In India, only 1 percent of individuals between 15 and 25 formally learn a trade or skill. In the developed world, that average is 95 percent. This lack of access to vocational training is one of the largest hurdles facing young people in India today. And it’s one of the reasons the National Sample Survey Organization estimates 423 million of India’s working-age population will be unemployed or unable to participate in the job market by 2030.
Milaap, an online platform that enables global microlending to India’s poor, recently launched an innovative new program it hopes will paint a brighter future.
Low-Cost Loans for India’s Poor
Microfinancing allows poor entrepreneurs, such as farmers, street vendors, and food processors, to have access to loans they wouldn’t normally be able to afford through formal funding, where interest rates may soar to near 50 percent of the loan itself. Compassionate individuals worldwide can contribute through a microfinance firm, such as Milaap, and the loan is distributed to an individual in need at interest rates as low as 12%. Microfinance isn’t just affordable for the borrower. It’s a more effective use of funds for the lender, since it’s self-regenerating—once repaid, lenders can leave funds in the system, offering a loan to another individual.
Microfinance funding typically goes toward resources that will immediately impact an individual’s daily life and improve business opportunities with improvements such as smokeless cooking stoves, solar lights, toilets, and plumbing. But that paradigm is shifting.
Loans for the Intangible
In many cases, there’s focus on providing training to support small business loans. But rarely is funding available for training itself. The innovators behind Milaap saw an opportunity to help its entrepreneurs improve their education by expanding the scope of its loans to include funding for formal vocational training. To accomplish this, Milaap formed a partnership with GRAVITY, a joint venture between the Bangalore-based microfinance firm Grameen Koota and the vocational training institute Vidya Poshak.
Through a network of field partners, the companies are empowering people worldwide to lend money to help students in India get formal vocational training in fields such as hospitality, retail, security, business process outsourcing, microfinance and banking, tailoring/garments, and health care.
Early Success; Bright Future
In the year since its inception, Milaap is well on its way to its mission of impacting 2 million people by 2015. Overall, its microfinance programs have already impacted thousands of people, and there’s been excitement over Milaap’s fledgling vocational loan program, particularly in the nursing and retail fields.
The first training program began at GRAVITY’s Dharwad Resource Center in April 2011, with 37 students between the ages of 18 and 23 enrolled. Of those students, an impressive 13 are girls and 10 are from minority groups, scheduled castes, or scheduled tribes.
To date, over 120 students have been trained and the fifth batch of students are current undergoing training. The previous batches of students have been placed at supermarket chains, cafes and rural BPOs.
This initial interest indicates great possibility for India’s most rural areas. An increased presence of skilled youth will both stimulate the development of villages and foster the return of young people with the promise of new opportunity and job availability. Young people who obtain new skill sets will improve their standard of living and are more likely to invest in both their future and the future of their villages. Their new status will qualify them as consumers, in turn opening new opportunities for markets and industry throughout India.