Livelihood Financing

CONVERGENCE

PROMOTION AND PROTECTION OF PEOPLE'S LIVELIHOODS

FINANCIAL SERVICES:

Savings; Credit both short- and long-term, for investment in natural resources: land, water, trees, livestock, energy Insurance for the lives and livelihoods of the poor, covering health, crops and livestock Infrastructure finance: roads, power, market-places, telecom, as needed; and Investment in human development including in nutrition, health, education, vocational training.

BUSINESS DEVELOPMENT SERVICES:

Productivity enhancement; risk mitigation, other than insurance (such as vaccination of livestock); local value addition; and alternate market linkages.

INSTITUTIONAL DEVELOPMENT SERVICES

Forming and strengthening of various producer organisations such as self-help groups, water users'associations, credit and commodity cooperatives, panchayats and Establishing systems for accounting, performance measurement, incentives, MIS, etc. Thus an approach to microfinance promotion, Livelihood Finance aims at developing assets, abilities and capabilities of the people so that they can earn their livelihoods in a sustainable manner.

FOCUS ON ALL THE ELEMENTS OF MICROFINANCE:

Although credit is an important financial service, it is not the only financial service that can help people, the other two financial services savings and insurance are also important. Savings are particularly important, as these act as self insurance in case of smaller contingencies; meet sudden demands of cash such as due to illness in the family; act as margin money or 'equity' for borrowing; and finally, to some extent act as a collateral for repayment of loans, where savings are deposited with lenders. Insurance is another important financial service for the individuals, given their vulnerability to livelihood and personal risks. Insurance may include life and general insurance to cover assets such as physical assets, livestock, crop and so on.

SUSTAINABLE LIVELIHOODS GENERATION :

Livelihood Financing leads to sustainable livelihood generation for the communities as the development of physical, natural, human, social and financial capital is also undertaken along with the financing of the activities.

HOLISTIC NEED-BASED APPROACH :

Livelihood Financing approach is based on identification of livelihood opportunities, selection and motivation of the micro-entrepreneurs, business, employability and skill training, establishing of market linkages for sourcing and outsourcing,creation of common infrastructure and some times obtaining legal mandates/regulatory approvals and providing credit as per activity requirement.

EMPLOYMENT GENERATION :

Livelihood Financing approach helps in employment generation by identifying the activities having potential for growth. It not only help people in getting selfemployed but also it provides steady wage employment to many others. This is certainly a diversion from micro credit approach that primarily focuses on self employment.