Some Thoughts on Access to Markets as a Strategy to Address Poverty

This paper deals with the importance of networks in poverty alleviation in India. The paper argues that:

• In almost all the regions of India, there exists a set of economically viable occupations (such as buffalo rearing, retailing and home-based craft) that even the very poor can engage in, if the necessary inputs are provided to them;
• A key input to leveraging these economic opportunities is access to basic financial services, which include savings, credit, insurance and tools for risk management.
• The following steps are necessary to provide access:
  • Development of a network of community-based financial institutions that have the ability to provide this access,
  • The participation of one or more main-stream financial institutions to provide financial resources, access to equity capital and links with capital markets.

The paper states that ICICI Bank and others have taken the following steps to create this network of entities in India:

• Creation of venture capital funds to provide equity finance and mentoring;
• Formation of specialized support institutions to provide research training and product design capabilities;
• Launch of a website to provide access to manpower.

The paper also lists various steps that ICICI has taken to address the issue of missing markets in livelihood services. These include:

• Creation of network organizations to build links between the poor and larger markets;
• Development of structured partnerships between grass-roots organizations and large companies.

The paper concludes by proposing a set of catalytic roles for development organizations to accelerate this effort.