ILO selects ESAF, BASIX for study on Decent Work Deficit program

By Nagesh Narayana
Microfinance Focus, Jan. 22, 2010: Tricur-based ESAF Microfinance and Hyderabad-based BASIX have been selected by the International Labour Organization for conducting an Action Research Program on Decent Work Deficit in India, to be known as “Shram Jyothi” program.
At a Press Conference organized in Trichur, ESAF Managing Director K. Paul Thomas said, “In developing countries like India this study holds significance as Decent work is far from being a reality for millions of working poor.”
During his speech Hideki Kagohashi, Enterprise Development Specialist, ILO India, said: “ILO has selected ESAF, among the 17 MFIs selected globally, for this task because of its socio-economic approach rather than pure financial way of functioning”. He added that “the selected MFIs would receive a grant to cover costs incurred in the identification, testing and analysis process. They would be duly recognized and actively engaged in the documentation and knowledge sharing process.”
Under the program Shram Jyothi, ESAF is planning to organize various training programs to enable its members to organize their activities, access government schemes and bank loans, get memberships in merchant’s association and to create new marketing opportunities for their products.
Paul Thomas added that after three years “this study may help ESAF to come up with products that help to handhold micro enterprises. … for the last 18 years ESAF has been striving to improve the working conditions and there by the social and economic status of the neglected class. We are happy that ILO has taken note of our efforts and selected us as partners for implementing their Action Research Program”.

The association between ILO and ESAF would primarily contribute to formalization, which was one of the important deficit areas noticed. Formalization in a way would help the entrepreneurs to get access to various public and private benefits available for them that lead to improved financial performance, said a statement.

At present, ESAF Microfinance has over 2,50,000 members, and a cumulative disbursement of loans worth Rs 450 crore. Moreover, it was the one and only microfinance organization in Kerala graded ‘mfr4′ by CRISIL ratings. ESAF Microfinance, which has presence in 6 states in India recently expanded its operations to the State of Madhya Pradesh. In March 2009, Dia Vikas, a 100% subsidiary of Opportunity International Australia took a minority stake in ESAF Microfinance. As per the MIX market ratings ESAF microfinance has been ranked 14th among the top 100 MFIs in the world.

The Microfinance for Decent Work Action Research Programme (MF4DW) study is expected to find answers to different questions like the decent work deficits that are the most blatant and pressing, deficits that can be addressed through MFIs, the costs and benefits for the institution and its clients while addressing these deficits, and the means. Throughout this process, partnering MFIs will be closely supported by the ILO Social Finance Programme.

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