A CONCEPT NOTE ON MICRO BUSINESS CENTRE

Bipin ShahSr. Faculty

Entrepreneurship Development Institute of India Ahmedabad

POINT-1

It has been estimated that informal sector accounts for about 75 percent of urban

employment in many developing countries and for 80 percent in Pakistan and

India.

• The regulatory framework does not safeguard the economic interests of those involved in the urban informal sector.

• Rigid regulatory mechanisms, deficit infrastructure such as space, electricity, water, transport and

• prohibitive credit requirements all unnecessarily limit the productive potential of this urban informal sector.

The informal sector provides livelihoods to large number of

urban poor, disorganized groups – whose only livelihood is the recovery

and re-use of recyclables from city waste.

A CONCEPT NOTE ON MICRO BUSINESS CENTRE MBC FOR URBAN POVERTY

The supply side of the informal sector is mostly governed by population growth, migration, participation rate, availability of employable skills and different types of jobs, while the demand side is governed by growth of the urban economy, choice of technology, skills of enterprises, labour intensity and infrastructure.

These different players save the municipal corporation substantial expenditure by removing wastes from the main waste stream in the city.

The social and environmental costs should also be included so that the municipal corporation has at its disposal the necessary finances for organizing and institutionalizing these informal activities. Without such provisions the situation of the informal sector will remain abysmally poor in urban centers.

In recent times, several attempts have been made to institutionalize the links between the formal and informal sectors in solid waste management.

MICRO BUSINESS CENTRE IS ONE SUCH INITIATIVE

POINT-2 The neglect of this urban informal sector can lead to serious

miscalculations in clean city programme, poverty alleviation and waste management practices.

SOLUTION IS TO

1. Facilitating emergence of sustainable micro enterprises2. Transforming existing unsustainable livelihoods into sustainable

micro enterprise based livelihood by strengthening these enterprise.

Strategic Interventions CAN BE ONE OR MORE OF;

• Capacity Building Approach

• Facilitators Approach

• Micro Credit Approach

• Business Development Services Approach

MICRO BUSINESS CENTRE CAN OPERATIONALISE THIS STRATEGIC INTERVENTIONS

REACHING THE POOREST OF POOR

The Poverty Pyramid

Entrepreneurial poor

Self Employed Poor

Laboring Poor

Vulnerable Poor

The biggest need for those people at the bottom of the pyramid is employment-SD

The enterprise development services can be provided to those people at the top of the pyramid for creating micro enterprise- MBC CAN FACILITATE THIS REACH

POINT-3

ROLE ; step-1To investigate and improve interlinking process introduce new energy and direction for efficient finance; marketing; operation &people

Objectives SHOULD be:

SUPPLY FIT

INVESTMENT/BANK FIT

EMPLOYMENT FIT

FIT FOR GROWTH

Develop COLLABORATION CLUBS; step-2

Building collaborative teams specifically enabled to respond to tenders and contract opportunities from the public and private sectors that would not have been achievable trading independently.

THE OPPORTUNITYThere is increasing pressure on Local Authorities to trade locally.

They are looking to save money.

They do not know who are the excellent groups on their doorstep

They are concerned about the RISKS of employing a small company.

Develop & Network with LOCAL ECONOMIC DEVELOPMENT FORUM; step-3 Members; Local economic stakeholder including local municipalities; NGOs; business membership organization; banks; & important private actors

WORK ON CONTINOUS BASIS FOR SERVICES LEADING TO MICRO ENTERPRISES CREATION -THE THREE STEP METHOD

OBSERVATORY LABORATORY

DELIVERY PROGRAMME

MBC- focus will be on 3 sectors i.e. Production

(Micro-industry),

Services and Business On Micro-Industry ( Manufacturing ) side, a group of people (

hub) will be encouraged for setting up of enterprises centered

around and supported by Micro Business Centres (MBC) established

following cluster approach. Space may be provided by MBCs in the

form of working sheds or micro-entrepreneurs may work from their

homes.

In relation to Services sector, Urban Local Bodies will provide Seva/

Suvidha Kendras ( for every 50,000 population at least one Kendra)

with suitable logistics and space. Workers will register themselves

with the Kendras, which could act as focal points for the servicing

trades and facilitate jobs / assignments to the registered skilled

workers on demand from the clients. The emphasis will be on quality

skills and the rates will be decided in advance / fixed for home visits.

In Business Sector, i.e. shop-based enterprises, kiosks/spaces will be leased out by the ULBs to the urban poor for setting up

shops. Vendors markets will be promoted. Mobile vending outlets,

running on motorized scooters will be encouraged with suitable

technological interventions.

Beneficiaries can also run their ventures from their own houses / shops.

Technology / marketing / infrastructure / knowledge and other support provided to the urban poor in setting up their enterprises as well as marketing their products

This component will mainly focus on handholding support for the urban poor entrepreneurs who want to be self-employed and set up their own small Businesses or manufacturing units.

Total expenditure on this component of Technology / Marketing / Knowledge / infrastructure & other support provided to the urban poor in setting up their enterprises as well as marketing their products, may not exceed 10% of the total funds earmarked for the USEP component.

For businesses they can help with project preparation, permissions from planning and regulatory agencies, maintenance of accounts, advertisement, packaging, branding, deciding maximum retail, marketing etc.

PROPOSED MODEL FOR ESTABLISHMENT OF MBCUnder this TECHNOLOGY/MARKETING/KNOWLEDGE/INFRASTRUSTUREcomponent, Micro Business Centres (MBC) will be established at cluster level ( e.g. handlooms / handicrafts , food processing, construction glass & ceramics, electrical and electronics, mechanical engineering, auto driving & mechanics, metal works, etc),

supported with one-time capital grant subject to the concerned State Government/Urban Local Body providing the required land free of cost.

A Micro Business Centre can be established with one-time financial support of around Rs. 130 lacs comprising capital grant component of Rs. 80 lacs towards construction of building and remaining Rs. 50 lacs towards the grant for recurring expenses for first two years to meet the cost of experts and other running expenses till the MBC becomes self-sustainable starting with third year.

Efforts should be made to make these MBCs self-sustainable in due course. For this, MBCs may involve themselves in business, consultancies and other income generation activities. As micro-business prosper, they can also charge fees.

This will be run on the basis of a Public – Private – Partnership (P-P-P) model MBCs could also be run by the society of entrepreneurs themselves with manpower hired on contract basis.

Small Enterprise Advisory Services ( SEAS) will be provided through the MBC which may be equipped

with specialists covering 5 key areas.

(1)Community, Mobilization including Survey and identification of Beneficiaries, Cluster Development, etc.

(2) Capacity Building including Skill and Entrepreneurship Development

(3) Business Development (4) Finance & Credit and (5) Marketing.

These specialists, who may be paid remuneration commensurate with their education and experience will undertake handholding activities for the development of entrepreneurs from the urban poor community and promote business development by them from the concept stage to commissioning to sustainability.

The MBCs & Small Enterprise Advisory Services ( SEAS) will specially focus on handholding the urban poor micro-entrepreneurs who have opted for self-employment with a view to enhancing the success rate of micro-enterprises.

Operative guidelines for MBCs and SEAS will be issued by the respective States / UTs adopting a cluster based approach

SCOPE OF SERVICES BY MBC-1

Technology, marketing, consultancy ( advice) & other support may also be provided to beneficiaries setting up micro-enterprises, in relation to production and marketing of their products etc.

This can be accomplished by providing selling places for the poor in the form of kiosks and rehri markets, setting up of Nagar Palika Seva / Suvidha Kendras for construction and other services ( like those provided by carpenters, plumbers, electricians, TV/radio/refrigerator mechanics etc. who will be available to city residents on call), and through liaison for provision of weekend markets/evening markets in municipal grounds or on road sides on the one hand and technical assistance in relation to market surveys/trends, joint brand names/designs and advertising on the other Community Development Societies (CDSs) will provide all needed help including securing of raw materials and marketing of products by the urban poor.

SCOPE OF SERVICES BY MBC-2

It is also proposed that a Service Centre be set up at the CDS level for those who have undergone skill up-gradation training.

Appropriate space may be provided to trained persons who can be asked to enroll themselves with the Service Centre so that they could be sent to attend day-to-day skilled tasks on call from citizens against appropriate scales of payment fixed by the Community Development Society (CDS).

Appropriate publicity may be done within the town regarding the facilities available under the Service Centre.

The Service Centre can survey manpower needs of local industry and other potential employers and match them to the job seekers, as also to help to organize appropriate skill training.

SCOPE OF SERVICES BY MBC-3

Clusters of micro-production unit may be developed in keeping with the factors of localization pertaining to traditional skills and in terms of towns known for specific products.

Appropriate or intermediate technology inputs may be used to strengthen the technological base of the selected clusters in terms of Common Facility Centres providing critical machinery / equipment required for common use by clusters of micro-enterprises as well as ensuring supply of quality raw materials at reasonable prices.

These Common Facility Centres may be run by associations of micro-entrepreneurs themselves related to the selected economic activity. Entrepreneurs should be provided high quality Small Enterprise Advisory Services ( SEAS).

SCOPE OF SERVICES BY MBC-4

Special assistance may be provided for setting up of Community Level Service Centres, which could be used for multifarious activities such as work places / branding/marketing centres etc. for beneficiaries under this programme.

These may be administered on a day-to-day basis by the local CDS. Space for such Centres should be provided free of cost either by the local body or any other agency.

Micro-entrepreneurs should be encouraged in developing trade-based organizations / associations. Mobile vending outlets may be developed with technological design and development support from IITs and other reputed institutions.

An integrated approach may be adopted with special attention to backward and forward linkages for a complete range of activities in the establishment of the enterprises.

Consumer/ use of products

Waste generation

Waste recycle workers / recycling units

Door to doorWaste collectorsWaste pickers

Middlemen dealers

Wholesale Dealers / units

Waste processing units

Movement of Reusable waste in the Recycling Sector

MBC -OPPORTUNITIES IN SOLID WASTE MANAGEMENT

WHAT MAKES MBC EFFECTIVE ?

Examination of the approaches & implementation of various agencies and of the ILOHighlight three factors of major importance in creating an effective MBC

1 THE INSTITUTIONAL SET UP NGO PPP PRIVATE ENTERPRISES

2 STAFF SELECTION THE ILO EXPERIENCE SHOWED THAT AN ENTREPRENEURIAL MANAGER AND A WELL-CHOSEN BOARD OF DIRECTORS WERE SOME OF THE MOST ESSENTAIL INGREDIENTS FOR SUCCESSFUL MBCs

3 THE EXISTING BDS MARKET AN ANALYSIS OF THE EXISTING BDS MARKET NEEDS TO BE MADE. IT IS IMPORTANT THAT THE MBC IS GENUINELY MARKET DRIVEN. PRODUCTS NEED TO BE ADEQUATE TO LOCAL DEMAND

OBSERVATION ON SUSTAINABILITY & RIGHT MIX OF SERVICES OF NEWLY CREATED MBC

MOST MBC SURVEYED BY ILO WERE GENERATING ONLY A PART OF THEIR INCOME FROM ENTREPRENEURS. THEIR SUSTAINABILITY STRATEGY HAS USUALLY INCLUDED OTHER SOURCES OF INCOME;

1 BY TARGETING MEDIUM & LARGE ENTERPRISES 2 BY BECOMING LOCAL SERVICES PROVIDERS FOR GOVT & LOCALBODY 3 BY PROVISION OF OTHER SERVICES OF LANGUAGE,COMPUTER TRAINING, RENTAL..ETC 4 BY BEING CONTRACTED BY LARGE ENTERPRISES TO BUILD NETWORKS OF SMALL & MICRO ENTERPRISES

RIGHT MIX OF SERVICES FOR NEWLY CREATED MBC;

1 ADJUSTING TO CLIENT DEMAND & THEIR PAYMENT CAPACITY

2 CONCENTRATION AND SPECIALISATION ON A FEW MARKET-DRIVEN SERVICES

CHALLENGES FOR THE MBC APPROACHES

1 IMPACT ON MEC- EMPLOYMENT( Input-output-outcome)

2 REPLICATION AND MARKET DEVELOPMENT

3 JOB QUALITY AND MEC

4 DIFFERENT TYPES OF SUSTABILITY AND ROLE OF SUBSIDIES

ONE SHOLD KEEP THESE CHALLENGES IN MIND WHILE CREATING AND IMPLEMENTING THE MBC SO THAT THEY ARE ADEQUATELY ADDRESSED

THANKS FOR ATTENTION

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