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S3IDF’s Social Merchant Bank: Redefining Sustainability

Neeraj Doshi

The old adage goes, ‘Give a man a fish and you feed that man for a day; teach a man how to fish and you feed that man for a lifetime’. Think for a moment, however, about the meaning of this adage today. What exactly is involved in “teaching a man or woman to fish” in contemporary society? It is not so simple, and basic skills may no longer be sufficient to provide livelihoods. The poor will need to know not only how to fish, but also how to store and transport their fish. They will need to know that the river they fish in is protected, and have easy access to that river. They will need equipment like boats, nets, and rods as well as market information on how, where, and for how much they can sell the fish. These fishermen will require what, in modern terms, are called infrastructure services: energy, transportation, communications, information access, water. Access to these basic services can significantly improve both quality of life and earning capacity of the poor, and is widely acknowledged as necessary for poverty alleviation.

But how can the poor people get access to these various services at an affordable cost? S3IDF (Small-Scale Sustainable Infrastructure Development Fund) is working to answer this question through the creative linkages of financing, technology, and business know-how that make up our Social Merchant Bank model.

Consider the case of Mr. Muniyappa Murugesh who, with the help of S3IDF was able to invest in a solar charging system providing quality rental lighting to local street vendors at a reasonable cost. Or Mrs. T. Muthulakshmi, the proud owner and operator of a small enterprise that manufactures biodegradable, disposable “eco-plates” (an environmentally friendly alternative to plastic), from the sheaths of the areca plants ubiquitous in her small town of Pollachi in the South Indian state of Tamil Nadu. Or the small town of Kondlahalli which, through our assistance has managed to set up a computer lab for community and educational use at its local rural high school.

These are just some of the projects currently in our portfolio, with many more in earlier stages of development in our pipeline. Through our unique Social Merchant Bank   model, we are creating self-sustaining enterprises and providing infrastructure to many under-served communities in India. Moreover we are doing so in a way designed to be replicable and widely applicable in other developing countries.

How do we do it?
As a social merchant bank, S3IDF provides the poor with essential linkages of technology, financing, and business know-how. We partner with other organizations to perform detailed pre-investment work, thoroughly evaluating the priority problems of communities served, potential solutions/technologies, and the viability of different business models given the ability and willingness to pay of the beneficiaries. We find local candidates to own, operate, and manage these investments, connect them with the most appropriate technology and business support, and help them secure financing from local institutions by sharing the banks’ financial risks. Through our work S3IDF is able to demonstrate that financial viability can be increased by linking improved service provision directly to income generating end-users. Regular monitoring and dissemination are also an integral part of this process, creating highly replicable new business ventures that provide much needed utility services to the poor.

What have we accomplished thus far?
There are just over 3000 direct beneficiaries (and many more indirect beneficiaries) of our projects thus far. We have a total of $160k in investments in the 60+ projects in our portfolio and the more than 100 projects in our pipeline. Our work currently spans the 4 South Indian states of Karnataka, Andhra Pradesh, Tamil Nadu, and Kerala.

How can you help?
Please visit our website, www.s3idf.org, for additional information.

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