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Published by Mukesh Kumar

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Published by: Mukesh Kumar on Oct 03, 2010
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Electronic copy available at: http://ssrn.com/abstract=1651373
Electronic copy available at: http://ssrn.com/abstract=1651373
Project Shakti: Poverty Alleviation through SHG - CorporatePartnership
According to Adam Smith “Man is rich or poor according to the degree in which he canafford to enjoy the necessities, the conveniences and the amusement of the human life”.Poverty is a condition where a person is unable to secure the minimum consumptionrequirements of life, health and efficiency. Such requirements include minimum humanneeds in respect of food, clothing, housing, health and education. Poverty thus can bedefined as a lack of income to acquire minimum necessities in life. High poverty levelsresults in poor quality of life, malnutrition, illiteracy, child mortality and low humanresource development.Poverty creates an ever ending vicious cycle. If the people are very poor, they cannot savewhich prevents capital formation. Accumulation of money prevents reinvestment. Capitalplays an essential and strategic role in development of a region and changing the economiccondition of large number, directly or indirectly. There are approximately 350 millionpeople below the poverty line in India and around 300 million are in the rural areaaccording to census 2008 .These consist mainly of small and marginal farmers, agriculturelaborers and rural artisans.The poverty in India is wide spread as well as deep rooted. Countless government and non– government organizations as well as a number of international agencies are engaged inwaging a timeless war against poverty. In the recent years microfinance is engaged as apowerful instrument for poverty alleviation.
Women Empowerment
Women empowerment and poverty alleviation are two areas which are attracting concernfrom various groups of people worldwide - like economists, politicians, NGO’s andbusiness organizations. Some business houses through partnership with NGO’s and self help groups (SHG) and effectively using micro finance are trying to create opportunity forself employment of rural women’s. The efforts has significantly increased women’ssecurity, autonomy, self confidence and status within the household and also helped thebusiness houses increase their market share and net worth.Project Shakti was started by Hindustan Lever Limited (HLL now HUL) in the year 2000as an ambitious plan to stimulate new demand in the lower income, rural segment bycreating a self sustaining cycle of - business growth through people growth. This projectwas planned as a win-win partnership between HLL and rural self-help groups (SHG’s)comprising mostly illiterate women’s. HUL helped the SHG’s to access micro-credit, buyHLL products and sell them in their villages. In return this project helped HLL todistribute its product’s even to the most inaccessible rural villages in India.
Electronic copy available at: http://ssrn.com/abstract=1651373
Electronic copy available at: http://ssrn.com/abstract=1651373
HUL: Understanding market dynamics
Hindustan Lever Limited (HLL now HUL) generates half of its business in India fromrural areas where its products are sold in some 100,000 villages with populations rangingfrom 2,000 to 3,000. Faced with increased competition the company realized by the end of 1990 that to increase its market shares it has to increase and strengthen distributionnetwork to cover more villages. HUL identified 500,000 villages, but the challenge was inreaching to these villages located in remote parts of India. As these villages were sparselypopulated, a regular distribution network will be difficult to maintain.With millions of potential customers HLL was unable to tap them because of poor roadconditions, transport facilities, no advertising coverage and lack of retail distributionnetwork. Moreover just by reaching this potential customers won’t sell the products,because the consumers needed to be educated in both personal and oral hygiene matters.HLL products would be entirely new to these rural communities lifestyle. Therefore thecompany understood the need for a new type of distribution network.Hindustan Levercame up with a solution in the form of Project Shakti (means Strength in Sanskrit) Thecompany decided to form a nexus with the growing number of women’s self-help groupsthat have formed all over the country. These groups are usually formed to help womensave money and borrow from each other to avoid the excessive demands of unscrupulousvillage moneylenders.
Micro-Finance and Self-Help Groups
Access to credit for the below poverty line rural Indians was quite impossible in the early1970’s. This segment could not borrow without any tangible securities from the banks.Local money lenders were the only solution who charged exorbitant interests. Tocounteract the power of the moneylender in rural India the grameen bank initiative waslaunched. The grameen or rural banks encourages women living below poverty line(BPL) to make regular savings and to pool the savings in a group saving s account, therebygiving them access to credit based on “group savings”. Members could take loans fromthis common fund to finance various activities like purchase of cattle, organize a weddingsor finance micro-enterprises such as opening a tea stall or invest in projects like shakti.Peer pressure ensured that the loans were returned in time. During the 1980s, thegovernment took massive efforts in promoting economy at the grass-root level by workingwith NGOs.By the year 2000 there were a large number of SHGs located in various part of thecountry. In a SHG generally all members belong to families below the poverty line.However, if necessary, a maximum of 20% and in exceptional cases , where essentiallyrequired, upto a maximum of 30% of the members in a group may be taken from familiesmarginally above the poverty line living contiguously with BPL families and if they areacceptable to the BPL members of the group. A function efficiently a SHG group devisesa code of conduct (Group management norms) to bind itself. This should be in the form of regular meetings (weekly or fortnightly) allowing free exchange of views
Making creditavailable for micro-enterprises had a surprising result in elevating the livelihoods of theseSHG members. HLL took notice of this phenomenon and started project shakti as acorporate SGH partnership.
Project Shakti
 3Poject Shakti was started in the Nalgonda district of Andhra Pradesh in November 2000with 50 SHGs in 50 villages with 1000 to 2,000 inhabitants participating. HLL executivesstarted with giving presentations at rural self-help group meetings and explaing thebenefits of the project. HLL gave these self-help group women’s extensive training insales, commercial knowledge and bookkeeping techniques to help them become micro-entrepreneurs.
Each woman who chooses to become a shakti distributor have to initially invest Rs.10,000 to 15,000. This amount is usually borrowed from self-help groups or micro-financebanks facilitated by Hindustan Lever. Each such distributors target to serve 500 customersgenerating a monthly sales of Rs.10, 000 plus. As farmers have seasonal cash inflows(post harvest time), there wives can generate a sustained income on a monthly basis alongwith raising her self esteem and position in the house. For single or widowed mothershakti gives security.Within a span of four years project shakti have spread to twelve states covering 50,000villages with 13,000 shakti distributors reaching out to 70 million, hugely scatteredcustomers residing in remote villages. To make project shakti successful HLL partneredwith 300 NGOs, banks and both state and local government departments.
In 2003 HLL started a new initiative called i-Shakti. This project was started with theobjective to meet villager’s information needs and allow organizations withcommunication access to those parts of the country not touched by TV, radio andnewspapers. This was accomplished by creating village ‘kiosks’ containing internet-linkedcomputers mostly housed in the homes of Shakti entrepreneurs. i-Shakti was launchedformally in November 2004 in Andhra Pradesh with the help of the state government.Through this initiative villagers could get free information on a wide range of topics like-agriculture and horticulture, health and hygiene, finance, child and adult education,employment, and entertainment.The content for i-shakti is available in local language and has been developed by NGO’sand institutions like the Tata Consultancy Services’ Adult Literacy Programme and theAzim Premji Foundation for children’s education. Tie-up with ICRISAT (InternationalCrops Research Institute for the Semi-Arid Tropics) is done regarding information onagriculture. Using i-shakti kiosks villagers can email questions to a panel of experts.Through i-shakti educational modules could easily be distributed specially among thechildren of the villages helping specially the youth to learn basic computers. i-Shakti is avery versatile and innovative way in reaching out to villagers 24 hours X 7 days located inremote parts of the country.
Shakti Vani
HLL pushed project shakti further by launching another initiative aimed at improving thelives and livelihoods of the people of India. Project Shakti Vani (meaning strength invoice) is a program designed to spread awareness of best and proper practices in healthand hygiene like disease prevention, pre-post natal care etc. HLL executives appointedlocal women and imparted them training in matters relating to health and hygine.

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