New Delhi: The recent spate of layoffs across various industries has shaken the jobs sector. If reports on the current jobs situation are to be believed, there are more than half a million job cuts across the globe from October 2022 onwards. However, these job cuts have mainly happened in white-collar companies, while blue-collar jobs continue to be lost in India. To enter a contrast picture.
India’s Micro, Small and Medium Enterprises (MSMEs) industry is the second largest after China. This industry produces more than 6,000 products, ranging from traditional to high-tech, and provides a wide range of services.
Experts suggest that micro-entrepreneurship could be one of the main catalysts behind such jobs remaining stable and actually growing.
To gather insight into this trend and understand how micro-entrepreneurship is helping the bottom of the pyramid, Zee Media’s Pawan Rai spoke with Sadaf Sayeed, CEO, Muthoot Microfin. Excerpts from the interview…
How have MFIs and NBFCs opened the way for micro-entrepreneurship in India?
MFIs reach out to remote rural areas of India, where formal banking facilities are still not readily available to communities at the bottom of the pyramid. In a vast country like India, where most of its population lives in rural areas, MFIs have helped finance micro enterprises and thus create jobs in the sector.
After agriculture and artisan work, avenues of self-employment generate the most income-generating opportunities for the rural population. Most MFIs not only provide finance facilities to micro enterprises, but they also provide skill training, vocational skill training and financial literacy to their clients, who are mostly women.
How is micro-entrepreneurship creating the blue-collar job market?
To solve the issue of unemployment up to a certain point, it is important to create informal job opportunities. The majority of micro-entrepreneurship belongs to this category and MFIs provide loans and support millions of people to start or sustain this sector.
Rural people get employment opportunities through their loans as MFIs and training empower low income borrowers to create self-employment opportunities through entrepreneurship. They in turn provide employment opportunities to many more people around them.
India’s female participation is disappointingly low compared to other countries. Can you elaborate more on this (in terms of empowering more women as micro entrepreneurs?)
Women empowerment is a major issue in India as it is directly related to poverty reduction and overall development of the rural population. Microfinance is considered an important tool to address these issues.
Digital advancement has helped MFIs to provide loans to women in rural India in quick turnaround time with minimum procedures. As a result, rural women are already making a major impact on India’s rural economic landscape.
In the times of Artificial Intelligence, how will the dynamics of microfinance change or will it change how micro-entrepreneurs will emerge in the near future
Digital advancements have already changed the way MFIs operate. The sector has made tremendous progress in 100% cashless delivery, KYC management and collections. In near future, cashless collection will be at par with disbursement.
With the use of AI and other technologies, MFIs can reduce operational expenses as well as reduce turnaround time for their key processes, which can be used to conduct more productive activities.
As far as our customers are concerned, we are training them to use technology and apps to make cashless repayments, apply for new loans and even refer new customers. However, I do not think that these technologies will affect two key characteristics of microfinance which are social sustainability and group dynamics.