|The Environmental Colours of Microfinance
6. Promoting Environmentally Based Micro-Enterprises
A more assertive approach to solving environmental problems that involves turning environmental challenges into opportunities to diversify the economic base of the micro-enterprise sector is presented in this section. The necessary transformation of both urban and rural environments can be accelerated through more environmentally-centred small-scale enterprise activity. In this regard, the micro-enterprise sector can play a more active role in facilitating the reformulation of economic activity to better coexist with the natural environment. Such a transformation would, of necessity, take place in accordance with the circumstances in which micro-enterprises operate.
For many years, environmentally-based economic activity has been one of the few bright spots in the stagnating economies of the industrial world. The Canadian environmental industry, for example, has been growing at an annual rate of 10 per cent, well ahead of the rest of the economy (Pallen 1996a, 39). The environmentally-based economic growth in the micro-enterprise sector of the developing world must not be confused with the experiences of the environmental industries of countries such as Canada. Nevertheless, in the developing world micro-enterprise development of greener markets will share some of the characteristics of western environmental industries. This includes the development of new markets and technologies, the provision of environmental goods and services, the promotion of the refinement of existing production processes and techniques, and development and use of new and more efficient energy sources and energy efficiency materials and techniques.
A special challenge and opportunity exists in linking the greening of the micro-enterprise sector to meeting other development objectives such as improved health services, housing, access to basic water and sanitation services and affordable modes of transportation and energy. Diminishing government and donor resources and a growing population mean that an increasing number of people are without such basic services and infrastructure. Micro-entrepreneurs can play a role in meeting this demand.
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A. Expanded Agricultural Activity
Over the last decade, donor groups have cut back support for agricultural activity. This has happened despite the fact that the vast majority of employment remains agriculturally- based and the fundamental problem of food security for the poorest people has never been resolved. Many MFIs have continued to provide lending for small-scale farming and there is both a desperate human need and economic imperative to more deeply explore the potential of agriculture-based, environmentally-related, micro-economic activity.
Despite the recent tendencies of donor groups, NGOs, researchers and farmers have been working in different parts of the world to develop a very important foundation of experience and knowledge in small-scale agriculture. A considerable amount of successful experimentation and innovation has occurred that has often been environmentally- related. It has been shown there remains an enormous potential in small-scale farming to create work, increase the food supply and address environmental problems simultaneously.
It is important to point out that much of this insight and experience has been developed in some of the world harshest environmental conditions. These difficult circumstances, according to many, actually present enormous potential for small-scale farmers (Chambers and Conway1992,24):
Echoing the findings of ecological analogies degraded resources quite often present immense livelihood potential. Paradoxically, degradation has often protected resources for the poor, because land is degraded -deforested, eroded waterlogged, bare from grazing, flooded or unsustainably cropped - it has low value. But again and again, when management practices are changed, remarkable bio-economic potential is realised.
Chambers and Conway (1992, 24) add that despite certain bio-economiclimits, there is enormous scope for intensifying and complicating farming systems.There is also great promise, as Anderson (1994, 2) suggests, in technology that can significantly improve the economic performance of small-scale farms. There are numerous examples of environmental enhancement of small-scale agriculture (see Borrini-Feyerbrand, Pye-Smith and Sandbrook 1994). A key element in the success of the these new practices has been the focus on building on existing knowledge and practices of farmers and ensuring their active participation throughout the project cycle.
In addition to participating in environmentally-appropriate farming techniques, micro-enterprises can be involved in promoting such practices andagricultural supplies such as drought resistant seeds and more versatile plants, plants and flowers that produce natural dyes and colours, appropriate farm implements, organic fertiliser and other farming services. Non-farming activities can also be encouraged. As Chambers and Conway (1992, 2) point out, already igh proportions of incomes of the poor, even of those with land, derive from sources other than direct farming.
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B. Urban Agriculture
Depending on location, urban agriculture may be an option. Urban agriculture is already practised throughout Africa, Asia and Latin America. Urban agriculture encompasses:
Formal cultivation and many more things including: fruit growing, container gardening, use of marginal areas such as road reserves, basements of abandoned buildings, boxes, canals, vacant land in towns, aquaculture (pond-fish farming), urban horticulture (vegetable and fruit production in urban and peri-urban areas), floriculture (production of flowers and urban ornamental trees and small plants), backyard and frontyard gardening, micro livestock keeping, hydroponics, roof top gardening, biodegradable waste recycling, and more (Sawio 1993, 3).
As Chimbowu and Gumbo (1993, 7) point out, rban agriculture provides an opportunity to create employment and help to transform the urban landscape into a more self reliant entity.A close examination of most urban areas reveals public lands and water and organic waste that can be used for agricultural purposes. Community lands and households can also be put to use . Every urban centre has its own special conditions for facilitating urban agriculture (Smit and Nasr 1992). Minor technological advancements can enhance the potential of urban agriculture.
One successful example of urban micro-enterprise agriculture is a squatter slum in Bogota, Colombia whose residents used hydroponics to grow vegetables on rooftops. his was achieved in containers placed on very light wooden structures in up to three layers. This is a highly productive activity directed primarily at supplying metropolitan supermarkets. The women farmers typically earn as much as their semi-skilled husbands (Smit and Nasr 1992, 150).
In order to promote urban agriculture, local bylaws covering the space where urban agriculture will be practised must be understood. Also, urban agriculture can present certain health risks that must be reduced (Smit and Nasr 1992).
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C. Conservation Related Micro-enterprise Development
Environmental groups have been involved for more than a decade in the promotion of conservation-related micro-enterprises. They have sought to establish these micro-enterprises as an alternative to unsustainable economic activity that threatens the biodiversity and the unique and endangered species of ecosystems such as rainforests. Micro-enterprise development has become a key element in many of the conservation/development projects that have been implemented.
Environmentalists have met with some success in this sector. However, overall the experience has been disappointing. Much of the failure of environmentalists in the 1980s and early 1990s to establish viable businesses related to these factors (SEEP Network 1995, 3):
- An inadequate understanding of the socio-economic context -- livelihoods are more complex than [simply] jobs in their relationship to religion, seasonal cycles, cultural taboos, kinship networks, etc;
- A poor relationship between enterprise objectives and environment objectives;
- The significance of asking people to change how they allocate their labour;
- A poor distribution of benefits in otherwise successful efforts caused friction that threatened environmental objectives.
Richards also suggests environmentalists have embarked on ventures with too many new elements; new technologies, new products, new entrepreneurs and new markets. Microcredit specialists will recognise that many of the problems encountered by environmental groups relate to weak business and community development practices.
Despite the challenges, environmental groups have identified an area of great promise. Value added products, organic farming, eco-tourism, agroforestry, and non-timber forest products are among the numerous activities that have been promoted. In Indonesia, six million people earn a living by collecting or processing non-timber forest products for export revenues of US$202 million per year (FAO 1991b).
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D. Renewable Energy
If current patterns continue, we are entering into an unprecedented period of creativity and innovation in small-scale energy systems. The change taking place in energy has been compared to the extraordinary explosion in computer technology (Flavin 1996). In future, new and renewable energy sources and systems such as hydrogen, wind, solar, and micro hydoelectricity will be cleaner, more efficient and adaptable, and increasingly cost-competitive with conventional energy sources.
Many of the technical problems that have held such sources back from having a wider application are rapidly being overcome. The commercial cost of, for example, solar-based electricity (photovoltaics or PV) has declined from more than US$70 per kilowatt in the 1970s to US$4 today (Flavin 1996). Given the other benefits of solar energy, this price is very competitive for small-scale economic activity. Competitive-minded American companies claim they can have the price down to US$1 a watt within three years (Halpert 1996, D20). This would make PV competitive with more conventional sources of energy.
These affordable and efficient scaled-down energy sources will create enormous opportunities for all development practitioners. They are especially favourable to small-scale economic activity. Micro-enterprises will be able to benefit from cleaner, competitively-priced energy sources. Micro-enterprises can also be created to service, install and build the equipment for these new energy sources and systems. Micro-enterprises, either on an individual or collective basis, will be able to exercise greater control over matters related to energy. As demonstrated by the successful rural electrification work of Enersol (see Appendix 2) and other NGOs such as Solar Electric Light Fund (SELF), many of these expectations are already being realised. The recent World Solar Summit in Harare, which identified small-scale applications in the developing world as a priority, should hasten further applications. MFIs should begin immediately to understand the potential of renewable energy and energy efficiency in the operations of the micro-enterprises they support.
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Only a slight minority of both urban and rural micro-entrepreneurs have access to motorised transportation. The majority will continue to remain dependent on relatively environmentally-benign forms of transportation such as walking, bicycles, carts and animals. Within this context, there is enormous opportunity for micro-enterprises to promote improved small-scale transportation systems.
Although not as advanced as the energy field, there is a growing recognition of the value of non-motorised transportation by development practitioners both from an environmental and practical standpoint. Non-motorised transportation can be improved to provide better access to markets and resources, increased mobility and to lessen the health risks related to excessive walking and carrying. The recycling sector in urban centres could be greatly reinforced by the addition of simple, practical transportation systems (Wass 1991). An activity such as fuelwood collection, which has become such a burden, could be rendered manageable again.
Improvements and innovation in bicycle and bicycle-related equipment commodities such as trailers is taking place throughout the world. A bicycle with a properly designed trailer has enormous carrying capacity. The technologies involved are simple. Trailers, handcarts and bicycles could all be fabricated by micro-entrepreneurs to meet the needs of local markets. In Sri Lanka, Rural Enterprise Development Services (REDS) has been successfully promoting the use of trailers in small-scale business operations and for domestic use. The trailers are fabricated by micro-enterprises (Pallen 1997). In East Africa, handcarts are being built and sold by micro-entrepreneurs for similar purposes.
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F. Water & Sanitation
In the developing world, the growing gap between the need for services and the ability to provide them is seen most prominently in the field of water and sanitation. New thinking is required on how water and sanitation services can be delivered in both urban and rural areas. The idea of providing every home with adequate water and sanitation will be impossible unless low-cost and simple, efficient technologies can be developed and widely promoted. Micro-entrepreneurs are well placed to provide such services. Etherington (1997) summarises some of the key opportunities in this sector:
Low-cost water supply systems require a range of goods and services including the construction of wells, the installation of hand pumps and their maintenance and repair. In many parts of the world, wells are still hand-dug by small-scale contractors, offering an alternative to boreholes drilled by mechanised rigs at a fraction of the cost.
If these contractors can obtain small amounts of credit, the efficiency and safety of well construction can be enhanced with the use of correct hand tools, moulds for constructing the concrete forms (caissons) to be dropped in the well, and dewatering pumps that allow construction to continue after water has been reached.
Once installed, hand pumps require both regular maintenance--usually done by trained users--and repairs to deal with more serious problems. [The repair] services are best provided by a trained mechanic residing within a reasonable distance [of] the pump and who is able to maintain a small inventory of spare parts.
Adequate amounts of clean water provide a productive resource for such products as vegetable gardens, food production and brewing.
Sanitation facilities require the services of small-scale masons, ideally able to build simple, appropriate latrines both in households and for community use. Public latrines are themselves a micro-enterprise with the user fees used to employ a caretaker to ensure their cleanliness.
Box 1: Orangi Squatter Settlement
Orangi is the largest squatter settlement in Karachi, Pakistan with more than 1 million inhabitants. In the early 1980s, the Orangi Pilot Project (OPP) was formed by Akhter Hameed Akhan, a retired schoolmaster, to make Orangi a better place to live. Chief among Orangi problems were horrid sanitary conditions. When it became clear that local government authorities would not build the required sanitation, OPP began a process of reducing the cost and simplifying the design of standard sewer designs. Researchers began by looking at a number of different sewage designs before concluding that it was technically and economically feasible to promote underground sewers. As Perweem Rahman of OPP points out, existing technical standards were ignored in favour of making the technology to uit the social situation
Septic tanks were installed between the sewer and toilets to ensure that only liquids reached the pipes. Another innovation was a new design of a manhole, smaller, cheaper, and simpler than conventional designs. The manhole covers were made of concrete rather than metal to ensure that people would be unable to lift them to dump waste.
Working with local masons, householders were encouraged to work together to install the sewers at their own expense. Residents of lanes with an average 20 to 30 homes began approaching OPP for help. Managers were appointed by each lane to collect money and organise labour and materials.
Despite assurance from xpertsthat the approach was unsound, over the last 15 years, citizens encouraged by OPP have built 94,000 latrines connected to 5,000 underground lane sewers and 400 secondary drains that carry wastewater to local rivers. The OPP programme has been expanded to promoting improved housing designs and health and education activities.
Source: Pearce 96.
The Orangi Pilot Project described in Box 1 demonstrates the potential of so-called marginal groups to address water and sanitation problems.
In some cases, providing water and sanitation services will not be feasible on an individual household level. Communal services or other arrangements should not be dismissed. Understanding community and cultural standards and learning from community members will help to understand the limits to and potential for developing new ways of delivering water and sanitation services.
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G. A New Outlook on Recycling
The traditional wisdom of not tinkering with something that is already working is foundin most cultures. In recycling, the micro/informal sector has a real success story that has occurred with little financial support and often despite opposition from local governments.
There is still a role, however, for MFIs to play in the periphery of the recycling industry to further develop the potential of this sector. Promoting use of equipment to maximise the retrieval of recycled goods, communal bins, simple transportation techniques, and other methods could enhance the profitability of recycling (Waas 1991). Also, many recycling activities can pose serious health risks (see Hunt 1996). MFI promotion of health and safety equipment such as gloves, masks, goggles, overcoats and earplugs could be very advantageous. The recycling projects described in Box 2 demonstrate the potential to improve working conditions and increase profit and environmental well-being through improvements in the organisation of recycling operations.
Box 2: Organised Recycling
Good examples of organised recycling, in the form of recycling cooperatives, can be found in Cairo and Ciuadad Juarez, Mexico. Scavenger groups in these cities have been organised into cooperatives to improve both working conditions and environmental management. In both cases, formal arrangements have been developed with the inputs provided by external agents.
In another example of organised recycling, ssociation Je Recycle an NGO in Morocco, collects waste paper weekly from more than 50 offices in the Rabat area and sells the paper to a manufacturing plant. The association uses the funds generated to run the programme, to outfit collectors, to distribute information on paper conservation, and for interest free microcredit for the purchase of collection carts.
Source: Jansen 1995, 6-7.
It is also possible that not all recycling opportunities are being explored. In fact, the sector potential in regions such as Africa is considered to be underdeveloped. Each location presents its own possibilities. Micro-enterprises in the rapidly growing countries of Southeast Asia will have different opportunities than their African counterparts.
Recycling can be applied to the commodities and products available in the marketplace. This means that as developing countries continue to be flooded with new commercial products, new recycling opportunities are created. One new area that is of particular interest is electronics and computers. Throughout the world, electronic and computer parts are being discarded. These could be easily rehabilitated or stripped for valuable recovered metals including copper, gold, silver and those from the platinum group (Velduizen 1994). he downside, in terms of adverse environmental effects from the recycling process, is remarkably small (Velduizen and Sippel 1994, 7).It is estimated that, by the year 2005, more than 150 million computers, most of which will still be operational, will be dumped in garbage heaps throughout the world (Mcdonald 1995, 19).
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H. Waste Treatment
Finding solutions to domestic and industrial wastewater is of grave importance to developing countries. Again, as in the case of water and sanitation, it is critical to find simple, cost-effective solutions. As proven by the Calcutta example in Box 3, such operations are within the capacity of micro-entrepreneurs. The Calcutta example is very grandiose. It is certainly plausible that micro-entrepreneurs could promote less ambitious water and sanitation models. Micro-enterprises could be offering such waste treatment systems to polluting factories, residential areas and the commercial and institutional sector.
Box 3: Salvation from Sewage in Calcutta Marshes
Over the past century, Calcutta has developed a system of sewage disposal that is among the most efficient and ecologically benign in existence. Approximately one-third of the city sewage is transformed by East Calcutta Marshes into a daily harvest of 20 tonnes of fish and 150 tonnes of vegetables. This natural sewage treatment system, which purifies sewage and industrial wastewater, supports 40 species of fish. The self-help system has been copied outside of Calcutta and more than 20,000 on-expertpeople have been involved in the creation of the system.
The success of these natural sewage disposal systems has brought the support of government officials in the form of assistance to sewage treatment cooperatives. The 430 members of one of these groups, the Mudialy Co-operative, harvest more than a tonne of fish a day from ponds in the heart of Calcutta's dockland.
Source: Pye-Smith 95, 20-22
Waste can be treated and purified by the natural processes found in small lagoons. There is growing interest and proof in the soundness of sewage lagoon systems that treat the waste with a duckweed (Lemma spp.) cover. Species of duckweed are found worldwide and grow on nutrient-rich water such as sewage wastewater. Duckweed is a quick growing plant. In addition to treating waste, duckweed is considered to be an excellent food source for fish, poultry and cattle. Case Study 3 (see Appendix 2) provides more insight into the potential of duckweed and, in particular, the work of PRISM, a Bangladeshi NGO which, since 1989, has been operating a duckweed lagoon that treats domestic sewage.
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I. Housing and Health
The need for affordable housing is well-documented. What is not as well appreciated is the need and potential to develop homes that can accommodate home-based enterprises. The structure, design and fabric used in construction for homes that double as a work site require special attention. Who, other than micro-entrepreneurs, are better placed to understand how to design and build homes to meet their needs? The development of multi-purpose housing is a good area for collaboration between housing groups and MFIs.
In the field of health care, there is some experience in promoting primary health care and family planning through micro-enterprise activity (Olson 1995). Significantly, in addition to their health potential, family planning services have enormous environmental benefits as well. Opportunities in this area are growing (Olson 1995).
Entrepreneurial approaches to service delivery in the health care field provide insight into how environmental products and services could be marketed to poorer groups. Such strategies have included (Olson 1995, 2):
- Stimulating consumer demand and the ability to pay for health services through increasingly responsive and flexible financial services, as well as education, marketing and income generation programmes to increase consumer awareness and purchasing power.
- Improving the supply of health care by increasing the efficiency and management of existing health care providers and creating new health-related enterprises.
- Creating or stimulating demand for health care services through micro-enterprise development of flexible financial services, social marketing and education.
The key to promoting health or environment services through micro-entrepreneurial activity is to treat people receiving those services as clients rather than beneficiaries (Otero and Rhyne 1994). Such an approach, for example, should be applied to micro-enterprise marketing of health and safety equipment to other micro-entrepreneurs.
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J. Green Technology & Safety Equipment
Safety equipment and environmentally- benign technologies could also be manufactured by micro-entrepreneurs. Once micro-entrepreneurs begin to look closer at their operations and participate in the development of alternative techniques and technologies, they also may end up with a very marketable commodity. There are already many technologies that exist that are effective and low-cost such as the retort for small-scale mining described in Box 4. Network-building can be used to identify markets for green technologies and safety equipment.
Box 4: Gold Processing Retort
Mercury is widely used by small-scale miners in recovering gold from ore. Among other problems with this practice is the release of mercury vapour into the air.
To counter this problem, the Mining Programme of the British-based Intermediate Technology Development Group developed a simple closed vessel, known as a retort, which prevents the mercury vapour from escaping when the ore/mercury combination is heated. This retort is based on a design from Brazil and is relatively easy to make and use.
Source: Intermediate Technology Development Group 1994/95.
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K. Advocating Legal & Municipal Bylaw Reform
Perhaps the most important contribution that MFIs can make to creating environmentally- based economic opportunities for micro-entrepreneurs is to lobby for reform of local and national policies, laws and city ordinances. Changes in housing, land tenure and accessibility to public lands would greatly enhance the potential of micro-entrepreneurs to undertake the activities suggested throughout this Sourcebook. MFIs have long recognised the problems created for micro-entrepreneurs by counter-productive policies and laws. The need to protect workers and their environment provides new motivation to push for reform.
Throughout the world, there is a new openness to see how bylaws and government policy can be reformed as part of innovative, often participatory solutions to problems related to decaying public infrastructure and services. An example related to micro-entrepreneurs, housing and the environment can be found in Lublin Poland. In 1990, a process was undertaken to revitalise the neighbourhoods of Lublin. Lublin's Urban Planning Unit launched a "participatory planning process" to involve community members in the rehabilitation of their neighbourhoods (Serageldin and Kipta 1996, 10). The city and local communities developed a plan for sharing the cost of projects to rehabilitate the local infrastructure in two pilot areas. A key achievement was to "formulate planning regulations to promote the development of micro-enterprise and home-based economic activities and expedite permitting procedures to stimulate housing renovation and expansion (Serageldin and Kipta 1996, 10)." Within two years, 137 houses were renovated and 50 new buildings constructed. 55 micro-enterprises were established in renovated buildings employing 120 people (Serageldin and Kipta 1996). This same process of collaboration is being used to plan environmentally related activity.
If you have resources to suggest, project descriptions or activities, lessons learned or internet links with related contents, please send an email to
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