Is social entrepreneurship in Pakistan restricted to the realm of the Western-educated elite, or can we find traces of it in our local culture? TC-P Contributor, Favad Soomro in his guest piece below explores ‘Aadhiyari’, a fascinating indigenous social investment model found in rural Sindh.
Working in rural areas has its charms. You not only get to see the serene landscape and enjoy the hospitality of people, you also come across things which you normally don’t find in books. Rural markets, though very rudimentary in many ways, offer certain unique opportunities and surely micro entrepreneurs step up to exploit those and create value in their own context.
During one of routine visits to interior Sindh, while in conversation with Khadim Hussain, Sales Manager of Micro Drip – a social enterprise selling low-cost drip irrigation systems, I came to know about a very interesting social investment model. Khadim said that he invests in his native village’s economy to create social impact while earning handsome return on his money. His village near Mehrabpur in District Naushero Feroze is a typical rural village where the economy is dominated by agriculture and livestock. He said that he invests in ‘Aadhiyari’: a livestock investment model practiced widely in rural Sindh. I probed more and here is what I found out:
Aadhiyari or Aadhiyaro (from the word Aadha or Adh meaning half) model works on principle of equal sharing between partners. Investors like Khadim provide capital to skilled resources in rural economy who know how to raise livestock but don’t have enough resources of their own. They are typically the laborers or landless farmers. Investor only provides seed money which is used in purchase of very young livestock. The partner, let’s call him the service provider, takes the custody of livestock, feeds it and helps it grow through his own resources. Typically, the investment for smaller livestock like goats is for nine months to a couple of years. At the end of the stipulated period, the livestock and its off-spring is sold in the market. Investor and service provider take their original investments out first and the rest of proceeds are shared equally between the investor and the service provider. The value is generated in raising the livestock which fetches pretty handsome prices in semi-urban or urban markets.
The return for investor alone ranges any where from 50 to 100% depending upon the duration of investment. This information of course is based on non-documented sources and must be discounted.
Breaking it Down
There is a variety of motivation at play here. Investor invests to earn good return on capital. Very few do it to increase money supply in rural economy and create a social impact. In some cases, poor households, having some livestock of their own, get into the arrangement to raise working capital in short run. The motivation however does not change the rules of the game.
Like any other investment, the model carries its own set of risks. It is entirely based on social arrangements. No formal agreements are signed and in case of a conflict, arbitration is done through social arrangements. Other risks include death and disease of livestock. The coverage of veterinary services in rural Pakistan is pretty poor and poses this inherent risk in its full magnitude. Another risk relates to the security as we see theft of livestock a common crime. However, it seems that certain equilibrium has been achieved in our social context and investors are not really shy of taking on these risks, making Aadhiyari a thriving business. As I found out later, this model is in practice in Punjab also where it is known as Bhaiwali. I am sure it will be in practice in rest of Pakistan and with our shared history, in some form in rural India as well.
A Social Enterprise? Perhaps
If we analyze this model, on surface it looks well suited to our rural economy. Each player is engaged in a role that suits him the best. But is it sustainable? Is it scalable? It surely does not treat Bottom of Pyramid as consumers. It is more in line with social enterprises, like BLISS, which eventually make the Bottom of Pyramid a ‘producer’. It also has similarities to microfinance with a difference that in this case, investment is made in the form of micro-equity rather than micro-lending. This aspect of sharing in profits gives this model a religious tint, bringing it in line with Islamic mode of finance.
The potential of such micro-equity investments in rural development can be significant. If coupled with good veterinary services and capacity building in livestock management, it can help increase income levels of landless farmers. A structured approach can mitigate risks and make this indigenous arrangement into a formal development strategy. After all Grameen Bank, and microfinance in general, was also established providing formal structure to economic arrangements already in place in Bangladesh’s social context.
About the TC-P Contributor: Favad Soomro works for promoting water conservation technologies in agriculture sector in Pakistan. A business graduate with experience in agriculture input supply chain, he is trying to figure out his and social entrepreneurship’s place in Pakistan’s development maze.