A cooperative in India: the Self Employed Women’s Association (SEWA)

While Mondragon is internationally the most famous network of cooperatives, two of the other widely celebrated success stories are from India – Amul and SEWA (Self Employed Women’s Association), both based in the state of Gujarat in Western India. The story of Amul began with just two dairy cooperatives and 250 liters of milk per day. This led to the formation of the Gujarat Cooperative Milk Marketing Federation which now has the capacity to collect and process over six million liters of milk a day. This milk is marketed as cheese, butter, yoghurt, ice-cream and chocolates under the brand-name ‘Amul’.

The Amul network, covering 11,000 village cooperatives and about 2.28 million members, had a turnover of US$575 million in 2002-2003. The Amul units consist of producers who now function from a position of strength.

However SEWA has pioneered many ways of enabling the poorest and most disempowered to benefit from cooperative solidarity.

Ela Bhatt and the foundation of SEWA

The raw energy evident in the workings of SEWA is drawn from India’s rich tradition of social and political activism. Yet the actual birth of SEWA was inspired by Israeli cooperatives. In 1970, a young Gandhian trade union leader from India earned a three-month fellowship at the Afro-Asian Institute of Labor and Cooperatives in Tel Aviv. Back in her hometown of Ahmedabad, Ela Bhatt was convenor of the women’s wing of Textile Labor Union – which organized workers in the city’s textile mills. For many years before that study-time in Tel Aviv, Bhatt had been restless about the limitations of the union work. It bothered her that such unions offered no protection or assistance to those who labored outside the factories and mills regulated by labor laws.

The Israeli experience fascinated and energized Bhatt. There, she studied the cooperatives of bus drivers, construction workers, banks and health services. “I came back wanting to start a union of self-employed women”, Bhatt recalled three decades later. Just two things were clear, she adds: “Unless the self-employed are in the mainstream of the labor movement there is no movement worth its name. And since women produce so much they must play a leading role. Beyond this there was no blue print.”

Thus, SEWA was born in 1972 as a cooperative for women street vendors, and later expanded with a SEWA Cooperative Bank in 1974. Today, SEWA is a huge network of cooperative efforts in diverse spheres. The driving energy for this work, says Bhatt, has come from the firm conviction that “if the poor are organized and build up their strength, then social marketing can strengthen the local economy”.

SEWA’s members and the Market

Today, the largest cooperative in the SEWA family is the SEWA Bank, which has 125,000 members. Apart from the bank, there are a further 84 cooperatives which serve the needs of dairy farmers, artisans, vendors, traders as well as other service providers and manual laborers. Grappling with markets has been central to SEWA’s mission, since its members are the smallest entrepreneurs in the local bazaar. SEWA’s growth has been a journey of discovering ways by which these entrepreneurs can hold their own in the market. At one level, SEWA facilitates the exchange of goods between its members. For example, handloom weavers supply fabrics to embroidery artisans, who in turn supply the crafted fabrics to women tailors. At another level, SEWA has helped its farmer members to sell grains directly to big buyers in the national markets, by-passing layers of middle-men.

Reema Nanavaty, a senior SEWA staffer, says their activities have been guided by the awareness that market fundamentalism tends to flourish when markets are controlled by a few. Thus, SEWA‘s answer has been to create greater access to credit, as well as more equitable meeting grounds where sellers and buyers can meet and negotiate terms. The focus has been on building institutions that can deal with the market process, says Nanavaty, who quit a government job in the prestigious Indian Administrative Service to come and work at SEWA.

Gum collectors of Gujarat

SEWA’s success stories have made it famous among international development agencies. For example, there is the case of the gum collectors of Gujarat. In India, the sale of forest produce is regulated by state governments. In Gujarat, the state gives licenses to merchants for the collection of gum in forests. Tribals and others who live in or near the forest areas do the actual collection and then sell the gum to the license holders. The licensee then turns over the gum to a state corporation which auctions it to traders. Under this system most gum collectors were paid as little as Rs. 2 or Rs. 3 per kilogram of gum.

Some gum collectors formed a cooperative with the help of SEWA and themselves became a licensee. Suddenly their earnings tripled. But the traders, who were losing business as a result, formed a cartel to bid down the price of gum at the public auctions, thus wiping out the gum collectors’ gains.

SEWA responded by pushing for transparency and accountability. It demanded that the state-owned corporation auctioning the gum should set prices based on open market research and that the gum-collection license holders should be allowed to sell directly in the open market. It took five years of relentless struggle for SEWA to get the permission to sell in the open market, thus securing enormous benefits for its members.

Vegetable vendors of Ahmedabad

Then there is the case of SEWA’s venture at the Jamalpur Municipal market for wholesale vegetables in Ahmedabad. Vegetables and other farm produce pour into Jamalpur from the surrounding villages and are purchased by retail vendors who supply the fresh vegetables across the city. SEWA members have carved out a niche for themselves here, running a wholesale vegetable business which offers better rates both to sellers and buyers.

SEWA’s venture into this wholesale market was initially greeted with hostility from the existing trader. “Go home, they said to us, this selling is not women’s work”, recalls Labhuben Thakkar, one of the SEWA members who oversees the operation. The hostility was not merely gender related. The SEWA shop does business on a much lower commission of 4%, compared to the 6% to 10% charged by most other traders. Furthermore, the SEWA shop treats the vegetable farmers as equals, whereas the conventional traders, who are higher up in the caste hierarchy, tend to talk down to the farmers.

After an initial daily turnover of about Rs. 500, the shop now does over Rs.20,000 worth of business every day. Only 50% of the stocks are taken up by retail vendors who are SEWA members, the rest goes into the open market.

Health services

SEWA has also ventured into services like running shops that supply low-cost drugs to the general public, not just its members. This is an enormous benefit for low-income households who spend a big chunk of their monthly budget on medicines. This initiative was supported by an interest free loan of half a million rupees from the Gujarat Government. SEWA’s medical stores are able to supply drugs cheaply by sourcing directly from manufacturers and eliminating many layers of middle-men. While the average retailer has a 15% profit margin, SEWA’s shops work on a margin of about 5% to 6%. The revenue from these shops in turn helps to pay for SEWA health workers, also known as ‘barefoot doctors’. SEWA has also worked with dais, or traditional midwives, helping them to upgrade their skills.

The Gujarat Rajya Mahila Sewa Sahakari Sangh

In 1992, SEWA registered the Gujarat Rajya Mahila Sewa Sahakari Sangh, which trains women in how to set up and run cooperatives. The Sangh also has an export license and thus enables its members, mostly in the sphere of fabrics and crafts, to access markets globally. As fair trade awareness has grown in the Northern countries products marketed through networks like SEWA have found a huge clientele – since buyers know that a good part of what they pay is going to reach the end-producers.

Keys of SEWA’s success

The successful running of SEWA is the joint achievement of highly trained middle-class professionals and working class women working in a multi-tiered organizational structure. A good part of the challenge has been how to combine democratic processes with efficiency. For example, in its initial stage one of the crafts cooperatives was faced with serious problems in how to maintain quality control. Sales were low and stocks piled up. “So we stopped the work for 3 months” recalls Nanavaty, “then the craftswomen all got together and themselves came up with a system for ensuring quality control. They also found ways of eliminating bias of judgment in the quality assessment process.”

The efficiency is a by-product of a revolution in self-confidence. This happens when artisans and other producers no longer feel powerless and see themselves as owners and managers. The collective engagement not only sharpens their craft, it also creates contemporary business skills. SEWA has played a crucial role in facilitating skill enhancement. It has run full-fledged schools that have taught its members to read and write in Gujarati and English. Some have become computer literate and learnt to make their own video films. For these purposes SEWA has regularly drawn on the services, often voluntary, of the staff and students of the prestigious Indian Institute of Management in Ahmedabad.

SEWA and the challenge of globalization

SEWA has found that globalization and liberalization are a mixed bundle. As Ela Bhatt says: “I am for privatization but not the kind of privatization which is only for MNCs and big companies. The street vendor and milk producer are also private sector.” So far, globalization has very selectively expanded opportunities. Most small producers are left feeling more vulnerable and insecure in the globalized economy. Plus the wages and productivity of the unskilled are lagging far behind. The increased mobility of capital and skilled labor has further reduced the bargaining power of unskilled workers.

SEWA responded to the pressures of globalization with four key strategies:

• Organize women into membership-based trade unions, co-operatives, and associations;

• Enhance both technical and managerial skills within these bodies;

• Encourage capital formation both for individual members and in collectives.

• Create social security mechanisms which ensure access to health care, child care, insurance, housing and old age benefits.

Looking back on the last three decades, Bhatt notes with satisfaction that SEWA’s work has been widely recognized at the global level. “At least there is now visibility for the fact that the poor are bankable”, says Bhatt, who has retired from the day-to-day functioning of SEWA but remains active as mentor and ambassador. However, Bhatt adds that there is a down side: “political visibility is what we need to create a counter-veiling force and that hasn’t happened yet. For this, we need political action, in a wider sense.[…] Challenging Wall Street culture is not easy because the whole atmosphere is Wall Street oriented.”

SEWA’s experience illustrates how cooperatives can play a vital role in fostering bazaar spaces and enhancing the well-being of people who feel oppressed by global market forces. But such efforts remain on the margins of most economies. The interface between competition and cooperation is being changed by processes that are unfolding at the core of mainstream business.