Posts Tagged ‘dharavi’

Women Together: Incentivising Savings

Prema Salgaonkar has been working with Mahila Milan for over 20 years and now heads a group of local facilitators of a daily savings scheme for Dharavi residents. Mahila Milan means “women together” and provides a decentralised vehicle for the empowerment of women via leadership roles and advocacy alongside its pivotal daily savings collection. Prema visits around 450 households each day, of which a third will deposit anything between Rs 5 to 200, with almost all households banking something each week. Such a savings mechanism is ideally suited to the irregular nature of earnings at the base of the pyramid which we have been widely discussing here.

The deposits from a number of collectives are formally banked but rather than paying interest Mahila Milan provides community and emergency support in a transparent manner. For many, without this daily visit which both incentivises and protects savings, surplus cash would not even be conceived of – let alone put aside. Savings are readily accessible and members of the scheme can apply for credit if required. If loans are requested the local Mahila Milan leaders will assess the need and ability to repay, possibly consulting with neighbours as to the borrower’s situation. Repayment terms are negotiated on a case-by-case basis around the borrower’s earning patterns, with consideration given to the maintenance of some savings alongside repayments. Loans – usually for up to Rs 500 at 2% interest – have helped with school fees, medical bills and entrepreneurial start-ups from tailoring services to coconut vending.

Beginning in Mumbai in the eighties, initially Mahila Milan had many more illiterate members and developed a system whereby coloured squares of paper would be exchanged for deposits and kept by the saving member in a plastic bag: red for one rupee, yellow for two, green for three and so on. This way members could always check how much money they had access to and plan accordingly. Now this system has been largely disbanded and replaced with passbooks which members were proud to show us and explain the context of various peaks in savings and withdrawal. Currently Mahila Milan constitutes a networked federation of nationwide woman’s collectives encompassing 60,000 women

The system is not just about collecting money but also about daily contact which deepens the understanding of various issues facing Dharavi residents. Contributing to a consensus of community priorities, this information is often passed on to other support groups in the area such as the local community council (panchayat) plus used to inform a number of Mahila Milan initiatives. One of our informants (above) who used the scheme conveyed that even on the days when she has nothing to deposit that its was reassuring to be visited by a trusted outsider with sound financial knowledge and that she sometimes used the opportunity to discuss issues such as how rising food prices were affecting those beyond her own neighbourhood. She notes that watching her savings grow has allowed her to start imagining and planning a better future for her family – with her mother and sister also active members in the scheme.

We were told of numerous success stories like the woman who saved towards buying a second-hand sewing machine which allowed her daughter to leave a gruelling job at a local garment factory to start her own now-flourishing dressmaking business. Another woman with six children and an alcoholic husband saved Rs 5-10 a day till she had Rs 5000 with which she bought a machine to process heavy duty plastic for recycling and now boasts a much higher standard of living for herself and her family. Others access their savings on a more short term basis to counter income fluctuations – still signalling a heightened life standard. And significantly most continue with their savings schemes while servicing their loans.

Micro-credit has been commanding a fair amount of attention surrounding poverty alleviation of late – including voices of caution as have featured on blog posts below. Mahila Milan seeks to strengthen financial assets primarily through savings-led services with micro-loans being offered as a secondary and complimentary service. Last year’s brief article Putting the Microsavings in Microfinance from the New York Times makes the highly relevant point that “only some poor people will benefit from the chance to borrow, but almost all will benefit from the chance to save.”

[Check out more photos from fieldwork at Dharavi.]

Savings Circles

Sudha makes and sells floral garlands at Dharavi and as our conversation turned to savings she told me that she used bishi. I’ve spoken to a number of people at Dharavi who participate in bishi schemes (bishi = money matters in Marathi). Bishi is a kind of informal and voluntary local savings club which has a long history in India and has been employed rurally to also save and credit rice and grains. Bishi schemes constitute a type of Rotating Savings and Credit Association (ROSCA) – which are found across the world in base of the pyramid communities under a number of various names.

The schemes have various forms but at Dharavi basically go something like this example: a voluntary group is formed of 12 women within a particular community nominate an amount that they will each put into the scheme each month. (eg. Rs. 500) providing a monthly total of Rs 6000. Every month they will draw a saver’s name on a lottery system to be awarded the collective Rs 6000. Then that person will be removed from the list so that they cannot claim the full amount twice within a 12 month cycle. On occasion one of the participants may require credit from the group rather than waiting for their name to be drawn (eg. their cooker broke and they need to purchase a new one) They can appeal to the group and together they decide whether to award the full amount to them that month instead of using the lottery system.

Initially I had to work hard to put aside my assumptions about the inadequacies of bishi schemes. Yet after talking with a number of women I came to realise that they provide a local savings mechanism in which community participation creates a social pressure to save within a trusted environment with no transaction fees. The potential to fluctuate between emergency credit and the lottery system suits the flexible needs of investors. For some women I spoke to it wasn’t their only form of saving yet seemed to nurture a social platform on which to discuss money matters between women. Many were proud of what they had purchased via the scheme. (fridges, school fees, sewing machines, etc)

Some mentioned that even children run small bishi schemes, putting in Rs 2 each a day amongst 30 kids and drawing on a lottery system weekly to win Rs 420 – providing them more motivation to save than merely putting aside money alone which creates too much temptation to spend. Such incentivising to save is mentioned by all women I spoke to though others mentioned that the tendency to spend immediately on winning doesn’t support planned investment. Some told me it was an effective way of drawing some money away from male control of household finances.

The widespread and trusted nature of bishi schemes have indeed evolved into a number of more complex community run micro-finance models, some of which even intersect with more formalised banking. Merits and demerits aside – bishi highlights the social aspect common to many savings and credit schemes at the base of the pyramid.

Coping Strategies as Food Prices Soar

Surging food prices, partly due to the lowest monsoon rainfall since 1972, are being widely reported in India this month. I’ve been asking  female informants and neighbours at Dharavi how they are managing the pressure on household expenses.

Many tell me that they are adding more water to some dishes – making thinner dhal for example. Some pitch in together between a few households to make weekly trips to larger wholesale vegetable markets by train. Most of them already buy onions in bulk locally and have noticed a sharp increase in current prices so are now using less per meal. Larger families reported that they are cooking without coriander and with less chilli as these items used to be thrown in by vendors for free with a decent purchase but with recent price increases this practice is being curbed. One woman told me she had been experimenting with cooking the leaves of cauliflower which she used to discard.

During earlier price hikes many mention that they would add potatoes to other vegetables to make them go further – but most women I spoke to seemed well aware that potatoes in particular have gone up a lot in the last month. News about the price increases have been widely reported across news channels and most people I speak with have access to television. And for those who don’t – this kind of locally relevant news travels quickly through the community.

Island Life

Shankar Jadhar’s friends describe him as an “all-rounder”. The 40 year old Dharavi resident is married with 5 children and lives close to the traffic island which he has laid unofficial claim to, from where he conducts his business. He had been a barber for 20 years but when the road was altered 5 years back he lost his barber’s stall. Now he’s set up a makeshift stall and a shack to store items for his work in Dharavi’s recycling chain, encompassing multiple sources of income from the single location.

He buys various items (shoe soles, plastic bottles, glass bottles, wiring for its coper content) from local ragpickers which he then sorts and cleans up to sell on to middle men who deliver specific goods to recycling units elsewhere in Dharavi. There are bigger operations that do the same job utilising salaried workers but Shankar enjoys the independence of being self employed and amongst his community as he works. He makes better money from his recycling enterprise than his barber stall so he’ll make haircut & shaving customers wait till evening if he has a big haul of recyclables to get through.

On average he profits Rs 150-200 per day. Sometimes he employs up to 2 others to assist when he has a lot to get through (paying Rs 30-50 per day). On further questioning of his friends it seems that often others help him for short periods at no cost as his spot is a kind of neighbourhood hangout centre – though I’ve noted on numerous visits that Shankar is always busy on something and doesn’t sit around himself. Although he has erected a semi-permanent structure on the traffic island, the authorities have turned a blind eye due to the bribes he pays 2-3 times a year (Rs 100-200). Being well regarded in the area, Shankar has never been a victim of theft.

During monsoon his earnings are reduced by around 25-35%. He also fails to earn if he is sick or during the 3-4 weddings he attends a year plus income drops during the monsoon season. I’ve started to discuss savings and loans with him and will be getting more into this during upcoming interviews. His income is supplemented by his wife’s Rs 2000 per month salary which she earns washing dishes, etc for a middle class family in Bandra for 4 hours daily.

Dharavi: Initial Impressions

Ahead of my research in ernest of unpredictable incomes at Dharavi in Mumbai this month, I am taking this week to explore and photograph the area. I’ll be uploading images in upcoming weeks to my Dharavi Flickr set.

And in the spirit of appreciating those on limited incomes I have opted to take the train to and from the research site. Having visited Mumbai since childhood I have had the privledge of chauffer driven transport in the city or have opted to take taxis. The train from Grant Rd. to Dharavi costs Rs 8 return versus about Rs 300 by taxi. But I’m beginning to appreciate that this also provides a quanitifiable travel time rather than the unpredicatble traffic jams one gets stuck in by car – an important factor if you need to arrive at your destination in a timely manner. Plus for an extra Rs 1 I can indulge in having my fortune told and weight measured by the ubiquitous slot machines at Indian railway stations!

Image: Dharavi youth with 44 gallon drums which are recycled locally for national and global corporates.