The drive to the village is rough and dusty. There are no roads, dirt or paved, simply pathways that have been traversed for decades by the inhabitants of this village an hour away from Sambalpur, Orissa. As we bump along, I think about the teenage boys in the U.S. who like to go ‘off-roading’, an activity done for fun with daddy’s expensive SUV and a 6-pack of beer. Our purpose is more serious. The village is a site where Aamara Biswas, a remarkable non-profit grassroots organization, works.
Aamara Biswas was begun by Joyasree (Ranu) Mahanti, a quiet but determined woman who became active in social organizing in Orissa in the wake of cyclone catastrophe of 1999. Ranu’s focus has been on working with the poorest of the State’s poor. At one point, she was involved in micro finance programs in eastern and western parts of Orissa, and this experience helped her recognize the limitations of micro finance for the desperately poor. She realized that many of the women villagers she was working with needed very small loans to help with health and survival emergencies, to pay tuition costs for their children, to start micro-businesses (e.g., selling vegetables, opening pan shops). But they could not afford the interest rates and repayment schedules on offer, and sometimes programs forced them to take out loans larger than what they needed. She observed that too often they would need to visit a moneylender to pay back the micro finance loan they had taken out, thus dragging them into a cycle of debt from which they could not escape.
It seemed absurd to Ranu that Orissa’s poorest citizens could not find the minimal resources they needed to make a difference in their lives. She did a little experiment: she approached some strangers in the vicinity of her social work and asked them if they needed a small, interest-free loan (not more than Rs. 500) and told them to return to meet her with their repayment in six months. Those who said they could repay earlier were told to loan the money to someone else on the same terms. When she returned, she found that 100% of the people repaid the loans. Thus began Aamara Biswas’ nano-finance practice on November 9, 2007.
Donations from friends and other supporters gave the organization some capital to start providing loans of Rs 500 or Rs 1000. The rules are simple: loans go only to women; there are no hand-outs, only loans. If you repay the loan in full, you can take another for up to Rs 1000. While there are no penalties for repayment failures, if you do fail to settle up, you cannot access additional funds. Across its sites in cyclone prone eastern Orissa and the Sambalpur area (including tribal areas), the repayment rate is an amazing 97%. Aamara Biswas activists say that the percentage is high because women can manage the repayment of these small amounts of interest-free money over a long period of time. Ranu keeps a small portion of funds in a commercial bank to earn interest which helps to off-set administrative costs. These costs are kept to a minimum because there is only one office (a donated space in Sambalpur), Ranu volunteers her time, and local loan recipients serve as coordinators on the ground, keeping simple records of transactions and helping to identify emerging needs with minimum salaries. Each site has a small pool of funds. When the funds run out, applicants must wait for others to repay in order to obtain a loan. Ranu has found that when the need is greater than the availability of funds, the women will decide among themselves who is most deserving at the moment. They trust that the recipients will repay on time and that funds will then become available to them.
The village near Sambalpur is the most poverty-stricken of all those Aamara Biswas works in. No other government or social welfare organizations serve the area, so the needs are tremendous and Aamara Biswas’ ability to meet those needs is limited. Nonetheless, Kamalini, the village’s Aamara Biswas coordinator, and other villagers say that the support they have received has helped to minimize reliance on nearby moneylenders and given them some hope that their lives can improve.
Six months ago, a temporary school was started in the village because none of the children were attending the government school, two kilometers away. None knew how to read or write, making it nearly impossible for the older children to join in formalized education. The villagers built an open air school room. A small donation allowed Aamara Biswas to provide a classroom, chalkboard, schoolbags, books, chalk, and some salary to two local teachers. Nano loans allowed each of the children to receive a schoolbag, chalk board or tablet, and writing utensil. Six months later, all the children have some basic literacy skills, and 20 of the 50 who began in the program are attending the local government school. Another donation is providing some badly needed books and new bags and slippers with the aim of ensuring that all the children can go to the regular school soon. The children’s enthusiasm for learning was exciting to see: all of the kids want books in Oriya and English to enhance their employability; the girls are requesting sewing machines so that they can learn a skill. The objective is to get all the children on track so that the school can be closed down in a few years as the village can rely on the government school to meet the needs of its children.
The villagers have also banded together to request a loan of Rs 30,000 to start a small brick making business. Thirty village women will take loans of Rs 1000 and pool their resources to the enterprise. Since brick making is relatively profitable in the area, the women expect that they will be able to easily repay their loans in the six month time frame. Their next project idea is already on the table: due to a drought in the area, villagers have not been able to gather thatch to repair their roofs and need funds to buy materials.
Despite these improvements, the needs are great. During our visit, scantily clad children and adults peeked out at us from doorways. The lack of infrastructure and continuing water shortages confound the villagers’ efforts to sustain livelihoods and improve living conditions. It is clear that Aamara Biswas will need more resources and/or the cooperation of other organizations to transform the situation. Still, Aamara Biswas’ approach of providing nano-loans and trusting that the poor will make productive use of the funds and repay them in timely manner is an idea worth exploring further. For more information on Aamara Biswas, please visit their website at http://www.aamarabiswas.org/.