Aspiring polymath since 1982

Back To Work

Well, am now back to the world of the living and the gainfully employed. I have taken up an opportunity to work with a startup microfinance organization based in Mumbai For me, the attraction is two fold:

  • I get the opportunity to work in a startup organization in a pivotal role and help in shaping its future prospects, its culture and its success
  • I get to continue working in the field of social ventures even though this time round it is as an employee rather than as a potential entrepreneur

Urban microfinance is quite a nascent field in India because the focus of the government and the NGO sector has traditionally been on the less developed hinterland. The fact that is conveniently ignored is that migration to urban areas has intensified over the past decade of liberalization and that urban poverty is as omnipresent a problem as rural poverty. Interestingly, last year it was declared that for the first time in the history of the world, urban population had exceeded the rural. It just shows the increasing urbanization of the world is a process that is not going to end any time soon.

In India, the population in cities is increasing so rapidly that the average population of an Indian metro today begins to rival that of small European and African countries. There is a study which shows that Delhi adds on an average 665 migrants daily and Mumbai around 236. Thats over 300,000 people annually added to the Delhi population and over 200,000 to Mumbai’s. It is no wonder it is projected that by 2015, Mumbai and Delhi will rank as the 2nd and 3rd largest urban agglomerations in the world. Thats just another 7 years away.

There are a smattering of organizations, mainly in the NGO sector that are working in the urban microfinance space but none of them have actually been able to create a model that is self-sustaining and that achieves exponential growth. Its obvious that this is because they have not been able to understand what the consumer for urban microfinance services requires and actually, the problem might actually be even more fundamental, that these organizations do not view people accessing these services as customers in the first place.

This is the reason why there are no urban microfinance organizations that have reached the scale of players in the rural microfinance space like Spandana, Share Microfin, BASIX and others. Of course, one hears frequently of microfinance organizations that have been successful in setting up rural projects talk about entering the urban space, but it still remains to be seen how many of them will be able to successfully translate their learnings and in-house processes to reflect the realities of urban India.

In the end, urban poverty is something that requires as much attention from the policy makers, civil society and other institutions as rural poverty. There is an interesting UN-HABITAT report that urban slum dwellers are actually worse off than their rural counterparts. As usual, any such report should be taken with a pinch of salt but it does corroborate my own experience in both urban and rural settings of poverty. Of course, my experience is as sketchy as they come and should be taken with an even bigger pinch of salt.

At the end of the day, the success and viability of our society depends on how well we can patch together the disparities in its fabric created due to economic and social circumstances. Microfinance in all its avatars is definitely an important tool at addressing these disparities and bridging the gulf between them. In the packed slums and chawls of urban India, the financial returns, security and social validation that microfinance can bring to the people living in them will go a long way forward into bringing people out of the vicious circle of poverty of opportunities that afflicts them now.

And in the course of doing that, if urban microfinance in India is also able to create a microfinance praxis that can be easily translated to urban third-world settings across the world and do so in a financially and socially sustainable manner, it would do no less than change the world. Let’s see how this innings goes then.


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