During April 2013, Grassroots Economics worked with community members to gather baseline data. This data will help us understand the economy of Bangladesh (a Kenyan informal settlement), guide the design of the Mutual-Credit system, and make effective impact assessments.
Five trained surveyors interviewed 204 businesses owners during April 2013. These businesses represent roughly 90% of the business in Bangladesh. The survey accompanied the Bangladesh Business Network membership registration process, and took around 30 minutes for each Businesses owner to complete. Three rounds of verification, error checking, and corrections were used to ensure the quality of the data.
Informality, Size and Instability of the Bangladesh Economy When asked if the businesses were registered, meaning they pay taxes to the Kenyan government and are included in national statistics, only 5% of businesses said yes. This establishing the economy as largely informal, as 95% business activity is not officially part of the Kenyan Economy Each business was asked to give ranges of minimum, average and maximum sales made during three different periods: typical work days, the worst days and the best days. Further, businesses were asked to specify months of the year and days of the week when their business was at lowest and highest performance. 76% of the participants identified January as the worst month of the year. 71% of the participants identified Monday as the worst day of the week.
Top reasons for bad business periods were: 1) Lack of customers/customers lacking money 2) Increases in price of business stock 64% of the participants identified December as the best month of the year. 56% and 50% of the participants identified Saturday and Sunday, respectively, as the best days of the week. Top reasons for good business periods were: 1) Many customers/customers have money 2) Abundant stock 90% of the businesses in Bangladesh earned less than 2,000 a day on an average day. Out of these, the average daily sales made per business during the best, normal and worst periods were: Best periods: 1,272 Kenyan Shillings (approx. 13 EUR; 15 USD). Normal Periods: 507 Kenyan Shillings (approx. 5 EUR; 6 USD). Worst periods: 269 Kenyan Shillings (approx. 4 EUR) (3 USD).
Summing together the daily sales of all the business surveyed, including those in the top 10% of the local economy (excluded from the averages) we have: Best periods: 393,045 Kenyan Shillings (approx. 4000 EUR; 4500 USD). Normal Periods: 181,743 Kenyan Shillings (approx. 1800 EUR) (2100 USD). Worst periods: 80,348 Kenyan Shillings (approx. 800 EUR; 930 USD). Business owners on average were found to have a household of 5 people, including themselves. 137 business owners identified themselves as the main provider. Assuming minimal income contributions from other people in the household, this means those 137 business (67% of the sample) only rise above the international poverty line of 2USD a day per person during the best business periods. Thus, sales volatility causes a lot of suffering in the community as community members’ ability to meet their basic needs is a challenge during average times, and severely compromised during bad periods, where they drop below the extreme poverty line of 1USD a day. Reinforced by these numbers, the program is targeting an initial amount of Bangla-Pesa with a value of 80,000 Kenyan Shillings, equal the sales volume of a bad period, and designed to facilitate enough trade to double the sales of a bad day, assuming businesses trade as much Bangla-Pesa as possible in a given day.
Gender Differences Women make up a significant majority of the businesses in Bangladesh, constituting 72% of the Bangla Business Network. Thus, it is vital to consider the differences between men and women in this business community. Although the gender difference in the daily sales were minimal, men and women business owners differed meaningfully in other ways. Women spend 42% more on their business stock than men.
Women spend 14% more on basic needs than men. Women spend at least 3 times more hours caring for their household compared to men. Daily spending for basic needs, such as water, food and charcoal we found on average to be 265 Kenyan Shillings. Each business is initially receiving 200 Bangla-Pesa, which should be able to supplement most of this spending and free Kenyan Shillings for other expenses. Another 200 Bangla-Pesa per business is collected as a membership fee and will be introduced to the community at a later time through community service work.
We find that women not only drive the economy by representing the bulk of businesses, but they also carry a double-burden in terms of spending and laboring for their families. By raising the amount of available money in the community through an interest-free credit we hope to see these women and the entire community stabilize there businesses and raise well above the poverty line.