Shamsun Nahar is providing entrepreneurship training to poor urban women and working toward linking them with the formal banking sector.
The New Idea
Shamsun has built a program to identify entrepreneurial potential in poor urban women. She develops that potential through a training program that focuses on the business skills and non-business-related core competencies of successful entrepreneurs. She then links the developing entrepreneurs with the formal credit sector, where they obtain loans to expand their business activities. In this way, they create a livelihood for themselves and provide employment to other poor residents.Shamsun's training program is unique in Bangladesh. Unlike training programs run by local citizen organizations, which usually focus more on the enterprise than on the individual, it emphasizes the person and taps into her core competencies. Shamsun's approach differs from entrepreneurship training programs operated by most development organizations, which have generally targeted educated, middle-class, and higher income groups.
The growth in Bangladesh's population combined with insufficient industrialization has resulted in widespread unemployment. Mass migration of people from rural to urban centers in search of work has led to a host of problems such as inadequate housing, water, sanitation, and child care. It is estimated that three to four million of the ten million residents of Dhaka, Bangladesh's capital city, reside in slums.It is very difficult for the urban poor to escape the cycle of poverty that circumscribes their lives. Studies suggest that a significant number survive on the modest income they earn through the informal microenterprise sector. This sector offers a possible avenue out of poverty and unemployment, but the way is not smooth. Prior to the success of Grameen Bank, the poor did not have access to affordable credit. Now, citizen organizations provide loans to their members, mostly illiterate poor women with few or no assets. However, the formal banking sector has remained unconvinced that this approach works–despite the poor women's high repayment rates–and is closed to poor households. Instead, the banks are lending to social-sector organizations that disburse the funds to their members. Since most of the urban poor are illiterate and lack specialized skills, they are, in many cases, unable to use their loans effectively. This constrains their ability to expand their enterprises and cross the poverty line.
Shamsun focuses on strengthening women's core competencies. She has observed that women participating in microcredit schemes manage small funds relatively well, but have difficulty with larger loans. She believes that with the right training these women can become more innovative, efficient, and entrepreneurial. Part of the problem, Shamsun believes, is that entrepreneurial thinking is not encouraged from childhood; instead, parents and elders obstruct independent thinking–an essential tool for entrepreneurship. Another part is that some individuals may need assistance in developing their potential skills. She has defined entrepreneurial skills based on the results of research done during the 1980s by Dr. David C. McClelland of Macber and Company, a firm in the United States, who studied the qualities that contribute to the success or failure of entrepreneurs. A comparative analysis of entrepreneurs from India, Malawi, and Ecuador revealed that the successful ones had common core competencies, including persistence, self-confidence, risk-taking, goal-setting, and problem-solving. Some individuals can cultivate and use these qualities on their own, but others need training and direction to develop the possibilities latent within them. Shamsun feels that citizen sector organizations tend to provide training without assessing the ability of their members to relate to it or use it. Believing that greater care must be given to ensure that poor women believe in themselves and their latent skills, Shamsun focuses on building self-confidence and then draws out the core competencies through experiential, participatory, and group exercises. She motivates women to think creatively, problem solve, and develop planning skills. She takes them on field visits to other enterprises and businesses for exposure to different ideas. The training program has three components: self-management (core competencies), business management (marketing, technical, organizational, financial components), and loan management (repayment, legal issues, repercussions of nonrepayment, bank loan criteria and rules).
Shamsun is also working toward making poor women "bankable." She is convincing formal banks to lend directly to the women who complete the training program. While others have had similar ideas, they have had little success persuading formal banks to lend directly to the poor. Initially, Shamsun faced great difficulty in overcoming this obstacle. She went to the Gonoshastho Kendro credit union and arranged for five women to receive loans for starting enterprises. After much persistence, she managed to convince two other national banks, BASIC and Agrani, to provide loans to her trainees. They agreed, but on the condition that Shamsun's organization, Saptadinga, act as the guarantor. Agrani has since offered to provide loans to trainees of Saptadinga without needing guarantees or collateral. Agrani has also offered to give Shamsun a commission for every trainee who receives a loan. The loans will be for larger amounts than what is generally provided through traditional microcredit programs, and the proposed target group will be from the lower-middle income bracket. For the future, Shamsun wants to ensure that any graduate of her training will be given priority by the formal banking sector. To achieve this, she is facilitating the exchange of information between trainees and banks so that each is aware of the other's needs.Shamsun has trained ninety-three women, eighty-six of whom have started new or expanded existing enterprises. She has arranged loans for fifty poor women from three banks. The women are now employing almost five hundred people.
Shamsun has funded the trainings through donors and a nominal application fee. When the program is better established, she plans to charge trainees a fee for sustaining the program. She is also working toward incorporating her ideas within other citizen organizations. She wants to develop entrepreneurial skills in younger people, such as street children and participants of youth vocational training programs, and she hopes to establish a research center for product development in the manufacturing sector to cope with increasingly competitive markets and to move to nontraditional items. Further, Shamsun plans to establish a support structure for entrepreneurs that will provide them with advice and encouragement, particularly during lean periods.
Shamsun has been an individualist from childhood. To avoid being married at a young age, she shaved her hair. To continue her studies, she moved from her village to the city and supported herself by doing household work in her uncle's home. During the 1971 independence war, she cooked for and nursed the freedom fighters. Shamsun has been training entrepreneurs for many years. She completed training on entrepreneurship in Ahmedabad and Manila and has written a training manual about entrepreneurship development. She felt that to be an entrepreneurship trainer, she herself needed to be an entrepreneur. Thus, she started a small clothing business venture in 1994 in Faridpur with only Tk 5000 (approximately US $90 at 2002 rate of exchange) in capital. After one year, she had increased her capital to Tk 70,000 (approximately US $1225 at 2002 rate of exchange). She ran the business for three years and learned many of the lessons she has applied to her training.