How a Classic Model of Social Commerce Can Teach the World How to Save
Tuesday, November 29, 2011
In a dusty hallway in Mumbai’s Dharavi slum, two women barter used clothes for pots and pans. The going rate today is ten pieces of used clothing for one new tin pot.
This is the informal economy, growing as the world’s population continues to urbanise in mega-cities like Mumbai and São Paulo. In Mumbai, where 60% of residents live in slums, activity in the informal economy, from bartering to neighborhood savings groups to co-ops, rivals the scale of the formal economy of retail stores, banks and taxes. The scale of this endeavor has not gone unnoticed by the corporate sector, and companies are beginning to embrace this population as a future market for their goods and services. But more important than what they buy is what they can teach about building highly integrated neighborhood economies.
Shabana Begum smiles shyly as she opens the door to her small home in the Dharavi slum. Dirty water pools in the meter-wide lane that passes her door. Laughing children rush past towards a pick-up game of cricket. Her two older children proudly show off their impeccably neat 40sqm home, as Shabana describes the savings group she’s been a part of for the last three years. Savings groups, pioneered in slums like this one and spread throughout the world by the organisation Slumdwellers International, are the backbone of a neighborhood support system that provides these communities services that the government and corporate world does not provide.
Shabana saves 100 rupees a day (about $2) through her savings group. Her husband, a rickshaw driver, earns 500 rupees a day. There are twenty families in this group. A volunteer representative comes by her home each day to collect her contribution. Saving 1/5 of your income is no small feat. When I ask her how she is able to save that much she says, “My husband makes a good living, I’m able to save it easily. It’s important to save every day.” She pauses, “And I’ve not had to take one withdrawal from it yet.”
