It's good business
Whether they are utilising their sewing skills to work as a tailor or taking advantage of the abundance of fish in a coastal area, microfinance clients run a variety of businesses to help their families out of poverty.
Microfinance clients typically work in challenging environments – poverty is often rife in their local area and resources are limited. The loans and support offered by microfinance institutions are crucial – helping microentrepreneurs grow and develop sustainable businesses: utilising a client’s natural skill or local resources, identifying gaps in the market and helping package and market a product for sale and even export.
A client’s location often determines the type of business they will run – in rural areas, agricultural businesses are more common, while in urban areas, clients are more likely to use loans to establish retail stores or offer transport, food or tailoring services. While some newer enterprises are quite small and only provide an income for the owner, others have grown over a number of years and now employ other people in a client’s community, too.
Types of businesses in… the Philippines: sari-sari (small grocery) stores, craft making, mini bakeries, crop farming, fishing, and vegetable, fish and meat selling.
Types of businesses in… Indonesia: kiosks, market stalls, small farms, animal husbandry, fish mongering, cake making and craft making such as weaving.
Types of businesses in… India: animal husbandry, kiosks, saree and other clothing stores, tailoring centres, small street restaurants, craft making such as basket and candle making, crochet and embroidery.
Business profile: weaving
Weaving is a widespread practice throughout West Timor, Indonesia. Much of the traditional dress of the area is made from woven cloth, with each pattern unique to a particular region. Interestingly, many weavers in Indonesia never officially trained in the craft. Instead, the majority inherited the skill from their parents, learning from them as children as they watched and helped where they could.
The weaving process begins by bundling the thread together and immersing it in candlenut oil. Next, the thread is dyed and coated with a second layer of candlenut oil mixed with the root of the mengkudu plant, to protect the colour from fading. After it is prepared, the thread is dried for a whole month in natural sunlight. Then the thread is ready for weaving.
Weaving is quite intensive work, and as such, weavers in West Timor usually work four hours a day. On average, clients produce twelve woven sheets a month. As well as being used for traditional dress, the woven sheets are used to create bags, hats, pencil cases and other handicrafts – popular with locals and foreigners alike. For our partner TLM in West Timor, approximately 50% of clients in rural areas run weaving businesses, using their loans to purchase the raw materials and equipment they need to produce the woven sheets.
Business profile: animal husbandry
Pigs, cows and buffalo are a common source of income for a number of microfinance clients in India. Purchased with a small loan, some livestock are raised to maturity and then sold for a profit, while others, like the buffalo, are often kept for their milk which can be sold to earn a regular income.
In Uttar Pradesh, one of the poorest states in India, one of our Indian partners Margdarshak has developed a program to help poor villagers raise buffalo. Clients are given loans of Rs.15,000 (A$366) to purchase the animal and its food. Clients then milk the animal daily and are able to sell the milk for a profit. As the raising of livestock comes with some risk, Margdarshak supports its livestock clients by offering animal vaccinations, de-worming, vitamins and nutrient supplements to add to the buffalo’s food. Insurance is also provided to safeguard the client if the animal were to die or be stolen.
Business profile: sari-sari store
A sari-sari store is a small stall or shack that sells small everyday items – drinks, snacks, canned food, salt, toiletries and so on. Sari-sari is Tagalog for ‘various kinds’ – hence what you find on the store’s shelves. Found on almost every corner in some areas of the Philippines, they are the Filipino version of a convenience store, albeit much smaller and much more common.
Sari-sari stores are typically small family establishments, costing about Php.5,000 (A$122) to establish. This low outlay makes them a popular choice for many microfinance clients in the Philippines.
In a country where few people own cars, sari-sari stores serve an important function. Usually open from 6am to 8pm, they provide locals with essential household items and food, making a longer trip to the public market unnecessary and saving on transport expenses. For ASKI, one of our partners in the Philippines, close to 20% of clients run sari-sari stores.