In 2005, I met Dhanasekhar in a town called Tharamangalam in Tamil Nadu. Back then, he was working at a power loom producing cloth, and earning about Rs. 6000 (~US$ 70) every month. Dhanasekhar had been trained in the craft of hand block printing at the Weaver's service centre in Salem, Tamil Nadu, India. An in-depth interview with Dhanasekhar can be found here.
We began working with Dhanasekhar in 2005 through Chaani.in, an organization that is focused on
- Making the textile value chain visible
- Increasing incomes of artisans
- Helping artisans become entrepreneurs
Need for seed capital
Most artisans like Dhanasekhar, despite being trained, lack the capital to set up their own unit. In this case, I provided him with seed capital, structured as an interest free loan of Rs.50,000/- (~US$ 600) to set up his unit. He repaid this interest free loan over the following three years. The repayment amount was not fixed. It was flexible and based on his earnings every week. We agreed the cadence would be a weekly repayment and agreed on the amount to be repaid every week. This flexible repayment schedule reduced financial strain on him, and transferred the risk to me.
Skill building: Bearing the risk of training and design
Although Dhanasekhar was trained in the fundamentals of hand block printing, he still needed to become proficient in the craft. He needed to build his ability to match colours, and print fabric evenly without errors. One of the biggest obstacles in working remotely with Dhanasekhar were the cultural differences between my customers and Dhanasekar. Having lived in Tharamangalam his whole life, Dhanasekhar had limited exposure beyond his town and lacked awareness of urban consumers and their aesthetic preferences. He didn't have an understanding of the different colours, shades and tones that consumers desired.
Also Dhanasekhar didn't have access to the internet and all our communication was over a basic mobile phone. I would send him colour swatches (paper/fabric/yarn) to provide colour references, and we developed a common vocabulary to identify the colours accurately. He gradually learnt to match colours, but the many mistakes and losses made through these mistakes had to be absorbed by Chaani.
Most artisans, like Dhanasekhar don’t develop their own designs, or invest in blocks and fabric- all of those are investments made by Chaani. However, once the blocks are provided to artisans who work with multiple vendors, the designs tend to get used beyond just the provider. This is an area that needs to be addressed through legal contracts. In the absence of legal recourse and an inability to monitor how designs get used, plagiarism and design theft is common.
Need for emergency funds
Artisans like Dhanasekhar lack a safety net in the form of health insurance or savings to meet emergency expenses. There were periodic illnesses in his family that disrupted his life and work. For instance, his father needed an emergency surgery and I provided the funds needed. When Dhanasekhar’s daughter started going to school, I provided the money to pay the school fees at the start of the term. These periodic advances ensured that he didn't have financial disruptions, but put a strain on Chaani’s resources.
The importance of building a financial trail
Dhanasekhar was used to receiving payments in cash. At my insistence, he opened a bank account with Indian Bank. I had a business banking relationship with Indian Bank and allowed me to make payments to him. However, at the time we started working together, Indian Bank had not implemented core banking in its rural branches. So initially, I sent cheques by courier to Dhanasekhar. This helped him cultivate a banking habit, build relationships with the branch manager and build a financial history. When core banking was universalized, it became easier to transfer funds digitally and provided Dhanasekhar with the financial footprint he needed.
The importance of formalization
When the Indian government implemented the GST (Goods and Services Tax) in 2017 and allowed businesses to pay taxes and file returns online, I insisted that Dhanasekhar formalise his business and get GST registration. This further allowed him to formalise his business and he became visible to the government. He then availed a loan from the bank under a government scheme that allowed him to expand his production capacity.
Dhanasekhar now earns in excess of Rs.3.50 lakhs (~US$ 4100) per month and produces more than 2000 units a month. His children have attended English medium schools and are now enrolled in college.
Artisans need different types of interventions at different stages of growth and development, if they are to transform into entrepreneurs.
These are:
1) Financial interventions
2) Skill building
3) Building social and cultural bridges
4) Building financial history and formalisation.
- Financial interventions take three forms. Providing a) Term loans, b) working capital c) bridge loans.
While providing loans is necessary, the key to a successful intervention is flexibility in repayment, based on income or cash flow. This flexibility also accounts for seasonality of income.
- Skill building:
This is on-going and continuous. Initially inputs need to be technical to develop proficiency in the craft. Later inputs will involve training in digital skills and business skills.
- Building social and cultural bridges:
Two decades ago, the role of a designer was to facilitate the production process with a superior understanding of consumer preferences and technical aspects of production. That role has now changed. Artisans are more likely to benefit through developing social networks & being exposed to different cultural contexts. Curated Co-design and collaborative workshops are likely to be more valuable than mere design inputs. Building social networks creates more opportunities.
- Building financial history & Formalisation:
Part of an artisan's evolution from a daily wage labourer to an entrepreneur will depend on building a financial history with formal financial institutions. Formalising the business allows the artisan to become visible to the state and become eligible for state funded schemes.
The role that Chaani has played over the years in absorbing risks to enable this transformation cannot be underestimated. Institutions like Chaani need access to long term patient capital in the form of both grants and equity, to multiply the impact we have seen in Dhanasekhar’s life. If you would like to partner with us in this journey, please reach out at Sreenivasan.vidyuth@gmail.com