Data: Living Off the Land

This story originally appeared in our December 17, 2010 e-magazine. Click here to subscribe. By the Numbers A new report by the International Fund for Agricultural Development (IFAD) presents interesting statistics about food production.
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70%: The necessary increase in food production to feed the projected global population of 9bn people in 2050 15%: The annual percentage of national budgets spent on agriculture in Asian countries since 1972 $36 billion: The value of total global investments in agricultural R&D in 2000 where close to 50% was concentrated in Brazil, China and India 321 million: In acreage, the area under cultivation of genetically modified seeds in 25 countries in 2009 13 million: The number of smallholder farmers growing genetically modified crops in 2009 Continue reading Data: Living Off the Land

Leave a Comment December 17, 2010 Filed under E-Magazine, E-Magazine Issue 7

By the Numbers: Todays Impact Investing Industry

This story originally appeared in our December 3, 2010 e-magazine. Click here to subscribe. Theres no doubt that the demand for investment is growing, but how much opportunity is there? Nisha Kumar Kulkarni examines the investment potential and how its being measured. Approved Proposals and Credit Issued under Indias Credit Guarantee Fund Trust for Micro and Small Enterprises

Since 2000, the Small Industries Development Bank of India has increased the amount of credit issued to micro, small and medium enterprises. There has been growing demand for bank funding. Continue reading By the Numbers: Todays Impact Investing Industry Leave a Comment December 3, 2010 Filed under E-Magazine, E-Magazine Issue 6

DATA: The SME Financing Gap A Lucrative One to Fill

SME investment can be proftable The good news is that the importance of SMEs in terms of a countrys economic growth has now begun to be recognized by the formal banking sector. Spurred by increasing competition in their traditional businesses, banks are now looking to the largely untapped SME segment, which now presents a lucrative opportunity. When traditional banks downscale their operations to serve the SME market, higher transaction costs and undefined risk management strategies are seen to be a major obstacle. However, the profitability of SME banking, if it is served effectively by creative business models, has been proven by various case studies. The graph below shows that Return on Assets (ROA) of SMEs is higher than the ROA of the total portfolios of the sample banks. So it looks like this is one trend that banks would do well not to ignore.

ROA SME vs Bank Total

Source: SME Banking Best Practices Benchmarking, International Finance Corporation Comments (1) June 19, 2010 Filed under Uncategorized

DATA: SME Financing Gap A Lucrative One to Fill

Lack of Access to Financing A Case in Pakistan A recent survey conducted by the Small and Medium Enterprises Development Authority in Pakistan is a clear case in point of how SMEs struggle from lack of access to formal financing opportunities.

According to the results, only 16% of SMEs surveyed applied for bank loans in the last two years; more than half of these applications (53%) were rejected. In fact, a great majority of SMEs resort to personal connections for financing. Leave a Comment June 18, 2010 Filed under Uncategorized

DATA: SME Financing Gap A Lucrative One to Fill

The Importance of the SME sector Case in Point The Indian Landscape
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3.6 million Registered SMEs 26 million people employed in SMEs Involved in the production of more than 7,500 industrial items Accounts for 40% of the value added in the manufacturing sector output; and 34% of exports Contributed to about 7% of GDP between 20022003

Leave a Comment June 17, 2010 Filed under Uncategorized

DATA:SME Financing Gap A Lucrative One to Fill

The Importance of the SME sector The SME sector, with its ability to generate jobs and wealth can have a direct and significant impact on the formalization of a countrys economy.

It is said that among high-income countries of the Organization for Economic Cooperation and Development (OECD), two-thirds of all jobs are created by the SME sector. The figure is lower among low-income countries because of the overwhelmingly dominant informal sector, yet the SME sectors contribution is significant. And as an economy grows and income levels rise, the impact of the SME sector only increases.

Source; SME Banking Guide 2009, International Finance Corporation Leave a Comment June 16, 2010 Filed under Uncategorized

DATA: SME Financing Gap A Lucrative One to Fill

Small and Medium sized Enterprises (SMEs) are a driving force of economic development, and are key to job creation and GDP growth, both in developed and developing countries. However, mainstream banks, particularly in emerging markets, have typically viewed SMEs as high-risk investments and have shied away from serving these businesses. And while banks may consider many of these SMEs to be too small or risky, even the fast growth of microfinance has not helped their cause too much because many of them are too large to be effectively financed by microfinance institutions. More SMEs are suffering from this noticeably widening gap, which is called the SME financing gap.

Comments (1) June 15, 2010 Filed under Uncategorized

DATA: IS SOCIAL ENTERPRISE A FINANCIALLY VIABLE VENTURE?

Everyday this week, we bring to you some key findings of our Indian Social Enterprise Landscape Survey. Main Sources of Financing Limited access to the commercial financing

The survey results revealed that there is a clear divide between those that have access to mainstream and/or commercial funds and those that rely on personal connections and grants/donations to raise money. The ratio is about 50/50. Forty-five percent of respondents obtained funds from commercial sources whereas 21% of respondents source their funds from personal connections such as family members and friends; another 21% rely on grants and donations from charitable organizations. The survey report, which offers an in-depth analysis of the results, is available for INR400/US$10. Just click the Social Enterprise Landscape Survey Report banner on the top of our website www.beyondprofit.com or send an email to Asako Matsukawa [email protected]. See other data sets from the Social Enterprise Landscape Survey Revenue Stream Profitability Sectors to Watch Leave a Comment June 12, 2010 Filed under Uncategorized

DATA: Is social enterprise a financially viable venture?

Everyday this week, we bring to you some key findings of our Indian Social Enterprise Landscape Survey. Challenge Financing The results reveal that acquiring funding is by far the biggest challenge for social entrepreneurs. Forty four percent of enterprises said that Financing/Funding is their main challenge.

The survey report, which offers an in-depth analysis of the results, is available for INR400/US$10. Just click the Social Enterprise Landscape Survey Report banner on the top of our website www.beyondprofit.com or send an email to Asako Matsukawa [email protected]. See other data sets from the Social Enterprise LanRevenue StreamProfitabilitySectors to WatchLeave a CommentJune 11, 2010 Filed under Uncategorized

DATA: IS SOCIAL ENTERPRISE A FINANCIALLY VIABLE VENTURE?

Everyday this week, we bring to you some key findings of our Indian Social Enterprise Landscape Survey.

Sectors to Watch Education Sector with a track record of profit The Education sector has shown a marked degree of financial stability and growth potential. There are two key elements. First, the sector represents the highest number of profit-making enterprises (38%) among others, and also has one of the lowest numbers of loss-making entities (24%). Second, we observed a good growth potential; 38% of education enterprises are breaking even which means the number of profit-making enterprises in this sector could increase in the coming years.

Health Sector with large growth potential Although the sector currently produces a very small number of profit-making entities, it has the lowest percentage (13%) of loss-making enterprises. Most importantly, at 73%, the Health sector has the largest segment of break-even businesses. If/when these enterprises begin to turn a profit, the Health sector could sustain a multitude of successful, profit-making enterprises. Rural Development Sector to watch out for future growth Despite the fact that the largest number of social enterprises are in this field, it is the biggest lossmaking sector at the moment. However, Rural Development demonstrated the largest revenue increases last year, so there could be more surprises in store. The survey report, which offers an in-depth analysis of the results, is available for INR400/US$10. Just click the Social Enterprise Landscape Survey Report banner on the top of

our website www.beyondprofit.com or send an email to Asako Matsukawa at [email protected]. See other data sets from the Social Enterprise Landscape Survey Revenue Stream Profitability

Programs to promote Small Businesses

Written by iBlogger on August 11, 2010 in Business | 17 Comments Do you like this story?

Keeping in view the contribution of small business to employment generation, balanced regional development of the country, and promotion of exports, the Government of Indias policy thrust has been on establishing, promoting and developing the small business sector, particularly the rural industries and the cottage and village industries in backward areas. Governments both at the central and state level have been actively participating in promoting selfemployment opportunities in rural areas by providing assistance in respect of infrastructure, finance, technology, training, raw-materials, and marketing. The various policies and schemes of Government assistance for the development of rural industries insist on the utilisation of local resources and raw materials and locally available manpower. These are translated into action through various agencies, departments, corporations, etc., all coming under the purview of the industries department. All these are primarily concerned with the promotion of small and rural industries. Some of the support measures and programmes meant for the promotion of small and rural industries are discussed below: National Bank for Agriculture and Rural Development (NABARD)

NABARD was setup in 1982 to promote integrated rural development. Since then, it has been adopting a multi-pronged, multi-purpose strategy for the promotion of rural business enterprises in the country. Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans using credit and non-credit approaches. It offers counselling and consultancy services and organises training and development programmes for rural entrepreneurs. The Rural Small Business Development Centre (RSBDC) It is the first of its kind set up by the world association for small and medium enterprises and is sponsored by NABARD. It works for the benefit of socially and economically disadvantaged individuals and groups. It aims at providing management and technical support to current and prospective micro and small entrepreneurs in rural areas. Since its inception, RSBDC has organised several programmes on rural entrepreneurship, skill upgradation workshops, mobile clinics and trainers training programmes, awareness and counselling camps in various villages of Noida, Greater Noida and Ghaziabad. Through these programmes it covers a large number of rural unemployed youth and women in several trades, which includes food processing, soft toys making, ready-made garments, candle making, incense stick making, two-wheeler repairing and servicing, vermicomposting, and non conventional building materials. National Small Industries Corporation (NSIC) This was set up in1955 with a view to promote, aid and foster the growth of small business units in the country. This focuses on the commercial aspects of these functions.
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Supply indigenous and imported machines on easy hire-purchase terms. Procure, supply and distribute indigenous and imported raw materials. Export the products of small business units and develop export-worthiness. Mentoring and advisory services. Serve as technology business incubators. Creating awareness on technological upgradation. Developing software technology parks and technology transfer centres.

A new scheme of performance and credit rating of small businesses is implemented through National Small Industries Corporation (NSIC) with the twin objectives of (i) sensitising the small industries about the need for credit rating and (ii) encouraging the small business units to maintain good financial track record. This is to ensure that they score higher rating for their credit requirements as and when they approach the financial institutions for their working capital and investment requirements.

Small Industries Development Bank of India (SIDBI)

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Set up as an apex bank to provide direct/indirect financial assistance under different schemes, to meet credit needs of small business organisations. To coordinate the functions of other institutions in similar activities.

The National Commission for Enterprises in the Unorganised Sector (NCEUS) The NCEUS was constituted in September, 2004, with the following objectives:
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To recommend measures considered necessary for improving the productivity of small enterprises in the informal sector. To generate more employment opportunities on a sustainable basis, particularly in the rural areas. To enhance the competitiveness of the sector in the emerging global environment. To develop linkages of the sector with other institutions in the areas of credit, raw materials, infrastructure, technology upgradation, marketing and formulation of suitable arrangements for skill development. The commission has identified the following issues for detailed consideration: o Growth poles for the informal sector in the form of clusters/ hubs, in order to get external economic aid. o Potential for public-private partnerships in imparting the skills required by the informal sector. o Provision of micro-finance and related services to the informal sector. o Providing social security for the workers in the informal sector.

Rural and Women Entrepreneurship Development (RWED) The Rural and Women Entrepreneurship Development programme aims at promoting a conducive business environment and at building institutional and human capacities that will encourage and support the entrepreneurial initiatives of rural people and women. RWE provides the following services:
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Creating a business environment that encourages initiatives of rural and women entrepreneurs. Enhancing the human and institutional capacities required to foster entrepreneurial dynamism and enhance productivity. Providing training manuals for women entrepreneurs and training them. Rendering any other advisory services.

World Association for Small and Medium Enterprises (WASME) It is the only International NonGovernmental Organisation of micro, small and medium enterprises based in India, which set up an International Committee for Rural Industrialisation. Its aim is to develop an action plan model for sustained growth of rural enterprises. Apart from these, there are several schemes to promote the non-farm sector, mostly initiated by the Government of India. For instance, there are schemes for entrepreneurship through subsidised loans like Integrated Rural Development Programme (IRDP), Prime Minister Rojgar

Yojana (PMRY), schemes to provide skills like Training of Rural Youth for Self Employment (TRYSEM), and schemes to strengthen the gender component like Development of Women and Children in Rural Areas (DWCRA). There are schemes to provide wage employment like Jawahar Rojgar Yojana (JRY), food for work etc., on rural works programmes to achieve the twin objectives of creation of rural infrastructure and generation of additional income for the rural poor, particularly during the lean agricultural season. Last, but not the least, there are schemes for specific groups of industries such as khadi, handlooms and handicrafts. Scheme of Fund for Regeneration of Traditional Industries (SFURTI) To make the traditional industries more productive and competitive and to facilitate their sustainable development, the Central Government set up this fund with Rs. 100 crores allocation to begin within the year 2005. This has to be implemented by the Ministry of Agro and Rural Industries in collaboration with State Governments. The main objectives of the scheme are as follows:
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To develop clusters of traditional industries in various parts of the country; To build innovative and traditional skills, improve technologies and encourage public-private partnerships, develop market intelligence etc., to make them competitive, profitable and sustainable; and To create sustained employment opportunities in traditional industries. 9. The District Industries Centers (DICs)

The District Industries Centers Programme was launched on May 1, 1978, with a view to providing an integrated administrative framework at the district level, which would look at the problems of industrialisation in the district, in a composite manner. In other words District Industries Centers is the institution at the district level which provides all the services and support facilities to the entrepreneurs for setting up small and village industries. Identification of suitable schemes, preparation of feasibility reports, arranging for credit, machinery and equipment, provision of raw materials and other extension services are the main activities undertaken by these centers. Broadly DICs are trying to bring change in the attitude of the rural entrepreneurs and all other connected with economic development in the rural areas. Even within the narrow spectrum, an attempt is being made to look at some of the neglected factors such as the rural artisan, the skilled craftsman and the handloom operator and to tune up these activities with the general process of rural development being taken up through other national programmes. The DIC is thus emerging as the focal point for economic and industrial growth at the district level.

Govt Incentives for Small Businesses in Rural India

Written by iBlogger on August 30, 2010 in Business | 11 Comments

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Special emphasis on the industrial development of backward, tribal and hilly areas has been the concern of the Government of India expressed in all the Five Year Plans and industrial policy statements. Realising that backward areas development is a long-term process, several committees were appointed to identify the criteria for identifying backward areas and also to suggest schemes to take up the Herculean task of balanced regional development.

The implementation of integrated rural development programme is one such attempt made by the government to develop backward areas. The rural industries project programme initiated by the Government of India was meant to develop small business units in select rural areas. Though the backward area development programmes varied from state to state, they cumulatively represented a significant package of incentives to attract industries in backward areas. Some of the common incentives offered to small scale industries in rural areas are:
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Land Every state offers developed plots for setting up of industries. The terms and conditions may vary. Some states don t charge rent in the initial years, while some allow payment in installments. Power - Electricity is supplied at a concessional rate of 50 per cent, while some states exempt such units from payment in the initial years. Water is supplied on a no-profit, no-loss basis or with 50 per cent concession or exemption from water charges for a period of 5 years. Sales Tax - In all union territories,industries are exempted from sales tax, while some states extend exemption for 5 years period. Raw materials - Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials like cement, iron and steel etc. Finance - Subsidy of 10-15 per cent is given for building capital assets. Loans are also offered at concessional rates. Industrial estates - Some states encourage setting up of industrial estates in backward areas. Tax holiday - Exemption from paying taxes for 5 or 10 years is given to industries established in backward, hilly and tribal areas.

To sum up, it may be stated that the small business sector in India is getting the support of government through various institutions in different forms for different purposes. Despite special attention being given to backward areas, it is observed that imbalances in development are still there. There is a need to develop infrastructural facilities in these areas, as no amount of subsidies or concessions can overcome the natural handicaps caused by a lack of such facilities.

Commercial Banks in Rural Areas Experiences and Experiments

Written by Chandrakant Mallya on October 21, 2010 in Finance | 2 Comments Do you like this story?

The banking sector is the most import intermediary to mop up savings. Some decades ago, farmers lacked the knowledge about the investment opportunities. There are many unbanked and under- banked centers in the rural India. Not long ago, the rural peasants believed that the banking industry was meant to serve the city folk and the government organizations.

The sudden nationalization of 14 major scheduled commercial banks in 1969 is the turning-point in the banking industry. Barring a few, majority of these commercial banks were reluctant to spread their branch network in the rural areas. As per the new guidelines issued by the Reserve Bank of India, the Banks were directed to open branches in villages. The next major step taken by the Government was to set up Regional Rural Banks in 1975 and the nationalization of 5 more scheduled commercial banks in 1980. Governments showed how earnest it was in mobilizing the rural savings and meet the credit requirements of the agriculturists. ..To be a successful and popular Banker in the rural set up, one needs to understand the psychology of the rural people. The normal mentality of the farmer is not to trust the bank staff. They also feel that corruption is deep-rooted in the banking system and it is impossible to get loans, if not supported by underhand dealings. I will give detail in this article some of my experiences in dealing with the rural folks. I am referring to the year 1970, immediately after the nationalization of the Banks. Transfers from metropolitan areas to the remote villages were the order of the day, whether one liked it or not. What happens when one is transferred from a city like Mumbai to a remote village

in the state of Uttar Pradesh? Ask me! As a youngster, I was posted to a semi-urban centre with a population of about 25,000 and it was surrounded by a cluster of 100 villages. We were required to spread the banking habit amongst the villagers. Each Branch was given the deposit target, and to be considered as a successful Manager, one must achieve it. The Peon appointed at my Branch was a local man and he said he knew a man in a village, but it was difficult to make him speak about money matters, his was a miser and by nature very suspicious. He has lots of money and no one knows how much! he said. I decided to visit the village with my staff. I was shocked to see the area in which he lived. Not exactly the slum, but a shed-like house with the tiled roof. Does he store so much money in this house and in this area? You said this is a dacoit-infested village? I asked. He may just keep a few coins here. No one knows where he stores currency. Firstly, he was not willing to talk to me. But he knew the Peon and his father. He was also very happy that a local boy has joined the Bank. At least you will not run away, he said with a cultivated laugh. I was at great pains to explain to him about our deposit and loaning schemes. He was not willing to sign the account opening forms and pay the initial deposit. Five years ago, two boys like you came here and said they will open a Co-operative Bank. They took Rs.100/- from me and made me sign some papers. That was the last time I saw them! They have cheated a number of people from this village. Just sign the forms. You need not pay now. The initial deposit for opening the account is just Rs.5/- which you can give at the Bank tomorrow, after collecting the pass book. He showed slight inclination, but did not pay Rs.5/- But his next question startled me! Do you have the locker facility at the Bank? .My intuition was he knew everything about the banking industry. Next day, he did come to the Bank. Do you know how much he deposited? Rs.3/- lakhs in Fixed Deposits for a period 3 years and a Savings Bank account with an initial deposit of Rupees fifty thousand.(That was a big sum in the year 1970) He also took a locker, the biggest size available. -After two days he came again to the Bank with two of his men, and according to the confidential estimate of my Peon, he is reported to have deposited 70 kgs of silver and one kg of gold in the locker! Your Branch has saved me great botherations. I used to travel about 45 kilometers for banking transactions.Thank you and thank God! he said!