Indian Rickshaws Pull Ahead With Social Entrepreneurship

Indian Rickshaws Pull Ahead With Social Entrepreneurship

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Today, “social entrepreneurship” has become an important development to help some of the poorest groups in the world like the rickshaw pullers in India.

Colorfully adorned cycle rickshaws have long been a part of India’s landscapes. These hardworking yet environmentally friendly rickshaw operators can navigate busy urban streets and rural country roads with the same ease. But they are all but invisible to their passengers as they barely subsist above the poverty level. And it has been this way for more than a century. Then arrived Irfan Alam, a young social entrepreneur who was struck by the poverty-ridden conditions in which they operate.

Alam thought rickshaw drivers were natural points of sale and therefore they could make extra money by selling drinks, newspapers, or even mobile-phone cards to their passengers on the spot. Also since the average rickshaw covers about 10 kilometers (six miles) a day around town, he envisioned each vehicle could be used as an advertising medium and courier service.

These ideas evolved into the non-profit organization Sammaan (which means “dignity”). Today these sleek refitted cycle rickshaws, driven by uniformed personnel, have changed the landscape of the roads in the state of Bihar in India.

The success of Sammaan has earned Alam many accolades from Business World’s “Hottest Young Entrepreneur” to TED fellowship, BRLP World Bank Innovation Award, and a nomination as Asia’s most inspiring young entrepreneur.

Following his participation at the Entrepreneurship Summit hosted by President Obama in Washington in April, Alam visited San Jose to deliver a lecture about “Bottom of the Pyramid Entrepreneurship” at TiE (The Indus Entrepreneurs) conference. India Currents had the opportunity to speak with him.

India Currents: Congratulations on your achievement. When and how did you conceive this idea?

Irfan Alam: I was 17 at that time. While riding in a rickshaw, I got thirsty. So I asked the puller if he had any water. He didn’t since he did not have money to buy and stock them. I immediately realized that there was a market for selling water bottles in rickshaws. The very next day I talked to five rickshaw pullers and gave them each eight bottles of water. For every bottle they sold, we would make a profit of two rupees, which we would split in half. The very first day I made a profit of eight rupees [about 17 US cents].

You were very young when you developed a knack for business.

Yes, I guess entrepreneurship is in my blood. During India’s infamous Harshad-Mehta stock market scam in 1992, my father and many of his friends lost a lot of money. That got me interested in stocks and I started researching different companies. Interestingly, using my advice, all of my father’s friends recovered their losses, and most of them started making profits. This enabled me to start my first portfolio management firm at the age of 13. When my parents learned about my business activity with the rickshaw pullers, they asked me to drop this and concentrate on my studies. So I shelved it, but my interest never waned. I kept reading and researching about this sector all through my college days in Pondicherry, where I pursued my Masters of Foreign Trade degree.

What was the spark that revived this idea?

In 2006 an Indian TV show called Business Bazigar launched an entrepreneur hunt and solicited ideas for new businesses. I entered this contest with a business proposal to organize the rickshaw sector and make it a profitable venture. In my plan, rickshaws would be redesigned so that the spaces on the vehicles could be used for advertising and brand promotion. Also, I indicated that selling products like water, juice, biscuits, mobile-cards, and newspapers to the passengers could generate additional revenues. I won the show and was offered the seed money of Rupees 150 lakhs (about $300,000 USD).

Was Sammaan started with this seed money?

Actually no. Entry barrier to this business was very low but loyalty from the rickshaw pullers was the key. I wanted to run this as a non-profit and provide insurance, id-cards, and uniforms to the rickshaw pullers. To be honest, I was not thinking about social entrepreneurship at that point. I simply believed it was the best way to operate the business and the easiest way to get bank loans. Since the organizers of the TV show did not agree to this model, I ended up refusing the seed capital.

When did this turn into a true social venture?

As I understood more about the lives of the rickshaw pullers and their plight, it turned more into a social cause. Most of the 10 million rickshaw pullers in India rent their vehicles at the rate of 30 to 40 rupees (64 to 85 US cents) per day. The money they make, after paying the rent, is barely sufficient to sustain their families. These pullers are really at the bottom of the socio-economic pyramid. I thought if I could create an enterprise that could empower the rickshaw pullers and increase their incomes, it would be a win-win situation. I firmly believe in C.K Prahalad’s idea that businesses can be successful by targeting the bottom of the pyramid. Under this ideal Sammaan was founded in 2007 with seed money from family and friends.

Can you describe the operation model of Sammaan?

Once a rickshaw puller passed the verification process, he is then given training on basic etiquette and traffic rules. Then we help the operator gets a bank loan for a new rickshaw. Under normal circumstances banks would not be receptive but since we stand as guarantors, this rickshaw puller has access to credit. These operators feel truly empowered when they drive vehicles that they owned. They also get accidental and health insurance, ID card, and uniform. They become part of the Sammaan family.

How does Sammaan help increase the revenues of the rickshaw pullers and sustain the organization?

Sammaan rickshaws are designed with lots of space to display advertisements. The advertisement revenue is shared 50/50 between Sammaan and the rickshaw pullers. Also, rickshaw pullers can choose to sell water, fruit juice, cell phone prepaid cards etc. Similarly, sales profit is split between them and Sammaan. Money earned from transporting the passengers is solely theirs. In general, Sammaan rickshaw pullers can earn 30 to 40% more than what they used to make on their own.

Our rickshaw pullers also gain other valuable benefits such as a sense of belonging, empowerment, and dignity as their profession is traditionally viewed as menial labor. Their spouses and children can attend free evening classes called Samman Gyaan. Last but not least, Sammaan is profitable. Last fiscal year we made a net profit of eight lakh rupees ($20,000 USD) from a revenue of 50 lakh rupees ($125,000 USD). I cannot stress enough about the importance of being sustainable.

Does Sammaan get directly involved in micro-financing?

No. We only help our rickshaw pullers getting finance from banks to eventually own their own rickshaws through installment arrangement.

Aren’t cycle rickshaws a dying breed?

Quite the contrary, rickshaws are ubiquitous throughout India and they have even increased by 20% in New Delhi in the last two to three years. Furthermore, rickshaws are considered environmental friendly vehicles of the future. We are working on a solar-powered, fiberglass rickshaw right now.

What were your experiences at the Presidential Entrepreneurship Summit?

I met some truly great people like the Nobel Prize Laureate Muhammad Yunus. He invited me to Bangladesh to help set up a similar organization for the rickshaw workers there.

More information on Sammaan can be found at sammaan.org.

Sujatha Ramprasad is a contributor to India Currents. She loves to read poetry, philosophy and is an ardent fan of Harry Potter.