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    In India, Integrating the Informal Sector into the Global Economy


    © International Trade Centre, International Trade Forum - Issue 4/2003

    Access to global markets is critical to the economic security of many of the world's poor working in the informal sector. According to SEWA, in India, this sector includes home-based workers, vendors, manual labourers and service providers; it accounts for up to 70% of gross domestic product and over 40% of exports; of the total workforce, 93% operate within the informal sector, and 60% of these are women.

    Working in India's informal sector, the Self-Employed Women's Association (SEWA) is helping thousands of Indian women meet their business needs. Its domestic success has encouraged it to set up a trade facilitation centre to help women move into exporting. This has boosted exports dramatically, and brought greater security and prosperity to India's rural poor.

    Barriers to business

    Some of the barriers self-employed women encounter include:

    • laws and customs that discriminate against women;
    • insufficient access to credit;
    • lack of social benefits like health insurance and pensions;
    • lack of affordable childcare;
    • inadequate health care;
    • lack of education and training; and
    • insufficient knowledge about export markets.

    Meeting financial, social and training needs

    Several organizations within the group have grown up in response to an identified need, such as the SEWA Bank, one of the group's largest cooperatives, with over 125,000 members.

    Additionally, six self-financed organizations provide insurance, pensions, medical and childcare for SEWA members. The largest is the Lok Swasthya SEWA Health Cooperative, with 155 member-workers, serving 74,695 self-employed members and their families.

    SEWA emphasizes capacity building and member education, and has set up the SEWA Academy, where 20,000 women participate annually in education programmes, focusing on literacy, training, research and communication.

    The movement is governed democratically. Each cooperative or self-help group elects its own governing body from among its workers, and 500 elected representatives or pratinidhis meet monthly in small groups to share ideas and experiences.

    Moving into exports

    To give its members access to national and global markets, and thus ensure their long-term stability, SEWA set up the SEWA Trade Facilitation Centre (STFC) in March 2000. In this unique business model, the majority of shareholders are the artisans themselves.

    This project has been a resounding success. In its first 18 months, STFC's annual sales grew by 62% and exports by 311% over the preceding year. In May 2003, SEWA decided to register the centre as an independent company to enable it to grow even faster.

    When starting out, STFC identified potential export problems among the women producers, including a lack of experience in production and marketing, a scattered production base with inadequate quality control, no in-house design capability and insufficient retailing channels.

    To increase national and international trade, STFC needed to research markets and improve communications between micro-enterprises and their federations. To this end, it constantly carries out capacity-building and product development.

    It also streamlined the production system by introducing common production centres, quality control, central designing, cost rationalization and vendor development. It concentrated on brand building, integrating both social and commercial aspects in its planning.

    The centre made rigorous efforts to explore national markets, before expanding abroad. Artisans of Banaskantha and Kutch exhibited and sold their textile products in Paris and three other French cities during SEWA's first international exhibition, and international trade is growing. At present, business-to-consumer sales account for 71% of total sales, with business-to-business sales accounting for the remaining 29%.

    Applying technology to business needs

    Vinayak Ghatate, a World Bank consultant, explained how STFC is able to manage its entire micro-enterprise activity through the effective deployment of information and communications technology (ICT) solutions. "It uses e-business as a marketing tool for tapping the virtual marketplace and for showcasing its products via web sites," he explains. "Modern technology also allows the organization to adapt more rapidly to changing trends and manage its stocks more effectively."

    SEWA uses technology to help anchor the process of integration: it is a means to provide business training and education; facilitates networking; and improves quality management and production efficiency.

    STFC develops information and training software in local languages, both for skill building and to increase literacy. It has designed customized software for the micro-enterprises of poor, illiterate women, such as embroidery activities at the village level, and dairy management software for rural milk cooperatives to test the consistency of milk and eliminate fraud.

    SEWA also uses audio-visual media to connect with its rural members for training and capacity building, mentoring and export guidance. It uses e-conferencing via satellite for meetings and brainstorming.

    SEWA's ICT unit uses advanced technology to help its members and their communities in earthquake-prone areas by setting up communications centres to provide e-mail, Internet connections and satellite phones using VSAT (very small aperture terminal) equipment.

    Networking at different levels

    Networking plays an important role in SEWA's development. In India, this occurs between members in different states; in the South Asian region, it is through the South Asian Association for Regional Cooperation, by building alliances with other regional organizations and establishing a SEWA Trade Facilitation Centre for southern Asia. Finally, at the global level, it networks with SEWA movements developing in Turkey and Yemen. Through the World Bank "Voices of the Poor" workshops, it has established the Global Trade Facilitation Centre (see below).

    Blueprint for success

    Ela R. Bhatt, the founder of SEWA, attributes the movement's success to its hands-on practical approach, as it evolved in response to needs established while working with the members on a day-to-day basis.

    SEWA helps women take control of their lives, resulting in greater self-confidence and financial independence. Through the creation of a business entity, STFC is able to assure employment for marginalized workers: an effective concept for poverty reduction worldwide.

    Company: Self-Employed Women's Association (SEWA)

    Sector: Manufacturing, crafts, services

    Location: India

    Members: Over 420,300 members at grass-roots level

    (Gujarat 284,317, Madhya Pradesh 107,620, Uttar Pradesh 25,800, Bihar

    1,600, Kerala 719 and Delhi 252)

    Export markets explored: Australia, Belgium, France, Germany, Italy, Japan, Spain, United Kingdom, United States of America

    Web site:http://www.sewa.org

    Grass-roots trading network for women

    The informal sector does not have a voice with trade development decision-makers and trade development organizations. A global  grass-roots trading network for women could help address this issue.

    The Global Trade Facilitation Centre was officially launched in London in June 2003. Its founder is Reema Nanavaty, chairperson of the STFC and director of economic development and rural organizing at SEWA. "This multinational trade association is designed to strengthen, support and expand market opportunities for grass-roots producer organizations, in the informal sector, with a particular focus on women," she said. "It is hoped that this association will become a global resource for grass-roots producers everywhere, and assist informal sector workers in lesser developed countries to reach global markets."

    For further information, please contact Reema Nanavaty at bdms@icenet.net

    Mary Treacy, contributing editor to this issue of Trade Forum, is a communications consultant who has worked with cooperative businessassociations for 18 years.