Revival of India’s Small Businesses

The REVIVE Alliance supports self-employed individuals and micro-enterprises across diverse cohorts such as entrepreneurs, blue-collared workers, street vendors, construction workers, artisans and farmers. It provides accessible and affordable capital in the form of grants, returnable grants and credit. Photograph courtesy Samhita Social Ventures

The REVIVE Alliance is one of the largest private sector and philanthropy-led alliances in India working on economic recovery efforts from the COVID-19 pandemic. Launched by the Samhita-Collective Good Foundation (CGF), the REVIVE Alliance is assisting micro and small businesses impacted by the pandemic through an innovative finance model that allows for long-term empowerment, and financial and digital inclusion.

The REVIVE Alliance is focused on “helping facilitate the long-term recovery of the informal sector, with a focus on groups whose livelihoods are impacted by the COVID-19 pandemic, especially women and youth,” says Imrana Khera, partnership advisor at USAID India. It is estimated that 121 million Indians lost their jobs during the COVID-19 lockdown in 2020. “Over 91 million of these individuals were employed in the informal sector,” says Khera, “who are typically unable to access mainstream finance to rebound from the loss of income.”

The REVIVE Alliance provides grants as well as returnable grants, which give zero-interest support with a moral, not a legal, obligation to repay. These loans are used as working capital or funding for skilling to enhance the income levels of the recipients. “This finance model creates a beneficiary impact multiplier of 5 to 7 times compared to a normal grant,” Khera adds. With support from USAID, the REVIVE Alliance is able to bolster its efforts by linking U.S. International Development Finance Corporation-backed credit guarantees with the platform.

“A wide grassroots network and robust relationships with organizations are critical to ensuring the right individuals and businesses receive the necessary support,” says Shagorika Ghosh, senior manager of the REVIVE Alliance at Samhita-CGF. “With informal workers and micro-entrepreneurs across industries as a focus area, we work with companies, foundations, other funders and social organizations to select cohorts. Our decisions are based on the needs of vulnerable communities and entrepreneurs, and we place focus on cohorts that lie at the intersection of business ecosystems and social purposes.”

Through this process, it’s essential to customize solutions, “including value and repayment time of returnable grants and pay for performance instruments,” Ghosh emphasizes, along with the “type of skilling interventions, mode of delivering access to social security schemes and so on.”

One example of this is the group of entrepreneurs who are part of the Indian conglomerate Godrej’s Salon-i corporate social responsibility program. The program has trained close to 250,000 businesswomen as beauticians and provided business training support. “When COVID-19 and subsequent lockdowns affected the businesses of these entrepreneurs, funds were provided to the women in the cohort through returnable grants,” says Ghosh.

Helping small-scale retail stores adapt to e-commerce has also been an essential part of REVIVE’s efforts. “Small grocery stores—or kirana stores as they are called in India—form an integral part of the retail industry and local economy, and are significant livelihoods and income generators, in various pockets of urban and rural India,” explains Priya Naik, founder and CEO of Samhita-CGF. Given their proximity to communities, they were vital during the COVID-19 lockdowns. “However,” Naik continues, “the pandemic also impacted their traditional operational practices and brought increased competition from larger chains and e-commerce.”

In response, REVIVE is promoting a digitization drive supported by larger business improvement efforts, and incentivized by finance instruments such as pay-for-performance or returnable grants. “The REVIVE Alliance, with SnapBizz and the Trust for Retailers & Retail Associates of India, or TRRAIN, is driving a philanthropy-business collective effort to stimulate the adoption for digital tools and practices among kiranas,” says Naik. With “effective digital transactions, better inventory management and efficient customer service, these small kiranas will be able to achieve higher business efficiency,” Naik asserts.

So far, digital access, financial awareness, access and literacy, have been challenges for participants in the initiative. “The REVIVE platform’s primary target groups are individuals and small entrepreneurs who have no access or poor access to formal financial support,” explains Ghosh. In India, many of these entrepreneurs are women who aspire to own and operate their own businesses. “Therefore, the platform’s discovery and operations processes entail substantial communications and awareness campaigns contextualized to behaviors and cultures, regarding the support provided through financial instruments, how they work and what’s required of the recipients,” stated Ghosh. In addition to funding, REVIVE is designed to create access to further capital by commercial or commercial-philanthropy blended instruments.

“REVIVE also faced many macro headwinds,” Ghosh adds. “The Alliance had to adapt continuously through the second wave [of COVID-19] and subsequent lockdowns, to ensure that the progress made by our cohorts wouldn’t be reversed and that they weren’t burdened with repayments.”

Given the success of the first round of programs, there is much reason for optimism. “Within our farmer cohort, we saw 100 percent repayment rates of the returnable grants, so with the entire fund amount returned, the money is getting re-deployed to a second set of farmers,” says Ghosh. “For other cohorts that are still repaying, current ongoing repayment rates stand at 92.33 percent for beauty entrepreneurs and 76 percent for street vendors.”

Another area of success has been the diversity of people and businesses REVIVE is impacting. “Due to our strategy of collaboratively selecting cohorts,” Ghosh notes, “we’re providing revival and resilience support to beauty entrepreneurs, street vendors, small retail/kirana store owners, sanitation workers, blue-collar workers, entrepreneurs with disabilities, farmers, garment workers and so on.” For the upcoming year, says Naik, “REVIVE will double down on its mission and extend support to more informal worker and micro-entrepreneur cohorts; it will add both breadth and depth to its offerings.”

Natasa Milas is a freelance writer based in New York City.