Micro-enterprise activities for the poor: can capacity building efforts lead to livelihood promotion for rural women? The example of Udyogini in Mandla, rural India

This thesis is based upon a 16-week research period at the project of Udyogini in the rural district of Mandla, Madhya Pradesh, India. Udyogini is an Indian NGO which aims to provide business development services. It intends to make economic growth more inclusive for the poor, by building capacity among poor rural women to conduct enterprise activities. Capacity building efforts include the establishment of Women Enterprise Groups (WEGs), creating awareness about saving, establishing links with Microfinance Institutions (MFIs), incentives and materials for enterprise activities, and training to improve women's understanding about the market. To reach these objectives Udyogini selects Business Development Service Providers (BDSPs). These are women who have potential to grow as entrepreneurs as well as take leadership in their WEG. The objective of this research is to assess the capacities of BDSPs in micro-enterprise activities, as well as the capacity building work of Udyogini. Several constraints have been identified which women face when establishing an enterprise, largely in accordance with the constraints found in the literature. Access to natural resources, such as forest, water and land are very important in the success of these BDSPs as entrepreneurs. Furthermore, almost a third of the group of BDSPs faces problems regarding literacy. However, the women rely on help of family members and literacy therefore does not seem to be a constraint when establishing enterprise activities. Family support is a precondition for women to be involved in Udyogini and become a BDSP. Some communities seem to be reluctant to the concept of enterprise, which sometimes poses constraints upon BDSPs. Villagers appear to prefer wagework, are suspicious of Udyogini's intentions and show feelings of jealousy towards the BDSPs and the opportunities they have received. Although BDSPs can be successful in enterprise activities despite of an unmotivated community, it can impose constraints in the sense that it will be more difficult to establish a clientele. Moreover, access to microfinance is provided solely to WEGs, which means that a BDSP seeking access to capital is dependent on the (saving) behavior of her fellow WEG members. In addition, lack of time, risk taking ability, and to a lesser extent mobility, are constraints which BDSPs face when trying to establish enterprise activities. The livelihoods of women have changed due to the work of Udyogini. When asked about the benefits of the project, women express improvements in non-material well-being, as they have gained more knowledge, identity, self-esteem, skills and have widened their scope outside their family and village. Social capital has also been enhanced, since the women are now connected in the formal group of their WEG as well as in the network of producers' association UJAS. Although women express that they have gained only little financial profit from their activities with Udyogini, it can be argued that their financial situation has been strengthened, by the introduction of group wise saving activities and diversification of their income generating activities. Vulnerability has been reduced, since diversification of activities is established. However, a further cultural change, the embracement of the concept of enterprise in the community and more specifically regarding gender equality, is essential to the success of the project. Although training and income generating enterprise activities are sources of women's empowerment, no evidence has been found that the women's situation in the household has already been strengthened. Women are in many cases dependent upon their husbands in the enterprise, and men often carry out the more prestigious tasks. Concluding, the work of Udyogini has certainly been beneficial to its clients, primarily in non-material wellbeing. It is important to make sure the women can gain financial profits from the enterprise activities soon, to keep the women interested in the project. The work of the women is still largely characterized by dependency upon their families (for support in enterprise), upon their WEG (for access to microfinance), upon their community (for establishing a clientele), and upon Udyogini for providing skills, knowledge and other enterprise incentives. Although Udyogini is already concerned with the transmission of ownership to the women in producers' association UJAS, it is important to focus upon independency for the women in the future even more. Also, more time and training should be invested in the rest of the community. Udyogini has selected the BDSPs for their motivation, though it is important that also the wider community embraces the work of Udyogini, to make the situation for the BDSPs easier and to reach more people who would be motivated and could benefit from enterprise activities