Community Owned Companies Initiative: Developing and implementing new models of capitalized production structures with significant community ownership that are able to aggregate production and link directly to mainstream retailers.
There has been a paucity of new models of livelihood interventions that seeks to connect marginal producers in rural areas to mainstream urban markets and this trend is especially pronounced in the case of the crafts sector. Under the COC initiative, AIACA is working on promoting community owned, professionally run companies in rural areas that will be the focal point of production and sales of crafts in their respective regions.
According to the 2001 census, the Indian economy has 50 million craftworkers. These people are producers who operate as microenterprises but continue to live in poverty due to the small scale of their operations. They are unable to connect to mainstream markets due to a range of obstacles. In addition to broader deprivations, these obstacles include business-specific gaps such as the inability to invest in infrastructure and enterprise growth activities, as well as a lack of access to human, technical and knowledge resources required to form and scale up viable enterprises. The lack of access of poor producers to equity capital is a critical gap, which in turn results in an inability to leverage debt funding and derive cash flows adequate to hire required professional and technical expertise.
Rapid economic growth and the entry of organized retailers provide an unprecedented opportunity for these producers to collectivize, undertake more value-added processing activities, supply to organized retailers and increase their incomes. There are a wide range of donor-led projects ?funded by government, bilateral and multi-lateral institutions, and private foundations ? that focus on assisting small producers in forming collectives and providing capacity-building services. But, other than grants, there is currently no source of equity investments that these collectives can access to fund growth related investments.
Under the Community Owned Companies initiative, AIACA works with a range of mainstream retailers, financial institutions and grassroots NGOs to create commercially viable and sustainable crafts production structures. AIACA?s main role is to develop a template for the creation of these companies, conduct action research to refine the model and help distill replicable lessons, help identify and train the CEOs of the COCs, and develop additional sales for these companies through the Craftmark Initiative.
- Resource Center for forming Community Owned Companies
