The Swadhaar office is a short walk from the Santacruz train station, in one of the suburbs of Mumbai. Both sides of the tracks are blanketed by small shops selling mobile phones, jewelry, clothing, food and many other things. In front of these more permanent shops, tables and tarps carve out a toehold in the area between the street and the sidewalk for most of the day, sharing space with pedestrians, parking cars and motorists looking to create a new lane through traffic. This layer of merchandise includes shoes, underwear, t-shirts, pants and umbrellas, and is generally cheaper than anything in the rent paying shops. Then, during the evening rush hour as the entire city mobilizes to get somewhere, fruit and vegetable venders get in on the action. They squeeze into the few spots not yet taken between the street and sidewalk, or just create a third layer of commerce.
The sounds of hawkers’ chants, the chatter of negotiations, and of commuters talking on mobile phones, combined with the mass of humanity moving by bus, car and foot through the area, all made for a somewhat overwhelming experience in my first few days here. As I grew more comfortable not spending every second watching for the next auto rickshaw or motorbike hurdling towards me, I was able to look around a bit and enjoy the sights, sounds and smells of this daily ritual. I could attempt to discern what the hawker chants meant, and smell the incense outside of shops competing with the smell of freshly fried samosas and crushed sugar cane juice.
I also noticed that, despite the intense competition created by the sheer number of shops and vendors, all the merchants seemed to be doing a brisk business. As an American accustomed to groceries coming from a super market, clothes from a mall, and food from a restaurant, I will admit to being surprised that so many Mumbaiites stopped to examine and purchase the wares. But the people of this city obviously put a priority on the convenience of picking up something on the way to the train, or the economics of paying a lower price for some clothes because the vendor does not need to pay rent. They also clearly enjoy being amongst each other, sharing a snack or quick dinner as they take in the sights, sounds and smells just as I was doing.
The Santacruz market’s ability to support so many vendors creates the business opportunity for micro entrepreneurs that Swadhaar wants to help people exploit. A microloan can provide the working capital to purchase an inventory of pants, shoes, or any market product that could represent the beginning of a sustainable business. That business may represent a significant increase in income for a family. This is the theory of microfinance, one that makes more sense to me now that I’ve seen the economic viability of a simple business model like selling shoes on a sidewalk.
It is unlikely that such a business will ever develop into something larger given the amount of competition, so it is doubtful that such enterprise represent a path to prosperity. But a stable income, even if small, could improve the health or educational opportunities of the family. Beyond these benefits in and of themselves, healthier better educated kids will have more economic opportunities.
Unfortunately, the loans which benefit these types of businesses are increasingly difficult to originate in India as a result of a combination of cultural dynamics and, importantly, new restrictive regulations imposed by the Government. Swadhaar is no longer able to work with the types of clients with whom it was growing its business. Instead, it is moving in new directions in an effort to find ways to advance the goal of financial inclusion within the regulatory regime. More on this next time…