directed to make entrepreneurship aspirational and encourage it as a viable career option through advocacy, create support networks for potential entrepreneurs and promote entrepreneurship amongst women. Mr. Aggarwal believed that an equal focus on entrepreneurship skills is especially critical for rural areas and saw this as a good move by the Indian Government.

Getting it right

With the government making a strategic effort to create a skilled workforce and prioritizing skill development initiatives, it is critical that companies also get on board and invest in effective programs. Conducting one-off trainings or failing to link them to jobs may not significantly improve the prospects of those seeking work. From our conversations with a number of companies and implementation agencies in India, we have developed some guidelines that companies may find helpful when developing and executing their skilling programs.

Adopt a lifecycle approach

Like any other intervention in the social sector, in order to achieve long-term impact, companies need to adopt a lifecycle approach to skill development. This means designing programs that look at every aspect of skilling communities and includes mapping the skills and aspirations of a community before training, conducting training that is based on the findings of the skill mapping, connecting trainees to employment opportunities after the training and following up with them after employment. One of the programs that Swades conducts adopts this approach. Apart from the activities listed here, Swades conducts an intensive follow up with their trainees. Once placed in employment Swades tracked the progress of their trainees for 2 years. In the first year tracking occurred on a monthly basis in order to provide ‘hand-holding’ and get them accustomed to an office environment. In the second year, follow-ups were reduced to quarterly intervals. Praveen Aggarwal says that the reason Swades does this is, “to see how they are progressing in their careers and if they leave their jobs, why are they doing this etc.”

Following up with newly employed trainees is especially critical as it can result in significantly reducing the number of people leaving their jobs because of being unable to cope with new work environments.

Match skills to aspirations

Training programs need to keep in mind the marketability of skills received at the end of the course and match them to individual aspirations and desires in order for them to be impactful. Training that is not linked to careers that people want, is a waste of resources on both sides of the equation. A good way to ensure the relevance of training is by mapping skills according to both market needs and local capabilities.

This approach ensures the expectations and requirements of a particular community are met and provides guidelines on what kind of training is needed. Swades ensures that their training is consistently effective by, “giving (people) a bouquet of choices, empowering them with a sense of decision making – of what they can do with their lives, (and) creating aspirations.” Mr. Aggarwal went on to say that attempting to meet the needs of communities and advising them against potentially less-viable career paths, is a fine balancing act.

Transferrable skills: Providing communities with transferrable skills is also useful as it builds competence in areas required for most jobs. Transferrable skills include communication and analytical skills, decision-making abilities, team work, writing and reporting skills and other similar skills. For semi-urban and rural populations, such skills are especially useful as most have never been in an office environment. In their training on transferable skills, Swades includes aspects like how to dress appropriately for different types of employment, basic computer literacy, personal hygiene, interview skills, tackling work under pressure, dealing with superiors, reporting procedures and other useful information.

Connecting skills to the market

Providing market-relevant skills to communities should be a key focus area for companies. Without a link to market demands, skill training become redundant. Kalyan Chakravathy from PanIIT Alumni Reach for India (PARFI), a social enterprise that conducts skill training across India, spoke about how they link training to market needs by engaging with CSR, “(While) we work on an institutionalized, long-term, investment-heavy model, it does not mean that we are not consistent with the market. We are very demand-focused (and) update that demand through investment. That’s where CSR comes into the picture. Many of our schools are funded by companies.” PARFI’s skilling model is a loan-based training model which engages companies to provide employment opportunities and gives 100% placement to trainees after their courses. Mr. Chakravarthy said that placements were assured, “because we first sign up the employer and then set up the training.” With companies providing an input on what skills are needed, PARFI is able to conduct training that is relevant and can enhance the career prospects of trainees after the course.

The Value of Skills

If the courses or training that people receive are not recognised as valuable to their personal economic growth, for example by enabling individuals to achieve a higher salary or a better job, then there is very little incentive for them to take part in the program. If a watchman who has been trained under the skilling program subsequently receives the same salary as someone who is not trained, then what value has it added to his personal situation? Linking skill training to market needs is critical but companies must also ensure that this training will add value to the overall career prospects of beneficiaries.

Currently, training institutes across India are seen negatively as purely manpower sourcing agencies and this needs to change.

The Swades Foundation tackles this issue by working with select partners and social enterprises who they identify as having an understanding of a specific market. They connect their training to those who have demand for particular skills. PARFI works on a sustainable vocational training model that is loan-driven. The system, although charging trainees a fee, works well as it encourages only those genuinely interested to take part. The fee also ensures a high standard of quality and active participation from trainees, contributing to the overall sustainability of the program – and giving an impetus to social entrepreneurship as a whole.

Many government-sponsored skilling programs see high turnouts but do not necessarily have an impact on workforce skilling levels because they are free and are available to anyone, whether interested in a particular course or not. In general trainees tend not to attach much value to training that is paid for by the government. In the education field in India, people willingly pay more to be taught privately despite the considerable financial constraints this may place on them and their families. But they are prepared to do this because more often than not, the qualification they receive from a private institution will lead to more opportunities and a better standard of living.

The skilling centres of the future should be structured in such a way that the quality of their training is perceived as highly desirable and consequently valued by both potential trainees and future employers.

Focus on Entrepreneurship

Another way to look at the economic development of communities, especially those in rural areas, is through increased entrepreneurship. In 2013-14, agriculture employed 54% of the workforce in India but only contributed to 17% of the GDP[2]. In such a context, where the supply of labour outweighs demand by a large margin, finding new means of employment can be critical.

Providing rural communities with entrepreneurship skills and helping them start cottage industries or small businesses could work to supplement existing income and create local employment for many who would otherwise be forced to migrate to cities. Swades looks at building the entrepreneurship ecosystem by enabling entrepreneurs to create their own value chains. For companies, entrepreneurship programs are trickier as they need to establish connections to the market in order to provide entrepreneurs with a space to sell their products. Before implementing such programs it is important that companies ensure that implementation partners have a connection to the market and a clear exit strategy that enables the local community to continue work once the program has ended. Swades’ Praveen Aggarwal continued, “We are trying to create an entrepreneurship ecosystem. We manage the entire process…including providing entrepreneurship skills, how to understand your market, profit and loss, how to keep your account books…”

The added focus on entrepreneurship by the MSDE also presents a way for companies to leverage the entrepreneurship policy (see above) and engage with such programs.

Systemic Problems

One of the challenges of the current vocational training system is the lack of proper exit mechanisms for students of such programs. Rajesh Kaimal, Manipal City & Guilds (MCG), talks about the challenges of this situation, “a student who is on an engineering or an ITI course, should be able to exit after 1 or 2 semesters. [They should be able to] get a vocational education, get a certificate and then at some point take those credits and return to the formal education system and vice-versa. Most students drop out in-between, because courses last 3-4 years and they are unable to complete them because of family pressures or financial difficulties. If a student has done 2 years of a 3 year course and he leaves, he has nothing to show in terms of a qualification. For example – he might do the first year of a masonry course and if he leaves, he has nothing to show in the job market. There needs to be a an officially recognised certificate saying that he is qualified to do something at each step – since there are certain levels to all skills. Today there is no such mechanism and most ITI’s fail today because their students don’t continue.”

Education vs. Experience

When hiring, companies need to look at the value of vocational programs and the experience of applicants rather than exclusively match jobs to the highest level of education they have received (See above). MCG’s Rajesh Kaimal continues, “corporates should recognise that they need skilled people and not (just) educated people and should understand what they want. Is it skills and experience that you require or is it education and a paper degree that you are looking at?” This is a choice that needs to be made wisely by companies. To further illustrate the point, he talked about the fact that former specialized soldiers from the army have been employed as sweepers on the railways, despite having 15 years of experience, and considerable mechanical skills developed by fixing battle tanks. This happens quite often because many join the army straight out of school and consequently do not possess more than a 10th or 12th standard pass certificate. Historically all appointments on the railways have been dictated by an individual’s level of education.

Moving forward: A Vision for Skill Development

The announcement of the new plan for training and skill development is an opportunity that should encourage companies, investors, implementation agencies and potential beneficiaries to rethink traditional approaches to skilling. Even if the aggressive targets for skilling aren’t met, it will be important to ensure that those who pass through programs are trained well and given valuable skills that they can use in the market. It would be a flawed methodology to define the success of future training courses by the number of people being skilled, rather than potential employment outcome. Training people will have little value if they are not ultimately able to find better jobs, earn decent salaries or work in the sector and profile they were trained for – none of which can be achieved without the active involvement of players that dictate demand for skilled labour – namely companies. Why? It is companies that set trends, create demand for specific skills and subsequently understand what is needed for the future as they shape market demand. We need to invest in delivering market-driven skills to the public which will ultimately contribute to the long-term growth and development of the country.

About the contributors:

Praveen Aggarwal, Chief Operating Officer, Swades, a foundation that focuses on creating livelihood opportunities for rural populations across India.

Kalyan Chakravarthy, Executive Director at the PanIIT Alumni Reach for India Foundation (PARFI), a not-for-profit registered society of IIT alumni committed to execute and scale self-sustainable business models that enhance incomes of the underprivileged sections leveraging PanIIT and other like minded networks.

Rajesh Kaimal, Business Head, Manipal City and Guilds, a joint venture between Manipal Education and City & Guilds, UK that trains and certifies people across the country.

Luis Miranda, Director at Samhita Social Ventures and Founder & ex-President, IDFC Private Equity

[1] http://www.tradingeconomics.com/india/gdp-from-agriculture

[2] http://www.tsmg.com/download/article/Skilling%20India%20final.pdf

Beyond Safety Nets: Navigating India’s Social Protection Landscape

In the vast and diverse landscape of India, a multitude of social protection schemes have been crafted to support the country’s extensive informal workforce. These programs hold the promise of offering a safety net to millions of individuals and families navigating the precarious terrain of informal labour. However, many of these schemes remain underutilised due to various constraints. This blog delves into India’s pressing need for social security programs, the obstacles impeding their adoption, and innovative models to enhance access. 

 

In times of personal crises or livelihood disruptions, Social Protection Schemes serve as a cornerstone for individuals and their families, offering a path to prosperity through economic growth and inclusion. These programs provide the resilience needed to rebound and shield individuals from the debt traps that often perpetuate poverty cycles. They  empower marginalised communities to achieve overarching goals such as promoting social inclusion and ensuring income security.

 

From Obstacles To Opportunities: Sachita Bhoir’s Success Story

Group of women from rural area

Amidst India’s rural landscape, Sachita Bhoir’s traditional life faced a challenge – the absence of a common service centre for government schemes in her village, Chane. To bridge this gap, the team at Samhita-CGF conducted a field visit, which became a big turning point for the village’s residents. 

Through painting courses, the experts provided community members with information on various social security schemes like Sukanya Samridhi Yojana (SSY), Atal Pension Yojna (APY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). 

Sachita’s interest in the SSY scheme was evident, as she wanted to secure her daughter’s future. Unfortunately, there wasn’t a bank within the village that could help her with the necessary paperwork. So the team reached out to the nearest branch of a bank and proposed organising a camp, to bring door-to-door banking services for the community members. During the camp, Sachita successfully linked her mobile number with her bank account and applied for the scheme. Her determination, combined with the unwavering support of the team, yielded positive results.

Sanchita’s story serves as a significant illustration of the importance of closing the divide between community members and the government’s social security initiatives.

 

The Need for Social Security Programs in India

The Need for Social Security Programs in India is an issue of paramount importance, given the challenges faced by the vast informal workforce in the country. This group comprises an astonishing 92% of India’s labour force, encompassing casual and contract labourers who toil across a wide array of industries. Unfortunately, they operate outside the scope of formal employment benefits, leaving them vulnerable to a multitude of economic shocks and uncertainties.

This demographic of informal, blue-collared workers further highlights the issue of systemic marginalisation that urgently requires attention. An estimated 72-76% of non-agricultural workers within this cohort find employment in industries like construction, retail, manufacturing, and wholesale. These industries often expose them to various occupational hazards, and many of them possess limited educational qualifications, exacerbating their economic vulnerability.

Women within the informal workforce face even more formidable challenges, such as sexual exploitation, lower wages, and diminished bargaining power, further compounding the issues of inequality and social exclusion.

Despite the Indian government’s commendable efforts to provide a wide range of social security programs, a significant portion of eligible individuals remain either unaware of these crucial safety nets or lack the knowledge required to access them. This awareness deficiency is striking, with approximately 55% of individuals having no knowledge of the government’s social security initiatives.

Furthermore, the issue of inadequate access is a matter of critical concern, as an astonishing 88% of India’s labour force, approximately 400 million people, presently lacks proper access to these essential social security programs. This substantial disparity between the existence of these programs and their successful extension to those in need underscores the urgent requirement for holistic solutions to close this gap and safeguard the well-being of India’s informal workforce.

 

The Effects of Inadequate Social Protection

The limited access and utilisation of social protection schemes have had significant consequences. There’s room for improvement in financial inclusion, with approximately 15% of small businesses currently having access to essential financial products and services like affordable bank credit. 

India’s performance in the United Nations Sustainable Development Goals (SDGs) presents opportunities for growth, As highlighted in the 2021 SDG report, the country ranked 121st out of 169 nations. While there is work to be done, India’s commitment to SDGs like No Poverty (SDG 1), Zero Hunger (SDG 2), Quality Education (SDG 4), Gender Equality (SDG 5), and Reduced Inequality (SDG 10) indicates a clear need for enhanced social protection measures.

The development of robust safety nets can bolster individual resilience during unforeseen crises. The insurance penetration rate, currently at 3.2% in India according to the Economic Survey 2022-23, presents an opportunity for growth. 

Rural areas, in particular, can benefit from increased access to life insurance products, where only 22% of the rural population currently holds such policies. This highlights the need for comprehensive social protection reforms to bridge these gaps and enhance financial security for all.

 

A Comprehensive Approach for Social Protection

To address these multifaceted challenges, a comprehensive social protection system becomes essential. Such a system must provide robust protection throughout an individual’s entire life cycle, combining a variety of assistance mechanisms and aligning them with government priorities. 

Stages of Social Protection System

 

Models to Facilitate Access

The adoption of innovative models is crucial to overcoming the barriers hindering access to social protection programs, and two notable approaches have emerged:

  • Fixed Centre Model: One pioneering strategy is the Fixed Centre Model, which capitalises on Common Service Centers (CSCs). These centres are efficiently managed by Village Level Entrepreneurs (VLEs) and function as central hubs for unlocking access to various government entitlements, particularly for underserved populations. This approach synergises with the Digital India Mission, aligning itself with the nation’s broader digital transformation goals. 

It operates through multiple touchpoints spread across the vast expanse of India, effectively fostering sustained access to social protection. By utilising the extensive network of CSCs and the expertise of VLEs, this model brings government support closer to those who need it the most.

  • Change Agent Model: Another innovative strategy is the Change Agent Model, which deploys camp-based initiatives in various settings, including workplaces and residential colonies. Under this model, a cadre of Community-Based Change Agents is trained to bridge the digital divide and facilitate access to government schemes.

These agents are well-versed in basic digital literacy, government programs, and the application process. Furthermore, they play a crucial role in fostering Community Champions who emerge as local leaders, capable of mobilising their communities and imparting essential knowledge about government schemes and services. 

This model embodies an end-to-end facilitation approach, encompassing everything from initial awareness campaigns to hands-on assistance with application submissions and diligent follow-ups with relevant government departments. By embedding support within the communities themselves, the Change Agent Model empowers individuals, enhances awareness, and ensures a more inclusive and sustainable impact.

 

Empowering Communities: The Pathway to Social Protection

In the intricate tapestry of India’s social protection landscape, forging a clear path toward inclusive access is important.  Samhita-CGF has made a significant impact, reaching over 166,000 individuals across India. Our efforts have facilitated government scheme applications, including e-shram, BOCW, artisan cards, and various financial inclusion initiatives such as bank accounts, life insurance. Initiating this transformative journey necessitated a multifaceted approach that addressed the core challenges hindering social protection schemes  effectiveness.

Raising Awareness and Enhancing Accessibility: The cornerstone of this approach lies in democratising information. By making government schemes more accessible, transparent, and user-friendly, the barriers between citizens and vital services are dismantled. 

Community-Centric Focus: Within communities, a specialised focus, especially on women and their families, is pivotal. Understanding the unique challenges faced by these groups enables tailored solutions.

Comprehensive End-to-End Support: A robust support system, starting from document collection to scheme enrollment, is imperative. This holistic approach ensures that the complexities of bureaucracy do not deter individuals from availing themselves of their entitled benefits.

Continuous guidance ensures that beneficiaries navigate the system effectively, securing sustained benefits over time. Establishing multiple touchpoints, both physical and digital, guarantees that support is always within reach, eradicating the sense of isolation that often plagues those in need.

By overcoming challenges, nurturing communities, and cultivating a culture of support, the nation is actively advancing towards a future where social protection serves as more than just a lifeline – it becomes a driving force for comprehensive societal progress.

Within this vision, communities are not mere beneficiaries; they evolve into valued partners. Encouraging active participation and nurturing a cadre of Community Agents of Change transforms passive recipients into advocates. Aligning strategies with government priorities creates a cohesive, responsive system, ensuring that efforts resonate with national objectives. 

 

This article was editorialised by Aakriti Singh and Ayushi Bhatnagar

 

Empowering the Underbanked through the Innovative Pre-Credit Score Initiative

In a world striving for new innovations in pursuing holistic financial inclusion, Samhita-CGF takes a bold step forward with its innovative network alliance to bridge the credit gap faced by underbanked communities and micro-entrepreneurs. In partnership with SIDBI, CGTMSE, and NSDC, Samhita-CGF is introducing the Pre-Credit Score (PCS), an innovative credit scoring framework that empowers first-time borrowers. Unlike traditional scoring models, which rely on past credit history, the PCS delves into income and expense patterns, as well as lifestyle indicators, providing a comprehensive view of creditworthiness. This revolutionary approach opens doors for New To Credit (NTC) and New To Business (NTB) segments, offering them access to formal credit.

The challenge: Access to commercial capital

As per SIDBI, only 2.5 Cr. or less than 40% of the MSME have ever been provided formal credit, which means over 60% of this sector has no access to formal credit. This glaring credit gap persists, particularly in the informal sector, where businesses are often funded by non-transparent, high-interest informal sources. Further, there is a glaring gender disparity in credit usage. Women in India receive credit equivalent to only 27% of the deposits they contribute, while men receive credit equal to 52% of their deposits. 

 

Lending to underbanked individuals, especially those operating informal enterprises, has been a longstanding challenge. The lack of access to adequate and affordable credit faced by the informal sector enterprises is a typical market outcome of information asymmetry, adverse selection and moral hazard. These enterprises essentially have a ‘thin file’ character, with varying degree of quantity and quality of firm-level financial data.

 

Samhita-CGF recognizes the critical need to provide access to commercial capital for sustainable livelihoods. Given that the majority of our workforce falls under the informal economy, it is imperative to provide access to commercial capital that is able to create sustainable livelihoods for the unbanked. The pre credit score (PCS) aims to solve this. It assigns a risk-adjusted rating to an informal enterprise, the proprietor and the household. Feeding into the credit-guarantee backed loan, it allows for injection of sufficient growth capital to help alter the subsistence character of the informal enterprise. 

 

Samhita-CGF’s pre-credit score for informal sector

A pre-credit score represents the risk-weighted profile of the informal enterprise proprietor and his/her household. It uses a 4Cs framework – Capacity, Character, Collateral, and Connectivity. Below is a snapshot of the same.

4 C's Framework for Pre-Credit Score

Each of the four aspects offers unique insights into informal businesses, creating a comprehensive picture. It assesses creditworthiness by considering financial resources, educational background and other credentials, possession of assets, and access to digital platforms. The individual indicators within these dimensions work together to gather information about the borrower’s capacity and inclination to repay the loan.

 

Pre-credit score unlocking commercial capital through credit guarantees 

Samhita-CGF envisions a transformed landscape for informal workers and microentrepreneurs, where financial empowerment is not a distant dream, but a tangible reality. Through the REVIVE Alliance, established in 2020, Samhita-CGF has exemplified its unwavering commitment to this cause. 

 

This pioneering initiative stands as one of India’s most substantial philanthropically funded blended finance and livelihood acceleration facilities, expressly designed to uplift individuals and MSMEs operating within the informal sector. With over 5,50,000 informal workers and entrepreneurs, including more than 4,40,000 women, benefiting from REVIVE over the past three years, Samhita-CGF’s impact is a testament to its resolute dedication to promoting economic equity and sustainable livelihoods. 

 

As we aim to irreversibly increase incomes and improve the livelihoods of 2 million participants over the next 3 years, and 10 million workers and MSMEs in 5 years (with at least 50% being women) through multi-year, multi-intervention support of participants. In partnership with CGTMSE, Samhita-CGF are co-creating India’s first new to credit (NTC) and new-to-business (NTB) focused credit guarantee scheme, to support entrepreneurs obtain access to formal credit. While credit guarantee schemes are not new to India, this scheme will be targeted to supporting only NTC and NTB entrepreneurs to provide a pathway to graduation to the formal economy. 

 

Through this systematic approach, we aim to not only facilitate the graduation of small businesses into the formal economy, but also provide evidence to demonstrate the creditworthiness of these segments as a whole and create a new market for formal lending for banks, NBFCs, and other FIs. Our co-created PCS will be used as a proxy for a formal credit rating and be required as a scheme prerequisite.

 

Samhita-CGF’s pre-credit score framework is a beacon of hope for millions in the informal sector. By extending lending opportunities, we aim to create sustainable livelihoods and promote economic equity. The initiative draws inspiration from data-driven insights and embraces collaborative synergy with external partners and industry experts to build a robust scoring model.

Bridging the Gap: Skilling Initiatives for a Changing Workforce

In India, the need for skilling initiatives is paramount, as they hold the key to equipping individuals with the essential skills required to thrive in a rapidly changing job landscape. This blog delves into the challenges faced by Skilling programs that hinder the program effectiveness. It also highlights Samhita-CGF’s innovative approach to tackle these obstacles, emphasising on the significance of skill development in driving individual success and broader economic development in the face of rapid change.

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India’s demographic dividend, characterised by a youthful population, could potentially be a significant driver of economic growth. However, to harness this effectively, India needs a skilled and job-ready workforce. Unfortunately, India’s current skilling ecosystem grapples with a multitude of challenges that hinder its capacity to prepare individuals for the demands of the modern job market. In this context, let’s delve into the challenges confronting India’s current skilling ecosystem and explore potential solutions to address them.

Young adult learning tailoring

 

Challenges with India’s Current Skilling Ecosystem

1. Limited  access to skilling programs  

 A significant stumbling block in India’s skilling journey is  the inadequate access to programs. Geographical barriers, lack of infrastructure, and financial constraints often stand in the way. This exclusion hampers social mobility and perpetuates income inequality. Empowering marginalised communities with readily available and affordable skilling initiatives is imperative. 

2. Need for Greater Accountability for Training Institutes or Participants 

One of the most pressing concerns within India’s skilling sector revolves around accountability. Numerous training institutes currently fail to deliver high-quality capacity-building opportunities, resulting in a lack of motivation among participants. To address this issue effectively, there is a critical need to establish stringent quality standards and implement robust monitoring mechanisms. 

3. Lack of Placement Focus and Post-Placement Support

Insufficient emphasis on placement support and post-placement assistance within current skilling initiatives leaves a critical gap in the journey towards gainful employment. To address this deficiency, skilling programs must pivot their attention towards providing essential resources like financial aid, mentorship, and networking opportunities for facilitating a seamless transition into the workforce.

 

A  holistic approach for empowering the workforce

India’s diverse workforce necessitates a multifaceted approach, encompassing financial aid and technology. These comprehensive strategies enable individuals to excel in an evolving work environment and navigate the challenges of the modern world, fostering sustainable progress.  

  1. One Individual, Multiple Interventions: It is crucial to provide a range of tailored interventions aligned with different stages of an individual’s career journey. These encompass skill-focused training, financial accessibility, and workplace support.
  2. Access to Finance for Skilling: Overcoming financial barriers necessitates a gradual approach to financial assistance, encompassing initiatives like returnable grants and loans with credit guarantees. This empowers individuals to invest in skill development without financial constraints.
  3. Create Public Goods for the Good of Everyone: Emphasising the creation of public goods that benefit not only individuals but also the broader skill development ecosystem is essential. Innovations such as pre-credit assessments boost confidence among ecosystem participants, supporting first-time borrowers.
  4. Skilling for Sustained Labor Force Participation: Emphasising the significance of ongoing skill enhancement, it is essential to provide comprehensive, long-term training programs that equip individuals not only for career transitions but also for rapid advancements in their professional journeys.
  5. Technology to Accelerate and Sustain Impact: Harnessing technology plays a pivotal role in expanding the reach and sustainability of these efforts. Advanced tracking systems facilitate progress monitoring, streamline onboarding, and provide ongoing support to workers throughout their career lifecycles.

 

 

Our skilling initiatives have made a significant impact, training over 52,000 individuals across 16 states through a network of 70+ centres, with a commendable 70% placement rate.

 

Skills for Life-Program

Acknowledging that India’s economic prosperity and global competitiveness relied on a skilled workforce, HSBC partnered with Samhita-CGF to initiate the Skills for Life Program. This dynamic initiative was designed to uplift unemployed and underskilled youth from disadvantaged socio-economic backgrounds. The program addressed the specific needs of these individuals by providing training opportunities for aspiring drivers while also equipping them with necessary skills to excel as General Duty Assistants within the health sector. 

HSBC - Samhita Skilling workshopSamhita - CGF Skilling workshop


Covering a wide spectrum of 330 participants across three states – Delhi, Haryana, and Tamil Nadu – across 7 dedicated centres, this program served as a holistic training solution for young individuals, nurturing both their personal and professional development. Beyond the in-depth training, participants also received certification and benefited from the job placement support, enriching the education of unemployed youth with invaluable practical expertise.

By empowering individuals across various profiles, providing access to finance, and leveraging technology, Samhita-CGF is making a significant impact in bridging the gap between education and employment, ultimately contributing to India’s economic growth and development.

 

This article was editorialised by Aakriti Singh and Ayushi Bhatnagar

 

 

From Opportunity to Success: Microsoft’s Holistic Approach to Supporting Women Entrepreneurs

When it comes to keeping up with the digital age, women in India face several challenges, which have a significant influence on the growing digital gap in the country. Microsoft, through its CSR Program, has supported a total of 10,000 women entrepreneurs, with the last 5,000 beneficiaries benefiting from a comprehensive approach that includes digital and financial literacy, bookkeeping, mentoring, advanced training for participants, and access to government schemes, all of which are aligned with the theme of sustainable entrepreneurship.

Weaving Entrepreneurial Dreams, One Stitch at a Time: Manisha from Nuh, Haryana 

“After the program, I felt that in order to grow the business, I need to be educated further.”

 

Manisha, is a determined young entrepreneur, from Bichhor village in Nuh district, Haryana. At the age of 19, she found herself in a challenging situation where she had to drop out of school to support her family financially. The conservative environment in Nu district further exacerbated the impact on Manisha’s life as her family opposed her desire to pursue education. As a result, she was confined to her home, without any opportunities for formal learning.

Despite facing these challenges, Manisha’s determination led her to seek guidance from her sister, who was skilled in tailoring. She quickly learned from her and began taking orders directly from home. However, the income from her limited customer base within the village was insufficient. 

A major turning point for her was when she became a part of the REVIVE program, spearheaded by Microsoft. This program taught her how to utilise digital tools and effectively manage her cash flow, enabling her to expand the business and reach a larger customer base. Moreover, it made her realise the untapped potential of her own phone for conducting various business related activities beyond mere communication.

Additionally, the program’s impact extended well beyond the realm of business, positively influencing the overall wellbeing of the community. Nu district, known for its persistent problem of financial fraud and crime, had long been a burden on its residents. However, with the implementation of the REVIVE program, individuals like Manisha gained valuable skills to safeguard themselves from such incidents, fostering a newfound sense of resilience and empowerment that surpassed societal gender constraints. 

Encouraged by such transformative effects and positive changes within the community, Manisha’s parents had a change of heart and agreed to support her in pursuing higher education. This marked the beginning of a promising chapter in her life, where she could simultaneously nurture her business and embrace the educational opportunities she had longed for. 

Manisha’s case study exemplifies the impact of Microsoft’s holistic approach in supporting women entrepreneurs. By providing digital and financial literacy, access to tools and resources and mentoring, Microsoft has empowered women like her to overcome challenges, achieve business growth, and pursue their dreams. 

 

UNDERSTANDING THE CHALLENGES

Entrepreneurship among women is a vital component of the overall solution. However, women-owned enterprises in India face a number of challenges, including:

  • Inadequate access to skilling: Women entrepreneurs often lack the skills and training necessary to run a successful business. This might make it harder for them to compete with more established businesses.
  • Lack of market linkages: This may be attributed to a lack of knowledge of their products and services, as well as social and cultural barriers that restrict women from accessing the market. 
  • Limited access to finance: Women frequently experience difficulties acquiring loans or other sources of funding. This might make it difficult for them to establish or grow their businesses.
  • Socio-cultural barriers: Constraints such as inadequate access to skilling, lack of market linkages, limited financial access, and societal biases represent substantial hurdles for women entrepreneurs. These barriers impede their long-term viability and ability to innovate.

Moreover, the digital divide exacerbates these challenges, making it difficult for them to leverage technology for business growth and success. Therefore, addressing these challenges is essential to unlocking the full potential of women entrepreneurs.

 

MICROSOFT’S PROGRAM INTERVENTION

Microsoft’s CSR Program stands as a shining example of a holistic approach to bridge the digital divide and support women entrepreneurs in India. Recognising the significance of digital tools as a leapfrog intervention in economic empowerment. Microsoft aims to support women micro-entrepreneurs by providing them with the necessary tools and resources to thrive in the digital age. 

Initiated as a pilot program targeting 5,000 women entrepreneurs in rural India, with the goal of providing them with digital and financial literacy skills as well as the capacity to effectively operate, manage, and develop their enterprises. 

 

HOLISTIC SUPPORT FOR WOMEN ENTREPRENEURS

Using a blended support model, Samhita’s partnership with Microsoft has aimed to address barriers and strengthen the women’s entrepreneurship ecosystem across 10 states by focusing on the following key areas:

  • Digital and Financial Literacy (DFL): Capacity Building Sessions were conducted to enhance women entrepreneurs’ digital and financial literacy. These sessions covered topics such as concepts of banking, insurance, and using digital tools such as mobile devices, internet, social media, email, and awareness of e-security and safety.
  • Digital Bookkeeping Tools: Women micro-entrepreneurs were introduced to user-friendly digital bookkeeping tools that streamlined their financial processes. By using the tools, they were able to improve accuracy, enhance cash flow visibility, and make informed decisions based on real-time data. These tools, built on Microsoft Azure, provide flexibility so that they can be used both online and offline, ensuring accessibility even in areas with limited internet connectivity. 
  • Performance-linked incentives: To encourage and motivate digitization in the first phase, high-performing women entrepreneurs or those with progressive engagement were rewarded with incentives. 
  • Handholding support: To promote sustained use of digital tools, and follow-ups for additional resources or support.

 

THE PROGRAM’S OVERALL IMPACT

The first phase of the program successfully trained 5000 women entrepreneurs in digital and financial literacy, and provided them with access to user-friendly digital bookkeeping tools. These efforts yielded the following achievements:

  • 44.1% of participants continue to actively maintain digital account books for their businesses.
  • 62% of women began tracking their borrowing and lending by the end of the program as compared to only 27% at the start of the program. 
  • The number of women tracking inventory, banking operation, and payments increased by 10%, 14%, and 19%, respectively. 

A significant proportion of women entrepreneurs were able to digitize their bookkeeping practices, and were also able to obtain small formal bank loans because of these efforts. These included women entrepreneurs from various cohorts such as artisans, street vendors, dairy farmers and tailors.

 

SCALING UP AND ADDRESSING ADDITIONAL NEEDS

In the second phase, the program has been scaled up to support an additional 5,000 women entrepreneurs and it includes multiple interventions, in addition to digital literacy:

  • Access to Finance: Access to formal financial resources remains a significant challenge for women entrepreneurs, which was addressed by facilitating access to credit and connecting women with financial institutions. By building relationships with banks and fostering partnerships, the program enabled the participants to secure financial resources. This support empowered them to invest in their business, expand their operations, and achieve sustainable growth.
  • Social Protection: By unlocking relevant government schemes and services, women entrepreneurs were able to leverage them to access funding, business development resources, and market opportunities. This strategic approach propelled their enterprises forward by providing them with the necessary support and resources to overcome barriers.
  • Mentoring and Peer Support: Through mentorship, these women entrepreneurs received valuable guidance, industry insights, and access to networks, enabling them to make informed decisions and seize new opportunities. Additionally, the program created peer support networks that fostered a sense of community, allowing women to share experiences and learn from one another.

 

KEY LESSONS FOR DRIVING IMPACT

Microsoft’s program has provided valuable lessons for scaling up and replicating holistic support models for women’s entrepreneurship. There are two key lessons that have emerged from this program:

  • Customisation: It is essential to address the specific needs and contexts of women entrepreneurs. By tailoring interventions, organisations can effectively address the specific requirements of women entrepreneurs, increasing their chances of success.
  • Partnerships: Collaborations with financial institutions, government agencies, and community organisations create a comprehensive ecosystem of support that helps in offering assistance and guidance to women entrepreneurs in their businesses. 

 

These lessons serve as valuable guidelines for organisations aiming to develop impactful programs for women entrepreneurs, and Microsoft’s Program stands as a testament to the effectiveness of such an approach. Ultimately, when organisations combine tailored approaches with strategic partnerships, they can create an environment for women entrepreneurs to thrive.

This article was editorialised by Ayushi Bhatnagar and Evans Rebello.

The REVIVE Alliance – Creating A Sustainable Future For India’s Informal Sector

 

India’s informal sector makes up a significant portion of the country’s workforce ~43% and provides employment opportunities for millions, especially those from the marginalized communities. 

However, despite its huge contribution to the economy, the informal sector operates without formal recognition. Currently only ~16% of all MSMEs have access to formal credit, creating a huge credit demand for working capital and capacity building support. This gap is further exacerbated for women, with 92.1% of women-owned MSMEs being unregistered / informal, and are therefore unable to access formal finance. 

As majority of the micro enterprises are either New to Credit (NTC) or New to Income(NTI), they are not deemed to be creditworthy, and are considered “high-risk customers” by formal lending institutions (LIs). 

This lack of support leaves individuals vulnerable to economic shocks, hindering their growth and preventing them from realizing their full potential.

Informal workers, including micro-entrepreneurs, have a huge potential to contribute to India’s economic growth, social progress, inclusive growth, and reduced poverty.

Samhita Revive Alliance clients

The REVIVE Alliance: A Catalyst for Change

Over 80% of solo, nano and micro entrepreneurs are either NTI, NTC, or New to Formal Credit (NTFC), have not completed basic KYC, GST, and other formalization activities, and do not have access to diverse markets. 

This shows the dire need for support from the private, philanthropic, financial and public sectors to band together to bridge this credit gap, and enable the rapid formalization and growth of these entrepreneurs. 

To support these efforts, Samhita-CGF founded the REVIVE Alliance, a collaborative platform that aims to increase incomes, improve livelihood opportunities, and enable the formalization of micro-entrepreneurs, making them more resilient to potential future shocks.

Through a multi-year, multi-intervention approach, REVIVE addresses critical challenges faced by informal workers, providing them with comprehensive support across 5 key interventions.

 

     1 . Financial Literacy and Inclusion

REVIVE focuses on enhancing financial literacy, facilitating access to formal credit through the Returnable Grant, as well as offering savings and investment support. 

Training programs and workshops are conducted to enhance financial literacy and promote savings habits. Additionally, REVIVE collaborates with financial institutions to facilitate access to formal credit and capital, catalyzed by the Returnable Grant that facilitates a graduation model. 

By enabling participants to navigate the financial landscape, REVIVE paves the way for financial inclusion and improved financial stability. 

 

     2. Skills Development and Job Progression

Limited skills and job opportunities often result in low wages for informal sector workers. REVIVE addresses this challenge by offering skill development programs that upskill / reskill job seekers and entrepreneurs. 

By partnering with training institutions, sector skills councils, and industry experts, REVIVE is able to deliver skilling programs to enhance technical and management skills, as well as entrepreneurial capabilities.

Woman artisan painting a pot

     

3. Enterprise Strengthening and Market Linkages

REVIVE aims to bridge this gap by providing enterprise development support and facilitating market linkages, so as to bridge the network gap and equip micro-entrepreneurs with the resources they need to thrive. 

Through these connections, micro-entrepreneurs are able to scale their businesses and expand their customer base.

     

     4. Digital Empowerment

REVIVE bridges the digital-divide through digital literacy and empowering participants with the necessary digital skills, covering topics like digital safety, financial tools as well as platforms that can help them with employment opportunities.  

Rural man and woman making digital payment

 

     5. Social Protection

REVIVE unlocks government schemes and facilitates access to affordable healthcare, insurance, pension schemes, trade-specific benefits and other social security benefits that provide a safety net for informal sector workers for income security and protection against unforeseen risks.

 

Fostering an Enabling Environment

REVIVE brings together a whole ecosystem of players – the government, corporates,, foundations, financial institutions, nonprofits, and other such stakeholders to create an enabling environment. 

Blended finance tools, such as the Returnable Grant, play a crucial role in providing NTC and NTI workers with access to capital on favorable terms, allowing them to invest in their businesses, scale their operations, skilling, get formal loans, etc. 

Through the co-creation of public goods, such as a pre-credit score, REVIVE aims to enable micro-entrepreneurs to access formal finance easily. The pre-credit score, backed by a credit guarantee, can be used by financial institutions to offer credit to first time borrowers, acting as a proxy for credit ratings and proof of ability to repay.

 

Impact and Potential for Scale

The REVIVE Alliance has the potential to create a transformative impact on the lives of millions of informal workers. By enhancing their livelihoods through improving access to finance, and enabling skills development, REVIVE aims to uplift micro-entrepreneurs and drive socio-economic progress. 

The ripple effect it can create extends beyond the immediate participants, positively impacting their families and communities.

With an initial target of impacting 10 million individuals, the REVIVE Alliance aims to scale its interventions and reach an even larger segment of the informal sector in the coming years.

By empowering informal workers through financial literacy, skills development, enterprise strengthening, and digital empowerment, REVIVE aims to build a thriving future where every individual has the opportunity to succeed and reach their full potential.

 

The Blended Finance Continuum: A Catalytic Pathway for Financial Inclusion

In India, the informal sector represents a significant portion of the workforce, employing more than 90% of workers and contributing around 50% to the country’s GDP. However more than 160 Million Indians remain underserved by formal credit systems

Access to formal credit, economic growth, and financial inclusion are critical for the development and empowerment for entrepreneurs in underserved communities. The lack of credit score and credit history is an impediment for getting credit opportunities, as many lenders are hesitant to extend credit to consumers without any credit history or score.

The innovative approach of a blended finance continuum can be a catalyst and pathway towards accessing future formal credit, driving economic growth, and providing financial inclusion for underserved communities.

In this blog, we will explore how the Returnable Grants, in conjunction with a pre-credit score, and credit guarantee, has the potential to create opportunities to transform lives for those in the informal sector.

 

Blended finance continuum: Opportunities or graduation into the formal economy

Blended Finance Continuum

The blended finance continuum offers a progressive pathway for participants to move up the chain of financial instruments from grants to commercial debt. As participants repay grants, they build a credit history and become eligible to unlock more capital from mainstream financial institutions. 

The aim of the model is to eventually make participants eligible for commercial loans. A large proportion of women are first-time borrowers and don’t have the credit history, collateral or documents to take formal loans. 

The pre-credit score with financial institutions and experts can be used by banks and NBFCs to offer affordable credit to first time borrowers; acting as a proxy for credit ratings and proof of ability to payback.

A rural women using a laptop

Paving the Way for Financial Inclusion

The Returnable Grants(RG) serves as a stepping stone for individuals and enterprises to transition from the informal sector to the formal financial system. By providing safe and flexible capital, the RG model enables micro-entrepreneurs, artisans, and job seekers to expand their businesses, invest in raw materials, and access new markets. 

As participants successfully utilize and repay the Returnable Grants, they build a credit history, gain financial knowledge, and establish their creditworthiness. This process aligns with the graduation model, which helps individuals progress from informality to formality, increasing their chances of accessing future formal credit.

“Fairoza Banu, a beauty-entrepreneur, used the RG model to expand her business. With the capital she received, Fairoza invested in high-quality materials and diversified her services. As Fairoza repaid the grant, she was able to show that she was able to pay back and be creditworthy.”

 

Pre-Credit Score: Unlocking Opportunities for New Borrowers

One of the significant barriers faced by individuals with no previous credit history is the lack of assets or creditworthiness. A pre-credit score framework is able to assess the creditworthiness and enable them to transition to the formal economy for accessing credit. 

Through evaluating repayment behavior and financial capacity, the RG model assesses the creditworthiness of underbanked individuals. Data collected from first time borrowers of the returnable grants along with other interventions can serve as a proxy to a traditional borrower..

This approach can provide first to credit borrowers with an opportunity to establish a credit history, demonstrate their repayment abilities and credit worthiness. 

Steps for building credit history:

  • First-time borrower repays returnable grant/debt
  • Provides access to financial, behavioral and repayments data which will feed into the pre-credit score
  • Pre-credit score will be used to estimate repayment capability of the borrower when trying to avail commercial credit from Banks/NBFCs

“Repayment of the Returnable grant builds positive credit history and for entrepreneurs like  Fairoza, can put the on a pathway toward formalization to access formal capital, so that in the future she could potentially take formal business loan and expand her business, and even support in the creation of jobs as her business expands.”

 

Improve access to relevant financial services on appropriate terms

A credit guarantee can mitigate the risk associated with lending to underserved communities and individuals. It acts as a form of assurance for financial institutions to provide formal credit to these marginalized groups.

  1. Risk Mitigation: A credit guarantee reduces the risk for lenders by providing a backup plan in case of default. This increased security will encourage financial institutions to extend credit to underserved communities who would otherwise be denied access. 
  2. Access to Formal Credit: A credit guarantee can bridge the gap between underserved communities and formal financial institutions, ensuring they have equal access to credit opportunities, establish financial stability, and become part of the mainstream financial ecosystem.

“As Fairoza’s business grows she may want to access higher credit amounts and access financial services, with a pre-credit score and a credit guarantee, a bank, confident in the credit guarantee provided by the RG model, can offer Fairoza and entrepreneurs like her access to great financial services. Such a collaboration can not only facilitate Fairoza’s growth but also encourage other financial institutions to support underserved communities.”

Indian women smiling

 

The Returnable Grant (RG), in conjunction with the graduation model, pre-credit score, and credit guarantee, has the potential to be a transformative approach to improve access to  future formal credit, increase economic growth, and provide financial inclusion for underserved communities. 

Through the graduation model, individuals and enterprises in the informal sector can overcome the barriers that traditional financial institutions impose on them,

  • The Returnable Grant: acts as a stepping stone for individuals to transition from the informal to the formal financial system, enabling them to access future formal credit and expand their businesses.
  • Pre-Credit Score: Evaluates repayment behavior and financial capacity of participants, to establish a proxy credit score, which paves the way for accessing formal credit in the future.
  • Credit Guarantee: mitigates the risk for financial institutions, encouraging them to lend to underserved communities and fostering economic growth.

The impact of the RG model can be seen through real-life examples of individuals who have transformed their lives and communities. 

It has empowered women like Fairoza to access formal credit, formalize and expand their businesses, and contribute to local economic growth and her family’s needs.

Through partnerships with financial institutions and philanthropic agencies we aim to create public goods like the pre-credit score and credit guarantee facilities, and unlock the full potential of the MSME sector to drive sustainable and inclusive economic growth.

Becoming an all-rounder

Artisan: Salma Ben Rajanpur, Gujarat

Supported by STFC’s sewing training

44-year-old Salma Ben comes from the Rajanpur area of Gujarat. “I am an all-rounder,” she says when asked about her skill set that makes her a growing artisan and micro-entrepreneur. “I have my sewing, tailoring business that runs out of my house. I do all kinds of work – cutting, designing new patterns, stitching, tailoring, etc.”

Salma Ben has been associated with STFC for the past three years and it all began with the advent of COVID-19. “Everything was shut. My husband lost his job. We had no income to make ends meet,” says Salma, who is a mother of three daughters and two sons. “All my children have passed class 10th except one son who is still studying. None of them are working and so I was the only provider at that critical time,” she adds.
This kind of crisis was met by Salma after she was determined to find new work. “I was asking everyone if there was a way to find more work. And this is when through a relative, I was introduced to STFC. They instantly became my pillar of support as they pulled me into their tailoring training and the first thing I ever made for them were thousands of masks,” remembers Salma.

At that point when many households were struggling with basic income, STFC began running its training programs and onboarded women who could make masks, cloth bags, basket bags, etc. This training usually consists of about 25 women in each batch and continues for about 3 months totaling nearly 45 hours. “I feel so fortunate that STFC provided me with free training when it was most needed. Earlier, I was doing tailoring work but that didn’t amount to much income majorly because I was dependent on local orders, which would only come at festivals or weddings. Also, the sewing machine was an old one and it was only during the training that I was introduced to a better machine that helped me do all tasks without depending on others. I also learned very critical skills such as cutting, and pattern drawing/designing – which earlier, I had to get done from someone else thereby losing further money,” explains Salma.

 

The training was crucial in not only their support but also in providing raw materials and equipment at zero cost. “I had earlier taken private classes but since I had to purchase my raw material, I could not continue those classes for long. It became a super expensive affair,” she says. Adding to this, Salma ben was introduced to a pool of determined women just like hers who took charge of their households at such a crucial time. “I was in such awe to see so many neighboring women just like I come out of their houses and learn a skill and become an entrepreneur. My husband still makes very little income- about INR 3000/month and with the support of STFC, catering their orders alone amounts to INR 8000/month. Right now, without my support, we can’t run our family. And without STFC’s support, I couldn’t have reached here”.

Salma ben has not only been influenced by so many other women like her but has also inspired many other women who have joined the training courses and are determined to work towards raising their income levels. “During COVID, I used to work for 10-12 hours straight. But then I fell sick and could not sit for so long. I have trained my daughters and now they help me in finishing orders.”

While Salma ben has still not named her business, she is determined to reach an income of INR10,000-12,000/month by taking more orders through STFC.

 

 

 

The Need for Partnership: Empowering Women-led Businesses through Collaboration

 

In this series, we delve on the key lessons from the Samhita -Collective Good Foundation (Samhita-CGF) and Microsoft Project on how to empower women entrepreneurs through digital financial literacy and build a stronger framework for the second iteration.

 

Women Entrepreneurship: The Indian Landscape

The COVID-19 pandemic had long-lasting devastating effects on the Indian economy, especially when more than 75% of small-scale livelihood families, who were into jobs like farming, construction and owned shops/stalls lost their ability to earn their daily wage income. But it also inevitably encouraged a new wave of women entrepreneurship, as the women, who were traditionally homemakers, realised that they could utilise their basic skills to make masks and other products and generate money, and decided to take on the mantle to run their households for the sake of survival through those tough times.

This wave of change quickly transformed women entrepreneurship into a fast-growing sector, and as of 2022, there are more than 13.5 million women-led enterprises in India. But they still attribute to only 20% of the total entrepreneurship in India. There is much more that needs to be done, and that can happen with the help of digital and financial inclusion. Financial inclusion can be considered the basis for enhancing the economic growth and empowerment of a particular country, and is a core need when thinking of establishing any entrepreneurship. This is even more imperative for women, as they lack the financial independence that is naturally granted to men in a patriarchal society. This is in different forms as outlined below:

BARRIERS TO ENTRY

  1. Socioeconomic and Cultural Barriers: There are many women who still end up handling a second shift model, where they are expected to handle both their businesses and homes simultaneously. 63% of women prefer to work from home for the same reason. This restricts their ability to expand their businesses, as they are not able to give in more time to establish it.
  2. Lack of Access to Funding: Women entrepreneurs usually tend to depend on immediate family, friends and relatives for financial support to start up and establish their business. Due to lack of financial literacy, many women do not even know how to be able to handle their own bank accounts. As a result, even as of 2022, even with 85% women who have bank accounts, there is a 37% gap in funding for women enterprises.
  3. Low level of awareness of government schemes: There are a variety of social security schemes provided by the Government of India like financial inclusion, insurance and direct benefit transfers (DBTs)which help to safeguard the future of Indian citizens, irrespective of gender, age, religion or class. However, a majority of women are not aware about them because it is not a topic that comes up in general discussions with other women.

All of these factors play a significant role in determining how women-led businesses are able to flourish in the Indian market.

EMPOWERING WOMEN

Financial and Digital Empowerment of Small Women-Led Businesses

In order to recognise the need to bridge the gap between women entrepreneurs and digital financial mechanisms, Microsoft decided to empower 5000 women through their pan-India scale-up project with Samhita-CGF. These interventions included:

  1. Provision of access to government schemes and services: The women entrepreneurs were made aware about the schemes provided by the Government of India, broadly covering financial inclusion, insurance and direct benefit transfers (DBTs). They were educated about eligibility criteria, and were provided with hand-holding support in procuring the scheme related documents, and the post-application process.
  2. Advanced entrepreneurship training: The women were trained on the MeraBills digital bookkeeping app, on topics like retaining a bank account, cash flow management and how to use the digital banking services. Additionally, they were taught financial planning. The entrepreneurs were also provided training the marketplaces to sell their products.
  3. Mentoring and capacity building to help other members with their existing skill sets: The entrepreneurs who were provided with the advanced training were also moulded to become mentors to the other women in the cohort.
  4. Enabling credit for their respective businesses: Samhita-CGF got in touch with the banks and non-banking financial companies to create a criterion for the beneficiaries to be connected to the right financial schemes that suit their business. The information included the process of loan disbursement, and how they can return the money in the signed period of time.

PARTNERSHIP FOR STRONGER IMPACT

One of the core reasons why partnerships like these are needed is because each firm has their own expertise, which can be utilised to help those that need it the most. For instance, Microsoft has access to the most innovative technological services available, while Samhita-CGF, through its REVIVE program has an understanding and expertise on financial inclusion. They also give businesses a chance to expand their particular customer base which makes it easier to reach out to more beneficiaries.

Stitching Her Business with Digital Empowerment: Meenakshi from Barmer

“Now I’m able to take money from my creditor and keep

monthly accounts of my deposits.”

 

Meenakshi, a 26-year-old resident of Barmer in Rajasthan has always had a strong desire to contribute to her family’s income through her tailoring business. However, managing the finances was a challenge for her, and she often had to depend on others for assistance. Her lack of familiarity with digital payments and bookkeeping made it difficult for her to transition to the new normal. Fortunately, through the REVIVE Project, Meenakshi was able to acquire the digital financial literacy skills needed to thrive.

Her story is a testament to the power of digital financial literacy in empowering women entrepreneurs. Here’s how she did it:

Meenakshi was introduced to the REVIVE Project through Pappu Kanwar, a master trainer from Barmer. She was taught how to operate the phone, use online banking, and send money using UPI. Additionally, Meenakshi was introduced to a digital bookkeeping app called MeraBills, which made it easy for her to keep track of her finances. In addition to reminders, financial reports, and budgeting, she no longer requires assistance with her finances and is independently operating her business.

Just like Meenakshi, there are several other women micro-entrepreneurs that are being connected to the digital world through skill building.

 

FINDINGS & WAY FORWARD/ ISSUES TO CONSIDER

Some of the considerations for the future could be as follows:

  • Enabling online training via mobile phone: Women who participate in such cohorts usually come from a low-income background, hence have to delve into multiple odd jobs in order to support their families’ livelihoods. Enabling online training will allow more women to be able to participate at their convenience, and hence gain digital and financial literacy skills.
  • Having a women-only training: This might prove to be effective in ensuring dissemination of learnings. Additionally, personalising the experience with one-on-one sessions, will help the women to develop more trust in the process and work harder on incorporating digital and financial literacy into their livelihoods.
  • Provision of data connectivity: Teaching skills is effective only when the women will be able to practise and use the MeraBills digital bookkeeping app in their shops and neighbourhoods too. Hence, the provision of adequate data connectivity in common service centres, panchayat buildings should also be included as part of the programmes.
  • Promoting more diverse learning: Curriculum content is better understood when it is supplemented with stories, videos and activity-based learning. The trainers can be equipped and encouraged to deliver their complex ideas in a simpler manner for the women to be able to better retain the information in the long-term.
  • Associating the women with unique identification to track their progress: Women in these cohorts usually use their family’s phone numbers to register and implement the program. Creating a unique id will help to identify them as individuals, and monitor their individual areas of improvement and growth.
  • Determining an effective pay-for performance process: On achieving a particular milestone, the women were paid ₹400 to encourage them. However, money can often be seen as charity and/or insufficient for the particular need. A change in amount and more clarity on the rationale to the beneficiaries will help to make the process more efficient.

The Samhita-CGF- Microsoft program has been instrumental in changing the lives of more than 5000 women entrepreneurs so far, and the second iteration will help to take this partnership forward to benefit many more women. It is inspiring to see stories of resilience like Meenakshi, and it is our hope that many such women are able to utilise the digital book-keeping and capacity building skills and tools to further advance their businesses and live a life of dignity.

 

This article was editorialised by Ayushi Bhatnagar and Tanvi Deshmukh

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