ARTISAN Cluster development with MFI
doob...@gmail.com
2 major problems faced by artisan clusters:
1. The first is the absence of organized community initiative, which
has forced the average artisan to plough a lone furrow, blissfully
unaware of the immense market potential his product has.
2. The second-which essentially is an offshoot of the first-is that he
is stuck in the traditional, centuries old mould method, unable or
unwilling to bring in the innovation and product diversification
required to cater to the changing tastes of the new age customer.
Initial Target Market & Opportunities
Around 58 Lakh families are involved in handloom and handicrafts
throughout the country; the corresponding figure in Orissa is 5 Lakh
families making the State the 3rd largest in terms of artisan's
population. There are 145 clusters in Orissa covering 30,000 artisans.
While at national level turnover from the handicrafts has gone well
beyond Rs.20,000 crores, Orissa has failed to cross even Rs.100
crores. This is much less compared to the population and the skill
available in the State. . By providing special loan package and
marketing support, MFI shall be able to increase this market size by
at least 10% in 2 years.
Where MFI can come into picture?
Clusters can be characterized in 2 parts: Artisan clusters and
Industrial cluster. An artisan cluster is characterized by the
predominance of household based enterprises. Such enterprises use
personal skills of the artisans to production, rather than
electrically driven machinery. These artisans are in the major need of
finance for their business.
The reason why we should focus on artisan cluster and not industrial
cluster because the latter gets loans easily from other entities, but
artisan clusters still do not get proper loans. In this stage we can
have a tie-up or partnership with UNIDO which works through cluster
development approach. In Orissa, UNIDO had tried to introduce several
artisan based loan products with some MFI's, but still the outreach of
these MFI's is limited. The major reason of the failure of these MF
products is that they are not created according to the needs of the
Clusters. The business cycle in these clusters is totally different
and income streams are not daily or weekly. In some cases it is
quarterly too. Apart from this we shall also provide linkages with
Handicrafts technology providers and handicraft markets. Technology
inclusion will help them in creating products according to market
demand and also to market them in better way.
MFI can develop a product considering following problems of Artisan
Cluster :
· Non availability of Credit with flexi repayment rate
· Lesser amount of loan is given
· SME's need working capital loans, which is given by lenders in small
amounts for longer time period. This creates a dependency of SME on
lenders. Vicious circle of poverty exists.
· More than 70% of weavers in Chanderi cluster don't have money to
support their families for more than 10-15 days.
· Savings not done by most of the artisans
· Don't have capacity to hold stocks
· They are bound to sell their products to middlemen at low prices
· Financial vulnerability reduces the willingness to experiment on
products
Over the current decade, the increasing liberalization of the Indian
economy has had a severe impact on many SSE clusters. The loss of the
protection that had been traditionally granted by the Indian
government to the SSE sector is increasingly being felt. Despite this
mounting challenge, India still lacks a coherent support policy for
SSE clusters. It is until December 2006, when a comprehensive policy
for clusters is formulated. There is still a huge demand of credit in
these clusters, which MFI can tap.