As microfinance expands to cover the country, much of the expansion strategy may be dependent on simple location metrics such as population. However dramatic differences beyond population can exist at the local level. Such differences in economic and demographic factors would translate into differences in borrower needs and borrower behavior.
In our data spotlight this month we highlight an example of such differences. We show here the Industrial Worker Rate (the fraction of the economy employed in non-agricultural activities as per the 2011 census) at the taluk level for Karnataka. As you can see, highly industrial areas are interspersed with agricultural areas. Indeed adjoining talukscan be quite different. Furthermore there is no ‘average’ level of industrialization, which is to say that there is no central peak in the distribution. Rather the distribution across taluks is long tailed, meaning that there are fewer and fewer taluks with each increasing fraction of industrial workers.
To highlight local differences more starkly we show a snapshot of two adjoining taluks, Sulya in Dakshin Kannada district and Heggadadevankote in Mysore district. Notably, Sulya has a very high industrial worker rate as well as female main worker rate and female literacy rate, all in the 80 or 90+ percentiles for Karnataka. In contrastHeggadadevankoteis in the 25th percentile or lower for all these metrics. What this means is that the microfinance borrower base is quite different in these two areas with Sulya’s women being a more savvygroup compared to their counterparts in Heggadadevankote. Their needs are surely different.
Clearly, with markets showing such different profiles, as companies and as an industry it will be to the benefit of all to move towards products that are differentiated for these different types of markets.