Livelihoods and Financial Inclusion of Rickshaw Pullers

Manik L. Bose, Phd.Economist and Social Scientist

Independent Consultant

Workshop on

“Livelihood and Financial Inclusion of Rickshaw Pullers”

National Institute of Urban Affairs, New Delhi

19th November 2013

Scope of this Presentation

Knowledge and findings from the following two documents:

– First, ‘A Research Study on Financial Inclusion related aspects of Rickshaw Pullers’ of UNDP prepared by the researchers and coordinated by the Centre for Rural Development (CRD), Guwahati, Assam conducted at the field level in 2012

– Second, ‘E-Discussions document’ prepared by the Solution Exchange Microfinance Community Members of UN-India through initiating debate among professionals for specific queries and from stakeholder participants of workshops in 2012

The First Study

Livelihood Findings• The Rickshaw Pullers (RPs):

– About 10 millions known from literatures + 10 millions(+ 50 to 100 millions people directly or indirectly dependent?)

• (but could not find reliable source for this information)

• Of course all of them are economically poor and socially vulnerable too (regret their life, wife /children feel ill fate)

• They are 100% migrants (seasonal, temporal and long-term)

• Become RPs, because they see RTS sector is one of the most available immediate opportunity for income and survival

• Seasonal migrants come only to drive rickshaw for additional income during the lean period at rural area (value added)

• Live in various insecured places (e.g. slums, platform, etc)

• Community feelings is very poor among RPs (individualism)

• RPs provide multiple services to the urban dwellers & market (take challenges mentally, physically and powered by leg)

• Their life found full of socio-cultural problems (marriage and education of children, driving at old age, values in society, etc)

• Most of them are unskilled and illiterate and lack livelihood capitals (resource poor)

• Lack of awareness of social security and human rights (not clearly know, are they eligible for it and how?)

• Very weakly motivated for development of next generation (an alarming case)

• Women and children of their family also work for odd jobs (they accept hardship is part of their life)

• Very bad financial manager as earn daily and spend daily, although earning is not bad (daily planner not tomorrow)

• Savings is not their regular habit due to various reasons (their women try hard traditionally)

• Most of the RPs have smoking and alcohol habits (reduce home take money)

• They spend almost one-thirds of their daily income during the working period for food and energy (operating cost investment)

Livelihood Findings…..contd.

Infrastructural and Institutional• Most RPs driving rental rickshaw and paying Rs. 20 to 35

varied location to location and maintenance arrangement with owner

– (it is more convenient for seasonal and temporal migrants)

• In most cities there is no allocated rickshaw stand, fare chart and parking place (municipality & traffic system?)

• The municipal authority is not giving them adequate support for RTS and RPs (license, institutional linkages)

• RPs are organizationally very weak (no union and cooperatives)

• They face many problems related to road infrastructure, traffic system, accident related, etc. (ban, police torture)

• The RPs face entitlement problem due to lack official KYC documents (entry barriers)

• Except the client of MFI and NGOs, very few people / organisations are hard to find helping for institutional service

• Many rickshaw owners claim that we are the one helping them most while not getting adequate help from municipality and police department (become traditional practice)

• The owners also said that we are the one providing employment support to seasonal and temporal migrant labours, not the government or any other organisation, but we are blamed for their any mistake. But, do not have capacity to help them in all areas, like shelter/housing, drinking water, their spending for families , etc (unlinkage)

• Innovation and technology largely helped to both RPs and users (light and comfortable)

Infras. and Inst…..contd.

Financial Inclusion of RPs

• Many RPs do not know exactly what is their financial inclusion, but they do understand savings, loan and insurance

• The seasonal and temporal migrants only know that they need a bank account for their small savings for short period and transferring money to home.

• They do not like any FIs that have market risk to loss money (e.g. unit base Insurance, mutual funds, bonds)

• The micro-credit and micro-lease arrangement by many organisation are doing well with RPs for giving them ownership of rickshaw and some are also arranging other FIs only for the lease period (after that many drop-out can be seen)

Key Benefits / Advantages:• The one particular benefit is visible to the RPs that they

are the owner of rickshaw without having capital (indirectly until repay loan later directly)

• The RPs are highly benefited through ownership of rickshaw at the end of lease arrangement (creating asset base and increasing cost-saving income)

• The payback installment of credit/lease amount is playing role of mandatory savings (creating habits of savings)

• The owner RPs run rickshaw according to their choice (enhancing freedom of work-life balance)

• Few are selling rickshaw after completion of credit/loan and opening other business (change in livelihood)

• Owner RPs enjoy rides of family to market & relatives (no hardship for love one and children)

Fl of RPs……..contd.

Major Disadvantages:

• Many organisations avoided seasonal and temporal migrants as they not live for whole year (financial exclusion of a large number)

• In many cases, this arrangement did not cover secured garage in the city (security of rickshaw)

• Sometimes they are not serious to repair and maintenance of rickshaw which increase cost of depreciation (reduce life of rickshaw).

• Single rickshaw owner has very high probability of increasing cost of rickshaw if face accident (risk probability)

• A RP will have right to sale his rickshaw after returning full amount of credit /loan (it is happening at the ground and seeking new loan, not going to face consequences)

Fl of RPs……..contd.

Demand for RPs and their FI• Demand for rickshaw is unquestionable in urban areas

based on current socioeconomic condition of large number low- and middle-income group, connecting people at short distance, transporting market goods, available at close to residence, helpful during hazardous period, good for local travel of tourists, etc. (demand for multipurpose vehicle)

• Following are the demand for FI findings from the study– Personal savings account– Group savings account– Micro-credit facilities (asset, business, housing)– Transfer of remittance– Micro-insurance (life and health)– Micro pension

All demand side financial products and services are regularly available at public and private bank /institutions but condition apply & read carefully!!).

There are four distinct suppliers of financial products and services (credit/lease & grant/donation)

1. Public inst. (bank / financial inst.)2. Private inst. (bank / financial inst./ MFI)3. NGOs (MFI / development org.)4. Mission / Philanthropic organisation / Individuals

In general, all recipients need identity, however No.3 & 4 involve directly with activities (e.g CRD, AIF, PNB, etc) and public and private institutions look for authentic KYC and collateral guarantee for providing micro-credit and financial products and services.

Supply of Financial Products and Services incl. Livelihood

Conclusions• In general RPs livelihood is vulnerable and deprived from

social and economic development of the country

• They are resource poor and have not fully aware of how to improve their livelihood

• They need financial education and livelihood support

• They need reliable source for savings and remittance transfer

• Long-term migrants living in the city need credit support to buy rickshaw for cost-saving income

• They need strong RPs community and union to deal with various institutions

• They need financial support for other IGAs to involve their family members, particularly for women both in rural and urban areas to protect and reduce migration

Policy and Strategy• The government and other organisation need to develop a

holistic approach considering migration, livelihood, financial support, IGAs for women and social security (policy & strategy for livelihood development)

• The local government such as municipality in collaboration with urban development authority and traffic police should look into their identity (i.e. KYC) card/certificate to organize them, control them and assisting them for social development and financial inclusion) (Institutional Policy and implementation strategy)

• The MFIs and NGOs need to be included in government programme for organizing them, assisting them for microfinance and other financial products and services that best fit case to case of RP. (policy & strategy for M&E)

• The government, local authority and NGOs need to come up with a new model for their collectivization and improved RTS service system (i.e. rules and regulations).

• A strategy for GO-NGO collaboration is needed to improve RPs awareness through various audio-visual and rally programs

Many Thanksfor your time and patience to listen

The Voice of RPs

Feel Free 2 Forward First w/Family &/FriendsFeel Free 2 Forward First w/Family &/Friends