The dynamics of the micro business sector, the informal micro business sector particularly, can be very difficult to understand. For example, we've had no success with taking novice apprentices in the electrical sector, giving them high quality (and completely free) electrical services training at our skill development centre, and having them set up a self employed group of electrical maintenance workers. This is despite our knowledge of how highly in demand this service is, and our counseling them about how this demand would easily translate into a high income for them, right from the start.
There could have been many problems with our approach: wrong choice of candidates, wrong approach to counseling, etc. And there is no reason to assume that these young trainees trusted us with their careers and livelihood. After all, we were neither contractors nor a company, and we were not directly bringing business to these trainees. Rather, we were just showing them the massive local opportunity for such business, and providing them with the means to exploit the opportunity - skills training, support with gathering customers and orders, a central telephone line for coordination.
The trainees were underpaid junior apprentices - wage employees - at electrical stores (micro businesses) in the neighbourhood. We were offering them the means to become self-employed, work together to create a business that serviced basic electrical maintenance needs of households, and make much more money as a result. Why didn't it happen?
Did our attempt fail because we couldn't convey the opportunity to them? Was the risk associated with this proposition too high? Or were they just unambitious, and content with their clear - if long and unprofitable - path in front of them, from apprentice to store assistant?
The advantage of having community members on your project team, is that you can get regular insights into some of the occurrences, and outlooks in the community. I was having a conversation with one of my 3 project coordinators, the gentleman who is our target community's "secretary", leader of a few slum-based unions in the city , and generally the go-to guy for community members.
I asked him to give me his two cents' worth of opinion on why skilled labour, particularly electricians, worked via contractors instead of building up their own business, even when they are really skilled and talented and getting a lot of customers interested in their work.
His explanation focused on financial constraints. He said that the few electricians he knew that tried to set up their own small businesses (basically becoming 'sub-contractors' besides independently servicing apartments and houses) ran into trouble because of money flow. On the one hand, contractors paid them in installments since all business here seems to work on a baaki (credit) system. On the other hand, as sub-contractors, they faced pressure from their own crew to make on-time payments.
The problem is that they had not built up enough capital stock from which they could pay their labourers, and which would be replenished in turn when the contractors paid them. Stuck in the middle, they found it easier to be independent skilled technicians working on hire for contractors, rather than setting up business as entrepreneurs.