Enterprise Approach to Development: The inspiring case of Nai Nangla

Heard about Mehmood Khan, Unilever's global innovation head? This article narrates a success story that beautifully demonstrates how an enterprise model coupled with strong emphasis on education can transform a village.

Nai Nangla in Haryana’s Mewat district could be just another Indian village, ridden with the usual problems of a people trapped in poverty: Lack of healthcare and clean water, low productivity, high unemployment and illiteracy. But Haji Siddiq Ahmed, a local farmer in his late 60s, sees a different vision. “I want this village to be an adarsh (model) village. Others should look up to this village — that this is what an ideal village should be like,” he says.

The image Ahmed sees is actually taking shape in this quiet village with a majority Muslim population. What’s more surprising is the way the change is taking hold. It may be difficult to imagine the humble folk of Nai Nangla as business executives, but the cool concepts reviving the economy of the village are no less professional.

Mehmood Khan, Unilever's Global Innovation Head and a Nai Nangla native, is the man behind this dramatic change. Mehmood's philosophy: "Focus on education and use enterprise to bring change by leveraging resources in villages".

All Mehmood Khan did was to convert a local resource, livestock, into a productive enterprise. He roped in the National Dairy Development Board’s Mother Dairy to spur Nai Nangla’s milk output and break the stranglehold that milk vendors had on local dairy farmers.

At one time, these vendors — middlemen really — would lend money to farmers to buy milch animals. In return, they would demand milk at low fixed prices until the loans were repaid. For most farmers, their income was too low to enable them repay the debt. The result: They remained trapped in debt.

Khan, troubled by this age-old exploitation, brought in Mother Dairy and ushered in a new system to break this debt trap. Debt-laden farmers were given loans from institutions so they could repay the vendor and start selling direct to Mother Dairy. “Almost 25 people got loans to buy cattle, without having to pay any bribes,” says Ahmed.

In July 2008, Mother Dairy set up milk collection centres in Nai Nangla and six other villages. In the first week, it got 70 litres of milk. Today, Nai Nangla alone gets 250 litres a day. “Gross income from agriculture is now Rs. 1.2 crore,” says Khan. “Milk has become a constant income source in a village which had seasonal income due to Kharif and Rabi crops.”

Khan woke up to the need for change in his village when the voluntary organisation Pratham, which educates the urban poor, launched its services in the UK in December 2003. Pratham can teach a person to read and write, and take interest in it within 35 days. He asked Pratham to test the abilities of children in Nai Nangla and the results shocked him.

Pratham found that students as high as fourth and fifth grades couldn’t even perform basic tasks like multiply or read a complete paragraph. Khan realised the enormity of ignorance in his native village. The low level of literacy among women gave him sleepless nights. “Women are change agents,” he asserts. “If a community has to progress, one must empower women and education is the first step.” So education for women is one of the priorities for the trust he has formed in the name of his parents — the Rasooli Kanwar Khan Trust (RKKT).

And there was another problem. “Mewat is a male-chauvinist area,” says Khan. While the villagers agreed that educating their girls was important, they had reservations. They didn’t want them to go outside the village, study with boys or be taught by male teachers. So the group decided that they would be taught by female teachers from their own village.

In July 2008, the girls suggested that they could learn to sew and be self-employed. Khan installed 30 sewing machines in nine villages. Some of the women are turning a profit, making a neat Rs. 2,000 - Rs. 2,500 a month.

Khan is leveraging his business network to bring employment to Mewat. A year ago, Aviva General Insurance was looking at a rural play. He connected them with 60 local youth. “It’s a cycle that generates money into the system. Aviva hired some people whose income went up. They can now buy Unilever products, for instance... This creates a market economy,” says Khan.

Khan has bigger plans. He is working with Deloitte to set up a water company in Mewat. “We’ll make 100,000 families of Mewat as shareholders. We’ll involve the community to green the Aravallis, replenish the lake here and then harness water and distribute it,” says Khan. He will need help from outside. He is looking to the World Bank for financing. It is expected to cost Rs. 1,000 crore, of which Rs. 900 crore will come from a funding agency and Rs. 100 crore from the people of Mewat, who will then become promoters in this company.

Together with Genpact, Khan has also set up a computer centre in Nai Nangla. Sixteen of the 30 men trained in the first batch have been hired by ICICI Bank. These previously unemployed men now earn Rs. 7,000 to Rs. 16,000 a month. For English training, Khan has roped in Kusuma Trust, a Gibraltar-based charity and ReadingWise, a company that works with NGOs to administer literacy programmes.

Nai Nangla is soon buying nine low-cost sanitary napkin machines from a Coimbatore-based supplier. A company called Crafts of India, funded by the Future Group, will help design and package the napkins, to be sold in Big Bazaar outlets. This will employ 100 women.

Mehmood Khan has taught us an inspiring lesson on how a market based approach can bring a miraculous social change. This story will strongly challenge critics who advocate against market mechanisms to tackle development.

* The story is an abridged version of a recent article at business.in.com

Muhammad Yunus on Education

I read a very insightful interview of Nobel Laureate Md Yunus at the Wharton Knowledge center recently.

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2243.

This part was specially beautiful:

So in almost every single public university, public medical school and engineering school, there are Grameen children who are studying there as well. A whole wave of new children is going into that. When I meet them, they will always discuss [one] issue, which is that they worry about getting a job. They say: "After we finish our [education], can you help us find jobs?"

How am I going to find jobs for them? So I started thinking about it. I had the idea that maybe they shouldn't be thinking about jobs. We tell them: Look, you are children from Grameen families. You are Grameen children. Your thinking should be different than other children's. Other people, other children -- they worry about jobs. You shouldn't be worrying about this. You should take a pledge and repeat this pledge every morning you wake up. And your pledge is: I shall never seek a job from anybody. I'll create jobs. This is my mission.

So you are not job seekers. You are job givers. Think in those terms because your mother -- you're the first generation child -- your mother owns a bank. Not many children have that fortune. You have that fortune. Your mother's bank has an enormous amount of money. Money is not your problem. Your problem is what to do with your money.

Then, if you feel frustrated [because] you cannot come up with an idea, think about your mother and what she did. She didn't wait for anybody. She took the money and went into business herself. She's an illiterate woman. Along the way she was successful step-by-step. She went on and sent you to school. Now you're in higher education with her bank. And what good is your education if you cannot do better than your mother? If she can do it, you can do much better. That's the thing that you have to prove to yourself -- that your mother gave you a chance and you will make use of it.

The great gram theory of Indian well-being

I came across this interesting statistic in a tamil weekly yesterday. Astonishing price rise isn't it?

Yet we see no protests about it anywhere! Price of bengal gram is expected to double in a few days and rice, our staple food, is becoming deliriously expensive. Remember the nation wide protests over food prices during the late 90s? Still worse, people in Chennai protested for a 1 Re. hike in price on city bus fares a decade back.

What do we infer from this scenario? Don't protests happen because people today have the capability to squeeze in these high differences in their monthly budgets?

A few people say yes. They say that the Indian consumer today is fed by svelte super markets which have spoiled him with choice and quality. Prices don't just matter anymore.

Or have we lost appetite for battling?

Some people say yes. They say that the low income group is completely protected from price rise by the rationing system. The main victim here is the urban middle class man, who earns between $200 and $400 a month, works for more than 10 hours a day and spends more than 3 hours in commuting through peevish traffic from workplace to home everyday.

The poor man is tired of facing political bureaucracy and has little energy to protest. Instead, he prefers to fight price rise by skipping those weekend trips to multiplexes and stays home, watching reality shows on satellite television.

Development?

I often get reminded of a radiant sunrise when people talk about development. Development, like sunrise, is a highly positive word. You feel happy when you see both of them. They don't just shut down darkness, they throw light into people's lives. But development, unlike sunrise, still lacks a universally accepted definition.

Debates defining development are endless. Mahbub ul Haq, the founder of the Human Development Report, UNDP, has a fabulous answer:

"The basic purpose of development is to enlarge people's choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives."

This way of looking at development, often forgotten in the immediate concern with accumulating commodities and financial wealth, is not new. Philosophers, economists and political leaders have long emphasized human well-being as the purpose, the end, of development.

As Aristotle said in ancient Greece, “Wealth is evidently not the good we are seeking, for it is merely useful for the sake of something else.”

The world today is looking at development with this new eye. Development is not just charity. If charity alone can address development, then the 2.3 trillion dollars of money pumped by the west into the developing world in the last 2 decades should have eradicated poverty. But all good that charity did was to create a meager 8% social impact. Instead, it stole dignity. It constricted people's choices. It bred dependency.

Today, entrepreneurs talk about market-based solutions to poverty, foundations are shifting their focus from traditional charity to "social investments" in for-profit entities and corporates aim at achieving double and triple bottom-lines protecting the social and environmental contexts. Business in the social sector is the norm of the day and people celebrate the idea of social entrepreneurship.

This blog will contemplate, celebrate, debate and disseminate information about the fabulous things happening in the developmental sector. It's a huge and happening space, yet very little is known to the world outside.

My hypothesis is that everybody loves to make amendments, but ignorance curtails action. Mere awareness can actuate amazing things.

Let me demonstrate!