United Nations Industrial
Development Organization
      Cluster Development Programme - INDIA
 
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Spotlight
 

I. Rationale for a Joint Learning Workshop
II. Process
III. Learnings emerging from the five main themes of discussion
IV. Developing a comparative framework
V. Annexes

I. Rationale for a Joint Learning Workshop
As a preliminary step for sharing of learnings, and in view of the great deal of interest that has arisen from this project, UNIDO organised a Joint Learning Workshop (JLW) in order to provide a much-needed forum for discussion and experience sharing. Its main objective was to bring together practitioners of MSE cluster development and experts in the same field to compare experiences and identify existing possible good practices in the areas of gender equality, participation of the poor, SHGs and NGOs functioning, as well as credit and market linkages.
Around 20 professionals and numerous local stakeholders participated in the 3-day JLW held during 26 - 28 October 2004. A copy each of the programme and list of participants are attached as annex 1 and annex 2.
During this exercise, the Focal Point has tried to understand what other parameters need to be taken into account to develop a more pro-poor Cluster Development model and a more effective implementation strategy in the Sindhudurg processed food cluster.
This JLW was promoted by UNIDO but was jointly organised with NABARD, which is principal support institution to this programme. District Collector Mr Pramod Nalawade inaugurated the JLW and was keen to enhance the number of SHGs UNIDO is working with (50). The target for the district is 1500. He also suggested higher co-ordination between the NGOs, pointed out need to create linkages with Mumbai and Goa markets and suggested that only production of fruits is not enough, processing is a must.

II. Process
§ Presentation of the paradigm shift - The UNIDO Cluster Development Programme (CDP) started in 1997 by working directly in developing industrial clusters (phase 1). Subsequently, while working directly in clusters, UNIDO CDP focussed more on capacity building of partners institution and state governments for cluster development (phase 2). Since 2002, under a pro-poor thematic project, UNIDO is trying to fine tune the traditional cluster development tools with new strategies to target the needs of the poor (phase 3). In the process, a number of learnings have emerged and related crosscutting themes are being addressed through the inclusion of the following new parameters and tools: creating a multidisciplinary team for strategic inputs, participation of the poor in defining their status and needs, addressing gender inequality and also the necessity to including the less poor, who naturally promote the cluster through business linkages.
§ Presentation of the Cluster of Sindhudurg – Unlike other clusters, the Sindhudurg fruit processing cluster (where UNIDO is working) covers a very large area, spread over 600 square kilometres in 4 Talukas (Malvan, Kudal, Vengurla and Sawantwadi ).
The project presently targets 70 SHGs that derive their livelihood from fruit processing. Cluster development work is also ongoing with 4 networks of cashew-processing MEs, 2 networks of fruit processing MEs and two associations, one of cashew processing SSIs and
one of fruit processing MEs, for a total of 157 target beneficiary firms. The chief purpose of project is to involve local BDS providers and to rapidly transfer the leading role in the cluster development process to local support institutions.
In close association with various support institutions such as DRDA, Dept. of Agriculture, National Bank for Agriculture and Rural Development (NABARD) and local banks, the project has succeeded in building a strong momentum towards capacity building of local NGOs to provide sustainable support to the MEs and SHGs of the cluster. The project strategy presently focuses on two local NGOs (30 SHGs) and one cooperative working with 40 SHGs, 25 of which have a majority of members below the poverty line. An SHG expert has been supported to launch income generation activities in the area of food processing. Six MEs networks and one ME association have also been targeted by the interventions and common procurement, production, credit linkage and marketing activities have been undertaken.
With respect to small-scale industries, the emphasis in put on awareness creation on issues related to their workers. Although owners of SSIs are by no means poor, their cooperation is a necessity for sustainable poverty reduction, especially trough an improvement of workers health/gross income and the scope for providing orders to SHGs. It is believed that SSI growth and cooperation is a necessity for sustainable poverty eradication, through, also, the income generation route for workers and possible subcontracting with SHGs units.
§ Field visit - The visits led to interactions with an NGO, a cooperative society, SHGs, network of fruit processors, and one association of cashew processors. A feeling of the events and activities undertaken was shared and problems faced were highlighted.
o NGOs - It became apparent that the NGOs have taken the lead in motivating SHGs, since this year for the first time they have gone into production. However, the rate of participation of the SHG members is low (around 40 %) and that needs to be improved. Working with NGOs ensures a natural process that is likely to lead to sustainability.
o The need for a market-oriented support of NGOs was highlighted. The need to target marketing, as against the current trend of only using NGOs’ network was also highlighted. Suggestions for using the local market, product standardisation, decentralised production but centralised marketing were also given.
o SHGs and network of fruit processors - The women members were quite vocal, but still need to be encouraged to participate and, although they seemed to have no problem in communicating in front of the male members, they were not articulate.
o Cashew processing SSI association – Although some good practices have emerged and improvements occurred, a lot remains to be done (there is scope for improving ergonomics, working environment and practices, introducing HACCP, etc.).
A copy each of the two introductory presentations appears as annex 3 and 4a, and a document prepared and circulated by the SSI association appears in annex 5.

III. Learnings emerging from the five main themes of discussion
Five sessions took place to gather best practices from experts and receive their recommendations for better implementation as well as for developing a more pro-poor methodology. The main conclusions and learnings emerging from the discussions, the suggestions given by the participants and the open issues remaining, are as below.

1. Role of NGOs-SHGs in cluster development
The case of Sindhudurg was presented (annex 4b) by Mr Tamal Sarkar (UNIDO) to illustrate the role that SHGs and NGOs can play in cluster development: UNIDO cannot work directly; it needs to work in partnership with NGOs.
This session was moderated by Mr L B Prakash (APMAS) and lead to the following discussions and conclusions:
- Training for capacity building of NGOs/SHG is not very fruitful through short duration interventions. Hence a more intensive handholding is needed, eg. “in service mentoring”. The trainees need to understand their role and also learn as to how to achieve it in practice.
- Institutional building - A forum for the district’s NGOs should be created to share competences, ideas and maximise best practices. More NGOs could also be taken on board.
- Need to develop of capacities of staff of NGOs in entrepreneurship developing (action plan, cost, record keeping, etc). NGOs’ capacity in marketing must also be built – the quality of manpower and not quantity is important. If NGO workers are given sufficient exposure and understanding of the market, they will be able to facilitate linkages.
- Need of leadership development training for head of SHGs and exposure to “success stories” that could become role models to build the confidence of the members.
- Prompt of SHGs in services (e.g. SHGs of fruit collectors)
- Banks are also promoting SHGs.
- However, SHGs are not products. Their development and maturity is a long-term process. More time needs to be given to support the already existing ones, rather than creating more SHGs and not supporting them to mature. To ensure sustainability, the focus should be process based and not target based.
- DRDA mentioned need to utilise more extensively SGSY scheme to promote SHGs by NGOs (a grant support of Rs 10,000/-.per SHG is given for promotion of an SHG by the NGO)
- It is important to only use the group approach if it really offers an advantage over working with individuals. One, two or three individuals of an SHG may have higher aspirations and those should be supported. In many SHGs, this is a trend, where after seeing the success of a few, the other members join in.
- Belonging to an SHG helps to empowers women and increases their bargaining power within the household
The recommendations arising from the discussions were as follow:
- Consolidation of already existing SHGs, reactivate them and strengthening their networks, rather than creating additional ones was stressed. For this, members need to understand the advantage of belonging to a group, the opportunities for group participation.
- It is important to develop mechanism to ensure a conducive environment (by creating less barriers, more technological and information linkages, etc.;) so that, over time, SHGs can participate if willing to do so. Whatever systems are developed, they must be as simple as possible. Complex systems drive out participants.
- Need of technical expertise in kokum processing
- Organising watershed by villagers involved to solve water problems, etc.
- Success requires more then 1-3 years, and more so in such a spread out geographical area
- The fact that only 40% of members are active in production was discussed. It is important to understand why and what is the needed critical mass
Some of the open ended issues were the following:
- Need of dissemination of information
- One participant expressed the point of view that active participation of a large number of members of an SHG is not a reality, it may be an idea to concentrate on smaller numbers and at times promote individual members
The UNIDO team realised that till now, it has operated in a “problem solving and selling of solution mode” and that there is a need to go a step further, by ensuring the development of problem solving skills - how to identify information, resource people, alternative solutions, how to choose etc.. It was proposed that a workshop should be organised with only local stakeholder, to start this process.
Following the recommendations emerging, and on their own initiative, some of the local NGOs met twice during the JLW, under the guidance of Chaitanya, an NGO that was invited as an external participant. Two DRDA representatives (including PD, DRDA) were also present on this occasion and an NGO forum was created in this process.

2. Credit Linkages for small and micro units
Credit linkages for small and micro units was introduced by Capt. S Narayanan (Punjab National Bank) who shared his experience as bank manager in the handloom cluster of Kancheepuram. He built the capacities of 12 NGOs to support bank staff in the formalisation of an indigenous system of saving and credit. In a pro-active manner, he trained them to gather all the information needed to opening of an account (fill application and resolution forms, bring the necessary photos and proof of address, introduction by the NGO, their bio data and a common seal for each SHG created for the purpose) thereby reducing transaction costs and speeding up the disbursement process. In this manner, 400 SHGs were given credit and they met with the bankers on monthly basis (for grading before credit, for monitoring afterwards ). To ease the logistic of meeting 20 SHGs per day and of managing a monthly meeting of all SHGs, Capt. Narayan and introduced different ingenious tools to treat SHGs as partners (and not as beneficiaries). He proved that poor are bankable and banking with the poor is viable.
The main learnings coming from his experience are that:
- Existence of schemes is not enough; creating an implementation mechanism is the key factor.
- Commitment of manager, managerial skills and proactivity make the difference.
- It is important to liase, from the beginning, with other organizations and to find on contact person who is dedicated.
- Participants of various implementing institutions hastens implementation
Various alternative models of credit linkages for small and micro units were also presented by Mr. L B Prakash. These include APMAS SHG model, Grameen model, Co-operative model, SHG federation model, etc. He pointed out that besides banks credit linkages can also come through different institutions (Rashtriya Mahila Kosh or Financial Intermediaries like SFMC and ICICI; loan funds through CASHE project; infrastructure funds through DRDA; GoI Grants like KVIC, Spices Board, Asian Productivity Organisation through National Productivity Council). The main learnings emerging here are:
- Regular channels (banks) now are picking up in micro finance. However, SHG loaning is still very low and does not reach the poorest of the poor.
- Ultimately micro finance is about market led financial services and products must be developed as per costumers’ needs. Not all SHGs take loan, loaning is costly, rate of return must be large enough to make taking a loan rationale. Hence availing of micro finance should not be considered as a panacea. In short, access to credit is not enough, profitability of investment is also required
- Some of the suggestions given were the following:
- Before any formal credit is taken, the focus should be on savings and inter-lending. This will constitute the glue that will promote joint action. Regular savings creates a sense of belonging and at a later stage helps groups to go beyond savings to address other issues.
- SHGs need to be trained on financial aspects related to credit, e.g how to use a cash book for sold things; loans and general ledger (main costs); attendance and minutes register; etc
- Awareness needs not only to be created at grass root level, but at the level of bankers as well (to trust SHGs).
- It was felt, that minimum environment and labour standards could also be taken into account by bankers when making credit appraisal
- Micro-finance should be made relevant to “micro-person”, if the process of production they are in is not understood, micro finance will not be useful. Studying the local industry would help in this direction.
The presentations of Capt. Narayanan and Mr. L B Prakash appears as annex 6 and 7 respectively.

3. Suitable market linkages for micro units
Mr Rewta Ram (URMUL) explained the development of URMUL Marushtali Bunkar Vikas Samiti (Falaudi), the existing governance structure, the development of their product and marketing undertaken (direct linkages and major metros are visited twice a year). The long term vision and the importance of long term training through mentoring were highlighted and it was pointed out that, often, the problem is not the market but the systematisation of its practices. For further detail, please refer to the URMUL experience that appears as annex 8.
The moderator, Mr Pradeep Kashyap (MART) a specialist in rural marketing for micro-enterprises, explained how the majority of income generating activities in India prove to be a failure because people start with a product, then try to develop their skills, get into production and, at the end, have a look at market. Based on these observations he suggested the following:
- Income is generated from the market, not from production, therefore identify market first (mini market survey), organize the production accordingly, and focus on quality
- Sellers earn more than producers. Therefore, concentrate on local/domestic/rural market as urban markets are reaching saturation (often due to intense completion).
- Make existing rural marketing more efficient, it has huge potential in spite of its major obstacles: (physical distribution of villages and channel management of goods)
- Also look at services, not only at manufacturing
- Explore public/private partnership for market entry
- Subsidy/project money should not be reflected by lower prices (when subsidies are withdrawn, the product can not survive in the market)
- The spirit of the enterprise is the entrepreneur. To create entrepreneurs for enterprises will not function; one should identify entrepreneurial people and create linkages for them.
- However, not all poor want to be entrepreneurs. If we want to reduce poverty, there is a strong case to encourage CSR in SSIs (finding business incentives for more responsible practices)
- It is essential to increase the processing period by introduction of new fruits/vegetables (using similar processing techniques)
- The need for product standardisation was also suggested.
- The focus should now be on decentralised production, common labelling and packaging, and centralized marketing (local selling and local marketing, but also participation in exhibitions, distribution through/creation of show rooms and explore exports for SSIs)
- Challenges bring out innovative avenues; role models and one prolific thinker make the difference.
- Assuming that a women earns her entire livelihood from food processing and that her wage is Rs 60 per day, her income will be of around Rs 1000 per month or Rs 12,000 if she can work all year long. If the livelihood of 50 women need to be enhance (total of Rs 600,000 for their income), and assuming that one fifth of the production costs generally goes in labour, the total sales should be of about Rs 3 millions (Rs 600,000 x 5).
The following steps were suggested:
1. Capacity of NGO staff to be built on marketing
2. Increase processing period of units by using other fruits/vegetable other than the local seasonal produce
3. Undertake a simple market survey (see right product, packaging) and marketing/business plan (what are the markets to access, communication strategy needed)
4. Try to link up units with a mentor from the area (who is successful) to give small good tips and exposure visits to build confidence and give ideas to processors
5. Standardization in quality products by units (quality dictated by market and created by units) and creation of common branding. It was suggested that UNIDO should visit Lijjat’s SHG model , that started 35 years ago and is now exporting to 80 countries with a turnover of Rs 3 billion.
6. Create awareness of consumers on these products (participate in exhibitions)
It was pointed out by one participant that market-led development traditionally supports large scale enterprises, but during the JLW it became apparent that as a strategy it is also important for poverty reduction. However, UNIDO needs to think about the limitations of such an approach and not only look at the opportunities but also at the constraints (problem analysis).
Finally, it was emphasised that market led development not only plays a role in economic development but also in the empowerment of women.

4. Gender mainstreaming and development of clusters
Gender issues were recurrent in all the modules; however one module was dedicated specially to gender empowerment and moderated by Mr Harish Sadani (MAVA). Ms Sudha Kothari (Chaitanya) presented the concept of women empowerment thought an alternative model, the case of Chaitanya, where 642 SHGs of poor and marginalised women are active.
Empowerment was defined as “a process of gaining control over self, resources, ideas, institutions and ideologies” but also as “democratisation of people’s institutions”. Women’s empowerment was defined as “a process whereby women become able to organize themselves to increase their own self-reliance, to assert their independent right to make choices and to control resources which will assist in challenging and eliminates their own subordination”. But by the women of Chaitanya, empowerment means: acquiring scientific knowledge to change behaviour (technical and social); be able to speak out (within and outside the family) and help others; have freedom /mobility; have the ability to negotiate /demand and get services and the capacity to access information, knowledge and skills on their owns; have access and control over resources (such as saving, credit, income, vocational skills) and see a positive change in men’s attitude relating to women.
Ms Kothari explained how mobilisation started by organising awareness raising session on issues of local interest (water, alcoholism and desertion of men) and how trirft was used as an entry point.
After organising women in SHGs, women’s self identified needs (water and sanitation; primary and reproductive health care; livelihood) were addressed by creating awareness about existing government schemes, health education and legal rights; introducing kitchen garden, revolving “goat-bank funds”; and focussing on the convergence with other local stakeholders and by promoting local resource persons.
Progressively, groups of SHGs were formed (called by the NGO clusters) and finally one federation was created as self-sustaining forum where “women can interact as women and not as the beneficiaries or recipient”. The presentation appears as annex 9.
All the participants agreed that a project like UNIDO has a limited effect in intra-household dynamics. It was also agreed that cooperation and conflict within the households depend upon the bargaining position of the parties, which in turn is determined by the perceived self-interest and the perceived contribution of men and women (that can change over time). And that, therefore, (as raised in session on SGHs & NGOs) belonging to an SHG contributes to empower women and may increase their bargaining power within the household (and the community) via the income, but also by increasing their voice (for example, if a woman has to borrow money, she will have to understand and explain why, what for, etc: discussion is an important step towards strengthening women’s bargaining power. With time, she will be more able to voice her opinion in other issues).
However, it was also pointed out that certain classic assumptions should be reconsidered. For example, at economic level, there may often be diversion of loan purposes (women take loans for men) or men may take loans for which women take responsibility of repayment; incomes from micro enterprise may be low and/or men may control the income earned; women may use unpaid family labour; and finally additional income generating activities may represent greater exploitation of women.
It was also pointed out that women are not a homogeneous group and that this needs to be taken into account in any implementation. The main recommendations were as follow:
- Train change agents to become gender aware and informal about essentials
- Build gradually the confidence of women by initially taking local role models (convince 1-2 women in the village, who will convince other women to create a group, the village will start to give recognition because of the groups)
- Include men in gender sensitisation sessions (give separate space for this, especially on young boys) and build confidence of families – male partners. Their acceptance will follow.
- Let women define what empowerment is according to them
- Interaction among SHGs needs to be promoted and as well work on collaborative mode with NGO (from inside and outside the district) and government
- On the whole it was felt that empowerment is a long-term process: start from the very beginning, plan, follow it through and do not work on add hoc basis
- Involvement of women at goal setting, long term planning, documentation. Organisation through local involvement is the key - creation of “jankars” (local knowledgeable women) is needed.
- Need for own meeting place of women
- The participants agreed that socio-economic and political empowerment is a process of self actualisation/self-realisation of the potential (knowledge skills, voice, resources, participation) existing in each individual for growth and development. But with self-actualisation it is also necessary to have a synergy of development actors for impacting the environment in which all can operate. Before phasing out it is therefore necessary to strengthen the local self-government mechanisms and ensure fund mobilisation, as the market does not support many activities. One can work with the village community to develop a community fund, which can be used for their own development
The session was closed by agreeing that UNIDO needs to have more tangible goals (e.g. equal wages for men and women?).

5. Participatory Monitoring and Evaluation (PM&E)
The case study of SWRC Tilonia was presented by Mr S. Srinivasan. His paper appears as annex 10. The discussion was moderated by Ms H R Girija (SDC).
The Barefoot PM&E system is a community managed and controlled “monitoring system that has emerged over 3 decades, through role perceptions and regular self-evaluation exercises.
It is based on the assumptions that a process of community endorsement is a precursor to all decision taken collectively and that a sustainable improvements of basic felt needs can only emerge through community control and management. Village committees, with equal representation of women and men, are formed to plan, implement and review all initiatives for village level development. Monitoring takes place on monthly bases. They constantly assess both short-term impact and long-term repercussion of the decision making process and constantly incorporate changes. In this way, people are accountable to each decision taken.
Some of the consensuses emerging from the discussions were the following:
- Gender equity is as fundamental in PM&E, as in planning and implementation. Women and men must have the same participation.
- The access to finance and ability to take financial decisions by these ground level committees (transparency ensuring accountability) is also very important
- If there are common interests, people come together. If communities can own, they will find the way acceptable to them. PM&E is not a management tool, it is an empowerment process.
- PM&E does not make any sense without participatory planning.
- There is a contradiction with objective oriented projects having short-project duration the introduction of participatory monitoring tools.
UNIDO needs to put more emphasis on community endorsement of action plan and ownership of vision - validation workshop after the diagnostic study is finalised is not enough and there is need to develop mechanisms to do so.
The poor can pay for services to a certain extent. More over, if they organise themselves to deliver the desired services, they can do it at a much cheaper rate than other implementers. In the context of a village economy, such responsibility can be given to a group of villagers chosen by the villagers themselves. However, in the context of this cluster, since various theme based forums (role of SHGs and NGOs, marketing, women empowerment, credit, and technology) had been informally formed in the past, it would be good to let them take up such responsibilities and empower them financially to do so. A monitoring committee including representatives of some NGOs and support institutions exist in the cluster and could encourage such proposed forums to become active.
The need to build the capacities of Cluster Development Agents in areas such as gender, conflict resolution, community based organisations and use of participatory tools was also highlighted.

IV. Developing a comparative framework
The final expected output of theses sessions was the development of a framework of reference for comparison of practices and formulate appropriate policies for a pro-poor cluster development.
It became apparent that a common framework for comparison of best practices was difficult to develop, since it would entail identical definitions for all agencies and same frameworks of reference, which was not often the case. For example, the participant’s definition of “clusters” differed, what was perceived marginal for one institution was of high relevance for others, and what was a holistic approach for one was, not holistic for the other. However, it was agreed that the 5 dimensions identified (SHGs and NGOs, gender, market, credit, PM&E) could be good parameters to take into account for such exercise to happen again in the future. No additional dimensions were suggested, aside from the timeline (for an organic process the time frame of the project is very much a determinant of its sustainability and replicability).
The participants agreed that the term “best practices” was not adequate for such an exercise and that it would be appropriate to talk about “possible good practices”.
The session about gender mainstreaming was more about women empowerment then about gender mainstreaming. It was therefore agreed, that in the context of cluster development, UNIDO CDP can not “mainstream gender”, but can (1) address issues related to women in the production system (introducing CSR in production units) (2) try to empower them via fair remuneration and increasing their participation or raising their voice and (3) try to address other of the women’s concerns (water, education, health) by linking up with other implementing institutions and funding organisations. It was decided that in the future (unless gender mainstreaming happens in the whole organisation), it would be appropriate to talk about women issues or women empowerment rather then about gender mainstreaming.
The definition of poverty was also discussed. For some of the participants, to talk about poverty reduction in Sindhudurg was not appropriate, since the poorest of the poor are not targeted. It was agreed that this methodology cannot target the poorest of the poor, mainly due to its time frame, but it does focus on the poverty nodes found around the production system and many SHGs are below poverty line (as per government definition). Further, the dimensions of poverty addressed were identified at the beginning of the project by a participatory poverty assessment (employment security and working environment, health, equality, isolation). However, while knowing why and how these are addressed, the team also realises its constraints and limitations (area of competence and own assumptions).
It was felt that very dramatic changes in short periods of time are difficult to sustain, especially in a cluster such as Sindhudurg where the processing period is seasonal. Development is a long-term process and resources should be allocated in a filting manner (not necessarily more resources, but more spread out over time).

Annexes can be requested to Alexandra Sagarra, UNIDO CDP: [email protected]

Annex 1: Programme
Annex 2: List of Participants
Annex 3: A Presentation on “An Introduction to the UNIDO Thematic Project"
Annex 4A: A Presentation on “An Introduction to the Fruit Processing Cluster”
Annex 4B: A Presentation on “Role of SHGs & NGO in Cluster Development
- A Case study of Sindhudurg Processed Food Cluster”
Annex 5: A write-up by the Konkan Cashew Manufacturer’s Association
Annex 6: A Presentation “A Case Study of the Handloom Cluster of Kanchipuram
Annex 7: A Presentation on “A Model of Credit Linkages for Small & Micro Units”
Annex 8: A Case study on “Urmool Marusthali Bunkar Vikas Samiti”
Annex 9: A Presentation on “Women Empowerment - Concept and Strategies”
Annex 10: A Case study of “SWRA – Tilonia”