Is there a new model for improving lives of the rural poor?
The recent micro-financing scandal in India where a few rogue banks lent money to poor consumers, most of them women, at exorbitant interest rates has made rural communities question micro-financing entirely.
In Tina Rosenberg's Fixes column in The New York Times, Rosenberg discovers a consignment-style solution to grow the economy of poor communities:
Soluciones Comunitarias uses the same model employed by second-hand clothing and furniture shops in the United States and elsewhere: consignment.
With consignment, a supplier gives a product to a retailer, who then sells it. After the sale is completed, the retailer reimburses the seller, keeping a commission. The risk is taken not by the retailer, but by the supplier.\n
Soluciones Comunitarias (“community solutions”) is selling products that improve the health and prosperity of villagers, and doing it in a sustainable way while providing rural people — the vast majority of them women — with new business opportunities that do not require risk or debt.\n
What they do is train women to be salespeople and they sell everything from stoves to eyeglasses without being forced to take loans in order to invest in inventory that may not sell. The Guatemala entrepreneurs will make a consistent profit by year end. If Soluciones Comunitarias can do this here, Rosenberg asks the question:
Is microconsignment a system that can deliver these products on a sustainable basis and large scale to people who need them? If so, how?\n
Her column on Saturday will explore the answers to these questions.