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Jun192015

Cash Machines for the Poor

Friday, June 19, 2015 at 7:51AM

Access to basic banking services for the poor is weak at the best of times. Many are openly discriminated against as a ‘bad risk’ by banks, and denied the sort of banking services middle and higher income people take for granted. Yet it is a myth that the poor do not have money or do not wish to save and invest for their future or for business.

The so-called Bottom of the Pyramid (BOP) – the four billion people around the world who live on less than US $2 a day – are being targeted by a wide range of businesses. Indian business consultant and professor CK Prahalad, the man who coined the term BOP, has gone so far as to claim this is a market potentially worth US $13 trillion, while the World Resources Institute puts it at US $5 trillion in its report, The Next 4 Billion.

And contrary to popular perception, the poor do have buying power, as has been documented by Massachusetts Institute of Technology (MIT) professors Abhijit Banerjee and Esther Duflo in their paper “The Economic Lives of the Poor”. Surveying 13 countries, they found those living on less than a dollar a day, the very poor, actually spent 1/3 of their household income on things other than food, including tobacco, alcohol, weddings, funerals, religious festivals, radios and TVs. The researchers also found that the poor increasingly used their spending power to seek out private sector options when the public sector failed to provide adequate services.

India, where 63 percent of the BoP market is rural and 304.11 million people are illiterate (Human Development Report), makes for a particularly tricky market to reach with bank machines: the average transaction is just 100 rupees (£1.25).

But a Madras-based company has come up with the Gramateller – a low-cost, blue-and-white bank machine custom-designed for the poor and illiterate. Vortex received funding of 2 million rupees (US $48,000) from an investment company, Aavishkar, that specializes in micro-venture capital — small sums for new business ideas. The advantage of micro-venture capital funding is its longer payback time: a young company does not get driven out of business by having to pay back the cash before the idea has been realized. Normally, venture capital helps a business to grow quickly but the venture capitalist wants to see an immediate profit on the investment.

Vortex’s chief executive officer, V.Vijay Babu, said: “The idea was conceived by Prof. Jhunjhunwala of IITM (Indian Institute of Technology Madras) in the course of an exploratory project focused on using ICT to deliver modern banking services to rural India.”

“It was found that branch-based banking is too expensive to be extended to remote rural locations where the volume and size of transactions are small. Using conventional ATMs (automatic teller machines) as a channel posed many difficulties because these ATMs were not built to operate in [illiterate] environments. Hence the need for developing an ATM specific to this context.”

Costing just a 10th as much to build as an ordinary cash machine, Gramateller has a fingerprint scanner for the illiterate, and is able to accept dirty and crumpled bank notes. Vortex came up with an ingenious solution to do this, said Babu: “Vortex developed a beltless dispenser design that in many ways mimics the way a human teller would pick and count notes.”

Vortex hopes to massively expand access to cash machines: at present, India has just 30,000 machines, or one for every 43,000 people (the US has a machine for every 1,000 people). These machines are being piloted with India’s biggest private bank, ICICI, and they have garnered interest from Indonesian banks as well.

“We are running pilots for two leading banks with about 10 ATMs,” said Babu. “Though it is still early, the initial response has been very encouraging – rural users find fingerprint authentication intuitive and simple and the ATM convenient and easy to use. A few users also gave feedback that our ATMs look less intimidating, maybe because it is placed in a non-air conditioned room with easy access and also is different in shape from a typical ATM.”

Furthermore the cash machines have taken a beating to see if they are robust enough for rural India: “The ATMs were tested for extended operating cycles under the harshest of environments that would prevail in the rural context — using soiled currencies, operating in non-air conditioned and dusty environments, subjecting the machine to typical fluctuations in line voltages and power outages. User-acceptance was tested by enlisting the participation of rural and semi-urban people to carry out test transactions.”

As for thieves getting their hands on the cash before the poor, Vortex maintains the machines will not become the victim of thieves: each machine will only carry a fifth of the money of city-dwelling bank machines.

Elsewhere in the South, a South African research and analysis company BMI-TechKnowledge (http://www.bmi-t.co.za/) in its latest report identifies a boom in banking services across Africa. In particular, South Africa, Botswana, Namibia, Angola, Mauritius, Tanzania, Kenya, Ghana, Nigeria, Egypt and Morocco – all have seen surges in profit and services as a result of improving banking regulations and political conditions. Maybe future markets for the Gramateller to reach Africa’s poor lie ahead?

By David South, Development Challenges, South-South Solutions

Published: August 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

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Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

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Cashing in on Old Wisdom

Tuesday, June 16, 2015 at 11:58AM

India’s traditional weavers, heirs to a 2,000-year-old textile industry, are turning to the ancient practice of ayurvedic medicine to make their products more appealing and boost sales. Drawing on recipes once used by weavers to the Indian royal courts, clothes are woven and infused with ayurvedic, herb-and-spice medicinal recipes to address various health problems. Strange as it may sound, the health-giving properties of the clothes have been backed up by clinical trials at the Government Ayurveda College in Thiruvanathapuram, southern India.

The college claims the trials were successful for 40 patients with rheumatism, allergies, hypertension, diabetes, psoriasis and other skin ailments. It is believed the healing properties of the herb-and-spice-infused clothes enter the skin and contribute to healing.

Modern India’s founding father, Mahatma Gandhi, championed hand-spun cloth and weaving. But India’s weavers have been hit hard by the rise in the rupee against the dollar and an inability to compete internationally. They are facing stiff competition from a flood of machine-made cheap clothing. According to Siddique Hassan of the Weaver and Artisans Rights Front (WARF), 1 million of India’s 5 million weavers have lost their jobs because of competition (Deutsche Presse-Agentur).

But rising interest in sustainability and natural healing is creating a growing global market for organic clothes – sales are set to triple to US $2.6 billion in 2008 (Organic Exchange).

Against this backdrop, local governments have turned to traditional ayurvedic medicine to help save the livelihoods of handloom weavers and develop a market niche for their eco-friendly fabrics.

In the technique called Ayurvastra, the clothes are dyed with herbal essences, infusing the cotton with the medicine. More than 200 herbs are used, mostly taken from roots, flowers, leaves, seeds and bark. Most of the clothes are made with cotton and silk, and some with wool and jute. A dress is marketed to people who suffer from hypertension. There are bedcovers, pillow covers, nightgowns, and even suits. It is believed the healing effect is best when the patient is sleeping.

The clothes are made in Balaramapuram, home to traditional weaving in Kerala, southern India, and sell for between 1,000 and 1,800 rupees (US $25 to US $45). Ayurvastra clothing is currently being exported to the Middle East, the US, Italy, Germany, Britain, Singapore, Malaysia and Jordan.

Acknowledging traditional medicine as a useful development tool goes back to the World Health Organisation’s Alma-Ata Declaration in 1978, which urged governments for the first time to include traditional medicine in their primary health systems and recognise traditional medicine practitioners as health workers. During the last 30 years there has been a considerable expansion in the use of traditional medicine across the world. Despite their ancient origins, it is still critical these medicines do meet efficacy and health standards and are proven to work.

Ayurvastra is a branch of the 5,000-years-old Indian ayurveda health system. Ayur means health in Sanskrit, veda means wisdom, and vastra is cloth or clothing. There are no synthetic chemicals and toxic irritants and the technique uses organic cotton that has been hand loomed.

“The entire process is organic,” said K. Rajan, chief technician at the Handloom Weavers Development Society in India, to Zee News. “The cloth is bleached with cow’s urine, which has high medicinal value. The dyeing gum too is herbal. It does not pollute like synthetic dye. And the waste is used as bio manure and to generate bio gas.”

Chaitanya Arora of Penchant Traders, an Indian company promoting and exporting ayurvastra cloth and clothing, tells how it works: “usage of the cloth is based on the principle of touch. By coming in contact with ayurvastra, the body loses toxins and its metabolism is enhanced.”

One clothes buyer, T D Kriplani, told Zee News, “Basically, I have read about the concept in newspapers… I was inquisitive and have also heard that it is in direct touch with body pores. I have come here after reading about it and hope it will benefit people.” It is even claimed the clothes can keep people cool.

Another seller of ayurvastra, Hitesh, is enthusiastic about its impact: “The medicinal clothes that we have launched is a new revolution in the textile industry. In there, we dye the clothes with ayurvedic dyes and the clothes have medicinal qualities, which hopefully are good for diseases.”