Monday
February 8
2010

Sriram Gutta

Market Linkages: The Achilles’ Heel of Livelihoods

Over the last two decades, models for livelihoods for the poor have come of age and many organizations have focused their efforts on reducing the vulnerability of marginalized communities. A lot of these activities have been through the efforts of NGOs, international funding agencies, and local organizations working in specific regions and with specific segments.

Though these models have been successful in creating employment, they haven’t scaled to realize their true potential. One such example is of Chamba chappals where over 500 artisans make sturdy and beautifully designed footwear in their homes or small shops. Chamba chappals have long been known for their durability and exclusive designs, many of which are now being developed and sold by footwear manufacturers at exorbitant prices. Yet, in the absence of proper advertising and market linkages – critical to ensuring these organizations take advantage of existing market opportunities, the Chamba artisans are finding it increasingly difficult to make ends meet.

Before moving forward, it is important to define ’market linkage’ for the benefit of all readers. This definition is my view-point on the topic and may vary from other definitions. A clear market linkage is comprised of one or more organizations that facilitate end to end integration of the entire supply chain – mobilize the women, train them, provide necessary infrastructure, supply inputs, provide capacity building training, and buy-back the finished product.

In simpler terms, an established market linkage frees up the women workers so they need only concentrate on production or sales (in the case of micro-entrepreneurs) and earn their livelihood.

Though some organizations have successfully created market linkages and achieved scale, we as an industry have a long way to go. I have listed four models that can each be effective in creating organizations that are scalable and sustainable:

1) Community managed organizations – These organizations mobilize groups to come together towards a common economic activity. They provide various types of capacity building to provide the necessary functional and technical skills. High volumes ensure benefits in the form of better pricing, lower operational costs, and removal of intermediaries. One of the most successful models in India is that of ’Shree Mahila Gram Udyog’ (Lijjat papad – thin crispy Indian wafer). The organization reaches 42,000 women in 72 branches across various states. Through the combined effort of all its members, Lijjat has achieved sales of over Rs.520 crores with exports itself exceeding Rs. 24 crores.

2) Corporate tie-ups – These models could include institutions (like microfinance, NGOs, and the like) that mobilize women for a livelihood activity and companies that provide the market linkages. Notable among these is Indian tobacco company’s (ITC) collaboration with ’self employed women’s association’ (SEWA) – one of India’s largest membership organizations for women workers in the informal sector. SEWA mobilizes rural women and brings them together in the production of agarbattis (incense sticks). ITC supports these organizations in setting up units, training women, providing raw materials, and buying-back the finished product. Another interesting model is that of Fabindia.

3) Collaborative model – Considering the array of activities involved from mobilizing people to selling the output, there is an opportunity for multiple players to participate in a market linkage. These models include different organizations playing different roles to ensure a beginning to end integration. I haven’t been able to come across any such successful models that have achieved scale.

4) Women entrepreneurs- There are organizations with inclusive business models that have created micro-entrepreneurs. Women in these organizations act as sales and marketing agents. Some of successful models are ’The Village Phone’ – grameen phone’s initiative and ’VisionSpring’, among others.

Through these models, organizations like ITC, Lijjat papad and Gujarat cooperative milk marketing federation (Amul) have successfully created livelihood opportunities for thousands of women – creating employment opportunities in rural and urban areas while also creating wealth. They provide constant support through their strong marketing reach, technical training, and quality process – resulting in standardized and high quality products. These micro-enterprises provide the women with a livelihood that could be carried out within their homes, at their own time and convenience. Though it varies from product to product, these micro-entrepreneurs earn anywhere between Rs. 800 to Rs. 3000/month – which is significant considering that most of these women are otherwise unemployed and their husbands are unskilled laborers.

We as an industry must create more robust market linkages which once successful hold tremendous potential for large scale impact.

If you know of other organizations which provide a large scale livelihood with a market linkage, please indicate that in the comments section.

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