Week 15 Reading Reflection

This week's reading is Vikram's Akula "Business Basics at the Base of the Pyramid". I really enjoyed this article. I see Vikram as a hero for what she's doing: offering loans to poor Indian people, the money of which poor people would use to start their own entrepreneurial ventures in order to be able to pay back. Since these poor people live on $2 per day, all borrowers start small businesses like agricultural laborers, mom-and-pop entrepreneurs, street vendors, home-based artisans, and small-scale producers. I was surprised by her strategy to make sure her customers payed her back the loans. "If one woman couldn’t pay her small weekly installment, the rest of the women chipped in; if she refused to pay, the others pressured her into meeting her obligation." So she basically used peer pressure to her advantage to make her customers work hard and pay their duties. Another thing that caught me off guard was the reason why she chose women as her target customer. She says, "Studies have shown that women are more likely than men to reinvest profits in the household and to support others in their borrowing group." I can't imagine why men wouldn't reinvest profits in the household in comparison to women. And that is something I would ask her. 
  
Finally, the writer seems like she has her customers as her first priority, which is what is supposed to be happening. To start with, in order to help the villagers organize their finances she hires about 500 new loan officers every month. They participate in theory classes on Saturdays and practice what they’ve learned in the field during the week. She, thus, enforces money education in the poor Indian villages so that they can manage their incomes more efficiently.  Instead of asking villagers, who are often illiterate, to describe the seasonal pattern of their cash-flow needs, she and her crew had them diagram it with sticks, seeds, and coins, indirectly telling them where the poorest people lived, what kind of financial products they needed, which areas were lorded over by which loan sharks, and so on. Her crew and herself essentially have personal time with the customers which is how they figure out the actual problems and are therefore able to find the most effective solutions to them. As she mentions later on in the article, "In everything we do, we ask, “Does this work for the borrower?”—even if it means operating against our own short-term interests." If it works for the borrower, then it will bring more profit in the company eventually, as well as increase customer loyalty.

Microfinancing is still a thing that most business owners don't prefer, due to reasons like lack of access to commercial funds, the high cost of handling millions of microtransactions, and an inability to create scalable operating systems. Despite these problems, Vikram has achieved so many things with microfinancing for the shake of her customers' good financial standing.