Bangalore, known as the “Garden City” or the “Silicon Valley of India” is a city of about 8.5 million people and the capital of the south Indian state of Karnataka. The city is booming with the energy of an emerging global city but like the rest of India it is a land of contrasts.
In the early 1900s Bangalore was a city of about 100,000 people. Its population crossed 1 million for the first time in the 1960s, hit 4 million by the 1990s, and has doubled in the past 20 years reaching todays population of 8.5 million. This population growth has generally been fueled by the economic prosperity of the city and the perceived economic opportunity has inspired millions to migrate to the city from towns in the surrounding states of Karnataka, Kerala, & Tamil Nadu. (Just among the people I work with are people from Kerala, Tamil Nadu, & Maharashtra & the languages of Hindi (National Language of India, mostly spoken in the north), English, Kannada, Tamil (Tamil Nadu), Telugu (Andhra Pradesh) & Malayalam (Kerala) are all represented… and that’s only among 4 people!)
Much of this economic opportunity in Bangalore is due to the boom in the IT sector and has attracted numerous large global companies such as IBM, Microsoft, Intel, & Google and serves as headquarters for the Indian IT giants Infosys & Wipro. Not only is there great economic opportunity with these companies, but all of these companies have been ranked among the 10 best places to work in India. Furthermore, with a talented workforce & entrepreneurial spirit abound, Bangalore is ranked among the top 20 cities in the world to start a business alongside places like Silicon Valley, Tel Aviv, New York City, & London.
Development does not come without costs however. With the cities incredible boom in population growth the infrastructure has struggled to keep up. Travel within the city of Bangalore can be a struggle, due to the congested roads & accompanying pollution. The ongoing construction of the metro system has been consistently delayed and currently only runs a length of 6 km. Waste is another issue in the city as the landfills are over capacity and with the lack of adequate trash collection in some areas it is still common to see piles of burning trash littered along street sides. Furthermore, development has not reached everyone, especially the unskilled workers who are not qualified for the glamorous IT jobs, although a Rickshaw driver in Bangalore would still earn more than their counterpart in Hosur. There still exist slum units within the city where residents don’t have access to running water or electricity, although again a substantially smaller proportion as compared to other large Indian cities such as Mumbai or Delhi.
An interesting conflict facing the “Garden City” is the tension between the green open spaces & charming atmosphere that brought it the name of “Garden City” and the development that has brought economic success, material wealth and the new title of “Silicon Valley of India”. More roads, transportation infrastructure & real estate are necessary in order to house, entertain and transport the millions of new city residents, however in order to provide this infrastructure many of the open green spaces that the city was famous for have been replaced. Even the famed Lal Bagh garden, with 240 acres of trees hundreds of years old from all around the world, was at risk in 2009 due to the expansion plans of the city Metro. Throughout the city center and various pockets of Bangalore you are more likely to see large shopping malls than blooming gardens, however the “Garden City” atmosphere is still very much alive in places like Indiranagar where community parks and household gardens are a common sight.
As a foreigner in Bangalore, one thing that sets it apart from other Indian cities to me is the surrounding greenery, birds & plant life that provide for a very pleasant and livable atmosphere. In some senses it is a bit of a luxury to place this kind of value on the aesthetics of our natural surroundings, as it may be difficult for someone who is chronically malnourished and lacks access to clean water to enjoy the pleasantries of the spring bloom, but this luxury is the same one that allows for people to place value on a shopping mall or other material items. I suppose that after the basic necessities of food, water & shelter have been met, where we see value becomes somewhat of a matter of preference. At the same time when the preference for development begins to negatively affect the health of the ecosystem we live in, this becomes more of a societal issue than just a matter of preference.
Issues in Bangalore related to water pollution & shortages as well as accumulating waste cannot be solved through increasing economic prosperity alone. It requires that we begin to place value on the necessary natural functions of life that we have taken for granted throughout the past centuries. Resources like clean water, clean air, good quality soil, and forest products have been used and generally depleted without taking into account their true value to society. It is important that we begin to take into account the true value of these resources so that extractive development models that actually destroy our natural sources of capital aren’t promoted. There are certainly innovative, technological designs that can help us to manage these systems whether it is energy efficient (& zero discharge) factories, homes, offices & cars, renewable energy systems, water treatment systems, & recycling/above ground mining systems. A technology & business friendly hub like Bangalore would be a great place for these sorts of operations to set up. After all at some point the world needs more innovation than just another smartphone app.
“If you think you are too small to make a difference, try sleeping with a mosquito.” – Dalai Lama
I have just returned from a few days at the Maha Kumbh Mela, a Hindu religious festival in Allahabad, Uttar Pradesh located at the Sangam which is the confluence of the holy rivers Yamuna, Ganga, and the mythical Saraswati. The festival is said to be the largest gathering of people on the planet and occurs only once every 12 years in Allahabad. Tens of millions of pilgrims are expected to have come to the 2013 Maha Kumbh Mela over the span of the 55 day festival in order to perform a ritual bathing at the Sangam which is said to wash away the sins of a lifetime and achieve Nirvana, releasing you from the cycle of reincarnation. Along with the ritual bathing, numerous Ashrams are set up throughout the festival grounds where housing and food are provided for all free of charge.
This religious festival provides some interesting insights into humanity & the world of social enterprise. Many of the pilgrims who attend this festival have completely renounced material possessions and are more inclined to gain spiritual wealth rather than economic wealth. While this specific example of the lifestyle of the Sadhus is a bit extreme, I just want to bring attention to the fact that wealth for many people can incorporate more than just the accumulation of monetary and material resources. Wealth could be considered Health plus Peace of Mind and can incorporate a variety of things such as good relationships, a sense of community, freedom, stability, fulfillment and good health. However it has also been shown that a general sense of well-being comes from the many benefits of economic progress. In this sense social enterprises can certainly help guide people towards a greater quality of life through providing & enabling improved access to such empowering things as healthcare, energy & education. At the same time let us realize that happiness and good quality of life are complex states of being that are relative to individual circumstances and cannot be achieved through the benefits of economic progress alone. By searching for this great balance in our own lives we are able to strive towards the true wealth of being.
“Heaven is within you, seek Happiness not in the objects of sense; realize that Happiness is within yourself.” – Vedanta Quote
I am all set to leave for Bangalore at the end of this week to begin my work with Kinara Capital. Kinara Capital is a start-up social enterprise that provides access to credit to small enterprises in India with the goal of supporting local entrepreneurs, increasing incomes, & creating sustainable businesses. There are 26 million small enterprises in India who struggle to obtain financing to build and grow their businesses. Only about 5% of these enterprises have access to the capital they require. In fact according to a report released by the International Finance Corporation (IFC), part of the World Bank Group, the debt gap alone for small & micro enterprises in India is about $198 billion.
There are investors willing to invest in equity but these investors generally overlook small enterprises unless there is a huge potential upside. Furthermore, for these small & start-up enterprises equity is a very expensive way of financing their business especially when their capital needs are only seasonal or cyclical. The debt financing available in India generally consists of commercial lending from traditional banks as well as microfinance loans from microfinance institutions. Traditional banks, including international banks like Citibank & HSBC or Indian banks like ICICI & HDFC, generally have strict lending standards and are unwilling to make small loans to these small enterprises especially without some form of collateral. The underwriting process would be just as costly for issuing these smaller loans and would be perceived to be much riskier and therefore the traditional banks tend to put their funds to work elsewhere. Microfinance institutions have stepped in and have been willing to provide some of these smaller uncollateralized loans. There are a number of large microfinance organizations present in India including SKS, Equitas, & Bandhan and the microfinance industry as a whole in India has about $2-3 billion in outstanding loans according to the Economist. However, based on the regulations in place microfinance loans are capped at 50,000 rupees or just under $1000 making them difficult to use to finance growth in a small business. The other option for small enterprises is local money lenders or loan sharks who have been known to charge annualized interest rates in excess of 100%. There is an obvious funding gap here between microfinance and commercial capital that could be filled by a formalized lending process to small enterprises and would greatly benefit the enterprises involved.
It is this gap in the current financing ecosystem that organizations like Kinara Capital seek to fill. By providing uncollateralized loans in the range of $2000 to $20,000, Kinara provides access to credit for the millions of small enterprises who are left out of the current financing system. Kinara currently has outstanding loans of approximately $400,000 with a repayment rate of 100%. This type of repayment rate is unheard of in traditional lending, not to mention uncollateralized lending. Kinara has accomplished this level of success through their innovative lending practices where they seek to utilize and integrate into existing supply chains allowing them to have a better understanding of the relationships and businesses that they are dealing with. In addition Kinara has a strong focus on the customers they serve and even provides financial management training and business diagnostics to their borrowers. With their current success Kinara has a vision that in 5 years they will have a loan portfolio of $100 million, have funded 20,000 small enterprises, creating 100,000 jobs and impacting 1 million lives. There are certainly challenges involved in reaching these goals including raising capital and the ever changing regulatory environment for Non-Bank Financing Companies in India but I am excited about the prospects of this young start-up social enterprise.