A scientist takes business education to the poor

When a scientist has to run a micro-finance firm, a different approach is inevitable.

That was precisely what happened when Dr Tara Thiagarajan, Chairperson, Madura Micro Finance Ltd, a neuroscientist by profession, was called upon to take over her late father's micro-finance business. Thrust into this new role, she suddenly had to grapple with a network of almost 20,000 self-help groups in Tamil Nadu. By and by, she discovered that they were going nowhere in particular, despite the micro loans. These were at best helping them to maintain their subsistence levels.

“Microfinance has warmed people's hearts on a global scale with pictures of women smiling broadly and waxing on about how great life has been since they bought that cow with their loan… I've met a bunch of them. But honestly, I have none of that warm fuzzy feeling because the truth is that the outcomes of microenterprise (and therefore microfinance) depress me,” she says.

“Granted many of them may rise up to make a few cents more a day, which pushes them over the arbitrarily drawn ‘poverty line'… Still, even after years, they rarely make the leap out of the subsistence context.”

Keen to get to the bottom of the problem, she started to discuss the issue and ask the crucial questions. She did come up with some answers – answers that she is ready to test so that women can use a microfinance loan to move to the next level.

Main obstacle

Dr Tara found that the main obstacle to microfinance not growing is the insular life led by the rural folk. Hence, whichever microenterprise they may take up, it too is conducted in insular environs and can only go that much forward.

To make her point, she pulls out a Google map of a typical rural constellation where a cluster of people live together, but are far away from the next cluster of villages. “The rural poor are very insular in their social groups and fragmented as a larger network. As a consequence flow of information and particularly novel information is very poor. No human being in that kind of network can amount to much. Conversely, the more diverse your individual connections... the more you will hear about opportunities, ideas, and the more successful you will be economically.” Our rural borrowers, she says, “live in a small world, run home-based businesses (if at all), sell primarily to their neighbours, rarely travel beyond a 5 km radius and have a whole lot of issues mixing with other caste groups. “

So Dr Tara has been spending a lot of time figuring out how microenterprises can scale up – in short how can they create better bang for the rural buck?

Here's what she and her team have come up with. First, map the market, mobility and communication network, get to understand the dynamics of how information dissemination would work and then use unique micro-market and micro-education products to drive the change.

So what are the products they have planned? “Our micro-market products will evolve to a mobile accessible information platform with some built-in intelligence to drive more connections in general. However, our goal is to identify and find clever ways to bridge structural holes in the network, or parts of the network that are large in their own right but highly disconnected from each other. Our micro-education products will be used to drive productive behaviour such as information seeking behaviour across different social and economic groups,” explains Dr Tara.

Pilot project

However, what is most interesting is the micro-education product being currently tested at a pilot project in Salem district. Madura Micro Finance has brought business education to the poor by developing a digital ‘mini MBA' programme. Given the Indian penchant for movies, the programme is in the form of a typical masala feature film called Shakti Pirakkudhu meant to inspire and raise aspirations. Developed in collaboration with Dr Madhu Vishwanathan at the University of Illinois, the film is broken into several classroom sessions and deals with the real lives and struggles of women in self-help groups, their failures and successes.

She talks about some of the learnings picked up by her team while testing the tool. “They tested it with two different groups - one that was reasonably educated (10th or 12th grade) and one that was largely illiterate, and came back with some very interesting learnings. Here's one: There are a couple of places where the video instructor asks them to pause the video, organise into groups of three or four and talk about some particular question or topic.

Innovative training

The groups, particularly the more illiterate group, were unable to carry out this instruction of organising into groups. It had to be explained really explicitly and they are now looking at adapting the video to include a demo of how to break up into smaller groups. So, I wonder, is organisation itself an innovation that we have taught rather than an inherent human trait?”

Though Dr Tara talks about one of the learnings, for her too, this is just the beginning. There may be many more to follow, along with the hope that vital change could be in the offing for microfinance.

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