Access to light is a serious development issue for those living at the Base of the Pyramid (.i.e., those who live on less than $5 per day), especially for individuals living in rural areas. The aim of this project is to develop a scalable, financially sustainable business model that a microfinance institution can implement in extremely poor rural areas. When implemented, this model will not only allow households to obtain light, but also create a new, viable business in the form of a micro-utility.
In order to generate our recommendation, we decided to focus our research on a specific village in India—Bhudapada Village near Sambalpur, Orissa. Bhudapada was chosen due to its relationship with the Baharat Integrated Social Welfare Agency, a microfinance institution. Bhudapada represents the “worst case scenario” in rural villages across India. Most of the residents earn their living as daily agricultural laborers, surviving on an average per capita income of USD$1 per day. However, the village also has some points of development, namely the existence of a self-help group, a self-organized group of local entrepreneurs that support each other in financial savings and risk diversification, and runs a small soap business and grocery store. BISWA has an established network of almost 15,000 self-help groups, which this project’s recommendations were designed to leverage, maximizing the speed at which it could be scaled up following a pilot implementation.
This strategy also enables a rapid expansion of the income generating and development activities this model will create within the self-help groups themselves and the villages they operate in. With greater availability of light, the self-help groups will be able to expand their business activities into the evenings and also to generate income from a new enterprise, the provision of light to their neighbors. With light, villagers will be able to expand their own participation in cottage industries such as craft making, benefiting from the additional income opportunities this presents, as well as the opportunities for non-income generating activities such as education and safety this light will provide.
Our recommended business plan involves three partners: the Baharat Integrated Social Welfare Agency, product manufacturers, and the villagers. The Baharat Integrated Social Welfare Agency will lend money to the self-help groups that will start and manage the micro-enterprise, which is consistent with their current operations. Self-help groups will purchase LED lights and solar battery chargers with rechargeable batteries of different sizes. The self-help group will then function as a micro-utility and will provide the light to villagers using financing options suitable to their level of income.