Microfinance in the Field: Spawning Microentrepreneurs in God’s own Country

Microfinance Focus, June 15, 2010: The portico of a rustic household is abuzz with the chatter of women in the midst of a joint liability group meeting convened by ESAF in Perinjnanam, an idyllic village tucked away in Thrissur district. “I used to pawn my jewellery to keep my business afloat before availing of micro-loans,” recalled a bespectacled Laila. For eight long years, Laila has deployed micro-loans (which roughly add up to Rs 68,000) to expand her catering unit. After having hired five cooks to supply local delicacies for weddings and get-togethers, this venerable-looking grandmother continues to dream big to scale up her business.

A Joint Liability Group Meeting in Perinjnanam, Thrissur, Kerala

Kerala, which boasts of stellar human development indicators, is spawning a new breed of micro-entrepreneurs due to the intervention of MFIs. Livelihood initiatives and asset generation at a domestic level are also gathering momentum, with women running ventures right in their neck of the woods, which range from goat rearing to soap powder distribution. While Kerala has made considerable headway in gender equality and literacy, microfinance has enabled many villagers in the state to reduce their dependency on moneylenders and attain greater financial self-sufficiency.
“The interest rates charged by our moneylender were too exorbitant,” explained Jalaja. Following a struggle against poverty and debt in Thiripur, a textile hub in Tamil Nadu, Jalaja and her husband relocated back to Vadanapilly, a village in Thrissur district. To tide over a cash crunch, Jalaja availed of a Rs 10,000-loan. “The micro-loans are useful for developing my husband’s tailoring business,” added Jalaja, who is well into the advanced stage of pregnancy.

Credit constraints still affect women across Kerala.  MFIs, which are making inroads into the remote parts of Idukki and Palakkad, have drawn clients due to the absence of formalities such as documentation and the provision of collateral. Clients frequently hark back to days of financial woes. Vijaya, a 45-year-old widow in Perinjnanam, struggled to make ends meet while working for a garment shop. After availing of ESAF’s loans, she succeeded in establishing her own tailoring unit, which has clocked an annual profit of Rs 25,000. She has deployed income generation and general purpose loans to expand her tailoring business and to fund her children’s wedding ceremonies. “Compared to other state-run self-help group schemes, MFIs offer a wider range of loans and also provides clients greater access to income generation activities,” she pointed out.
Ties with the Middle East remain strongly entrenched in the Kerala hinterland. Take for instance, the case of Sheeba, an MFI client, whose husband resides in the Gulf. She has utilised micro-loans to fund her sons’ high-school education. She had briefly run an animal husbandry unit and her family’s financial troubles have abated due to access to low cost credit. In this case, it is clearly evident that the inflow of funds from the Gulf is not always sufficient for clients to meet household expenditure.
More tales of endurance were in store, as Mini Jayaram, a joint liability group member, narrated how her husband had been briefly imprisoned in the Gulf. She was advised by her neighbours to obtain loans from MFIs to support her two small children. Her husband now works for a catering unit in Muscat. “A sense of normalcy has been restored for my family,” says Mini, heaving a sigh of relief.

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