Op-Ed: Why Traditional Income Generating Activities Simply Aren't Enough

Recently, traditional income generating activities, specifically those associated with self help groups (SHGs), have gained acclaim as effective tools for poverty alleviation. The assumption is that if, for example, Sunita, a woman from an agricultural community in Gujarat, learns how to make papad, she will then have the skills necessary to sustain a productive livelihood, and hence, support her family. Typically, Sunita, who now knows how to make papad, will be part of a collective such as an SHG, and together, these women will produce papad in bulk to be sold on the market. So far, so good, right?

But what if the demand for papad in Sunita’s region plummets? Or what if the prices for the raw materials or the equipment required to produce papad spike upwards? Or, even more fundamentally, what if the market for papad simply does not exist? How will Sunita transition from papad making to another entrepreneurial activity when she (as well as her fellow SHG members) have been trained only to produce papads?

This is precisely where skills-based income generation activities falter – when women are required to draw upon a larger, more holistic skill set in order to transition to another, more profitable business venture. Because these types of trainings teach women only how to produce a specific product, rather than how to assess market needs and then produce, women like Sunita are poorly equipped to tackle market fluctuations or competition. In other words, training Sunita with the skills required to produce papad is effectively the same as teaching her how to read / write her name, but neglecting to teach her the remainder of the alphabet. How can we then expect Sunita to read a book, unless, of course, she teaches herself?

What is required is a paradigm shift away from skills-based, production oriented income generation to training on how to think like an entrepreneur. In other words, Sunita should be asking herself questions like, “What are the needs of the market?” and “How can I meet those needs?” before seeking to learn a specific skill set. This type of thinking turns the traditional income generation model on its head, as it places women in the position to negotiate the terms of their engagement with the market, rather than being pigeon-holed into a narrowly defined skill-set that is unsustainable over time.

The progression, then, is towards greater self-reliance and sustainability. Sunita is no longer hoping that the market for papads remains stable, but rather, is positioning herself strategically so as to maximize on the intersection between the needs of the market and her own skill set. Even though this type of training requires more time and inputs, it is the most sustainable, as it empowers women to understand their relationship with the market, and hence, has the potential to generate true entrepreneurs.

If you are interested in this type of training, I highly recommend you read “Market Oriented Value Enhancement,” a training manual published in collaboration with the Best Practices Foundation (BPF) precisely with the vision of empowering the landless, asset-poor to become entrepreneurs, not simply skilled labourers. The training manual argues that the “traditional business approaches of both the NGOs and government are outdated, impractical, and frequently, ineffective”, for many reasons, summarized below:

1) The focus is on skill enhancement, typically encouraging participants to enter production, which is an increasingly untenable position for small entrepreneurs.

2) Skill training is typically capital intensive, requiring expenditures on machinery, factories, and raw materials to move forward.

3) Skill enhancement that is limited to a single product, requires large capital commitments and makes lateral mobility – moving from product to product – virtually impossible.

4) “Is there a market?” “Who will buy it?” These questions are central to any business but simply not asked, i.e., participants have committed time, effort, capital, and hope into a business venture without even knowing if people want their product.

By shifting focus from labour-oriented skills to market-oriented knowledge, women are given the tools to assess the needs of their own communities, and develop a business model that is adaptable, and withstands market pressures, rather than succumbing to it. Currently, this model is being tested in five villages – Channapur, Gabbur, Kotur, Mandihal, Mugad, and Hubli-Dharwad, Karnataka.