Enabling Rural Entrepreneurship Through Micro-Loans: Interview With Anoj Viswanathan, Co-Founder, Milaap

Posted on January 2, 2012 in Interviews

Milaap is an online platform that enables you to lend to India’s working poor so they can get access to education, clean water, energy and more. “It’s a loan, not a donation” emphasized the Milaap website. The organization recently crossed their goal of Rs. 1 crore (USD 189,000) in charitable lending to the working poor to help them start small scale enterprises at the grass root level. YouthKiAwaaz.com’s Anshul Tewari got a chance to interview Anoj Viswanathan, Co-Founder of Milaap. Below are the excerpts from the interview:

Anshul: Tell us a little about yourself and your background.

Anoj: I grew up in Coimbatore, did my schooling there. In 2005, right after my class XII exams, I got a scholarship from Singapore Airlines, to pursue my bachelors degree at National University of Singapore. In late 2008, I took a sabbatical from university to work in grassroots sector with a microfinance institution providing low cost solar lights and water purifiers to the underpriviledged households in tribal Orissa. Subsequently, my work took me eastern U.P and Bihar with a solar lighting company to help the poor purchase these products in small installments over a period of time, as they didn’t have the cash to pay upfront.

I graduated from NUS in May 2010 with a bachelors in Engineering and minors in Economics & Management of Technology and started Milaap in June 2010. During the period, I also cofounded an interest group called the Microfinance Society of Singapore.

Tell us about Milaap.org, how did the idea come across, what was the inspiration?

Milaap.org was founded with a simple mission – to connect flourishing Indians and its Diaspora with the working poor through charitable lending.

Individuals around the world can empower a rural artisan/farmer, a student or a family in need of clean water or toilet with as small as $25 (Rs 1000) loan through www.milaap.org using credit/debit card/bank transfer. Once the borrower repays the loan, the lender gets 100% of his/her money back.

The idea for Milaap was born during my stint at Orissa when I saw first-hand the difference made by solar lights to the poor households. At the same time, I also realized that these services reached only a few households and failed to make a bigger impact due to unavailability of low cost money for the poor.

On the other hand, a lot of well-to-do, socially conscious individuals had few avenues to give back to the less-fortunate in an accountable, transparent manner.

This frustration inspired us to build a platform that allows people make small loans to specific communities they wish to support and follow the progress and impact in real time. A small loan goes a long way. And comes back to you.

Are there certain social sector focus areas that Milaap concentrates on?

Milaap believes that access to loans that create jobs, assets and links to markets will have a long term impact on the families.

Milaap focuses on 7 key areas — Education & Vocational Training, Health, Water, Sanitation, Renewable Energy, Sustainable Farming and fair-trade for artisans.

Our loans provide for vocational training with guaranteed jobs, piped water connections and toilets to households; solar lighting systems to communities; marginalized farmers and artisans to buy raw materials, seeds and equipment,

We believe that these needs deserve to be addressed first because progress starts with a healthy and dignified life for all.

We also recognize the key role youth education plays in empowerment. When a majority of our youth are educated and trained, the problem of unemployment gets taken care of.

It is often seen that humanity develops with dignity and humility. It is also seen that people at the bottom of the pyramid do not get to experience a dignified life, while people at the top of it are not humble enough to help the former. How is Milaap helping the people living on the fringes of the society develop and lead a dignified life?

Milaap was founded with the belief that a large section of the poor are highly motivated and can be successful when given an opportunity. We also strongly believe that people are by nature generous, and will help others if given the opportunity to do so in a transparent, accountable way. Milaap simply provides a platform to bring about that change.

By connecting these two segments of people, we can create relationships which exceed beyond financial transactions, and build a community that expresses support and encouragement of one another.

We realised that a lending model encourages partnership relationships characterized by mutual dignity and respect as opposed to benefactor relationships of pity. Loans also encourage more accountability than donations where repayment is not expected.

What is the impact that Milaap is having on the lives of these people?

Through over USD 160,000 (Rs 80 Lakh) raised in loans, we have helped change over 3200 lives. Families with young children have access to clean drinking water at home, creating for themselves a healthier life. Women and their young daughters no longer need to go into the fields to relieve themselves. Over 120 unemployed youth now have blue/white collar jobs paying them Rs 6000 and above per month. Artisans and craftsmen have seen their income rise by 20-30% due to increased working capital and production.

Have you come across some really heart wrenching story of someone you were trying to help? How did you manage to help them?

Parameswaran (http://blog.milaap.org/mans-life-turns-around-with-toilet-loan) in Trichy has a young daughter who is disabled. Lacking a toilet at home, he would carry his daughter into the fields everyday to help her relieve herself. With a loan raised through MILAAP, he was able to build a toilet at home. Today, he is happy that he has been able to provide his daughter with access to a toilet at home. He is repaying his loan as well.

Heena (http://blog.milaap.org/stories-of-change-heena) is a young girl from Dharwad. Her mother used to make a living working as a maid. Heena took up a loan for a vocational training course to improve her communication skills and English speaking. One of her trainers mentioned that she went missing from a session one day — this was to fill-in for her mother who had fallen ill. She finished her course and was employed by Café Coffee Day at Hubli. She now supplements the family income and helps pay her sister’s school fees. Her dream does not end here — she plans to save up and pursue a degree in Arts.

To help our readers understand, what is the core concept of crowd-funding? How do you think can crowd-funding form a new generation of philanthropists and encourage participation that changes lives.

If you were to close your eyes and try to visualize what a philanthropist looked like, you would undoubtedly see a picture of Ratan Tata or an interview of Mr. Azim Premji. Philanthropy in essence was always seen as the hobby or responsibility (depending on your perspective) of the rich.

The traditional arc of giving went by “Go to school, get a job, save for retirement, and give back when we are older and financially secure.” Unfortunately, the problem is that we expect sudden generosity from people even if they haven’t been in the habit of giving.
We wanted to alter that — redefine the way charitable giving becomes part of our everyday lives. Crowdfunding enables that — instead of approaching a single wealthy philanthropist for a large sum, we can get hundreds of individuals to pitch in small sums — be a 25 year-old software engineer, 35 year old mother of two to their chosen causes and follow progress in real time. Thanks to this, someone sitting in Toronto can help someone in Trichy raise money to build a toilet.

We focus on youth, the generation that has embraced web 2.0 technology and haven’t been influenced by the older generation’s giving habits, to become lifelong philanthropists.

Democratizing philanthropy and communicating that every contribution counts (sustainability) and every contribution will be counted (accountability) will allow the average individual to feel like a mini-Azim Premji by building a portfolio of social investments across states and causes.

Is Milaap similar to the concept of microfinance?

Milaap’s applies the best principles of microfinance and customizes it to the needs and capacities of the borrowers. The main difference is that, instead of sourcing our loans from banks, we crowd-source our loans. As a result, this dramatically reduces the cost of the loans for our end-borrowers. Also, as mentioned earlier, Milaap’s areas of focus are different from traditional microfinance as well.

How has the response of the lenders been? Has the scale of response grown over the period of time?

The online version www.milaap.org has been up for over three months now. In this short period, we’ve seen 760 users on our website, the last 100 have come in 15 days. We are also seeing increased interest from corporate and HNIs who are looking for a business-like relationship in philanthropy. We are just starting out, though. We aim to raise loans to the tune of 1 million USD by June 2012.

There are so many young people who often want to do “something” for the people at the grass roots but fail to start. As an entrepreneur, what message do you have for such people?

Start somewhere. Volunteer. Find a cause you believe in. Now that you’ve read about Milaap, if the idea appeals to you, write to us. Technology enables you to do anything. We want to give 2 examples.

Karthik, a student from Rutgers University wanted to create awareness about the stigma attached to lack of sanitation for poor — he went ahead and made a funny video that’s attracting widespread attention: http://www.youtube.com/watch?v=v339mAq6teM

Peixin, a Singaporean girl who visited villages in Trichy and was so moved by the plight of women fearing rape and snake bites as they didn’t have toilets, that she decided to run a online campaign to raise funds for the same from her Singaporean friends. http://lendatoilet.causevox.com/

Don’t worry too much about what will work and what will not, just try out things and learn along the way. Get out of Powerpoint stage quickly and go to the grassroots. Understand the needs before ideating. Don’t listen to too much advice, just go with your gut. That is most important!

We congratulate Anoj and his team for this wonderful initiative. You can know more about Milaap at www.milaap.org and get involved here.