A recent report on the Wall Street Journal entitled ‘Market Literacy: A Key to Unleashing Rural Consumption and Entrepreneurship’ [1] by Professor Madhu Viswanathan, a Professor at the Department of Business Administration, College of Business, University of Illinois, and Mr Srinivas Sridharan, an Assistant Professor at the Richard Ivey School of Business, University of Western Ontario, Canada, observes that ‘marketplace literacy’ is a crucial tool that can be employed to help the rural poor. In addition to facilitating access to markets and the provision of microcredit facilities, which both authors acknowledged were important, market literacy is stated to be a useful technique that will help the poor ‘overcome the debilitating effects of low literacy and rigid social hierarchies’. The report goes on to explain what constitutes ‘market literacy’ and how it can be used in conjunction with microfinance to help the rural poor ‘confidently pursue economic progress’.
Based on research undertaken in India, the authors stated that rural women in particular, who form a significant portion of microfinance borrowers, often face ‘an acute shortage of market-economy skills, confidence, and awareness of their rights’, a situation which they claim is exacerbated by ‘failing yields in agriculture and increasing ecological imbalances’. In their research, the authors found that ‘rural women experience difficulty in even seemingly minor tasks such as widening their search for retail outlets and switching – or at least threatening to switch — shops’. Nonetheless the rural community is ‘rich in intensely personal, social relationships, which often yield economic solutions that (ironically) money cannot buy’.
The article goes on to discuss the ‘Marketplace Literacy educational program’ [2] designed on the basis of the authors’ research on urban and rural Indian consumers. The program is intended to focus on marketplace literacy or skills, awareness of rights and self-confidence in relation to marketplace dealings. For example, skills of bargaining, verbally counting money, judging products by look and use, and estimating credit-worthiness of customers can yield optimal economic outcomes for micro-entrepreneurs that do not rely upon their being formally educated. In a socially rich rural setting such as rural India, such skills can be even more effective. As a further example, poor women may rely on cooking skills to start an enterprise making and selling food. But to run it successfully would require more abstract knowledge for designing menus, ensuring raw material inventory, identifying an optimal location for their stall and so forth. Rural microentrepreneurs need a ‘deeper understanding of marketplace complexities’. The authors state that they can be encouraged to consider options such as retailing partly-prepared food to households or supplying restaurants or even changing from food to some other business based on a broader consideration of opportunities. Otherwise, ‘among the rural poor, ill-advised enterprises can cause a slide into deeper debt’ and un-do the positive effects of microfinance.
The Markerplace Literacy program uses methodology that takes into consideration both the vulnerabilities (low literacy, low incomes) and strengths (social skills) of the rural poor. Using pictorial rather than verbal or text-based tasks, participants are led through simulated shopping experiences that mimic pitfalls in real-life transactions. The program also trains participants to more accurately gauge value by considering ‘multiple dimensions of what they give up (money, time, and effort) in exchange for acquiring a product’. Consumers learn the importance of checking products, planning purchases, bargaining and switching stores. Entrepreneurs learn how to identify opportunities to begin an enterprise and respond to consumer needs. The report noted that ‘the most impactful aspect of marketplace literacy is that it treats consumer and entrepreneurial literacy as two sides of the same coin’ which is significant given how the rural poor often ‘often engage in the twin roles of consumption and enterprise to meet survival needs’.
In a series of follow-up assessments, the authors found that some consumers had begun to switch stores, avoid expensive retailers, bargain, check expiry dates on medicines, understand the meaning of regulated maximum retail prices (often quoted by shopkeepers as the price) and pool resources to buy staples on wholesale basis. The authors however found that it took longer for the participants to ‘dabble in or begin a small enterprise’ and attributed this to greater ‘uncontrollables’ involved in being an entrepreneur such as getting permission from husbands or accumulating start-up resources. In conclusion, the authors made the following observation about market literacy: ‘Deep understanding and know-why literacy may be a luxury for the poor whose lives are often stigmatized by their socio-economic and cognitive limitations. Facing deprivation on multiple fronts, they may not be able to envision and act on creating alternative realities for themselves. Everyday survival anxieties may override long-term hopes.’
Related publications on educational and other programs for microborrowers can be found on the Microcapital.Org website [3], [4], [5].
By Chinq Yee Chong, Research Assistant
Bibliography
[1] Wall Street Journal report entitled ‘Market Literacy: A Key to Unleashing Rural Consumption and Entrepreneurship’: http://online.wsj.com/article/SB125187240878878743.html?mod=googlenews_wsj
[2] Homepage of the Market Literacy program: http://www.marketplaceliteracy.org/index.html
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