Building Wealth by the Penny

Corporate interest also has been piqued by the success of microcredit initiatives that began two decades ago in Bangladesh and have been widely embraced in India and other developing countries. Run by nonprofit groups or commercial banks, microcredit programs typically provide poor women with tiny loans, which can be used for income-generating activities that start with the purchase of a milk cow, for example, or a handloom.

With lower default rates than conventional loans, microcredit programs have lent credence to the idea that small-scale entrepreneurship can play an important role in alleviating poverty, as well as create opportunities for big business. In his book "The Fortune at the Bottom of the Pyramid," C.K. Prahalad, a University of Michigan Business School professor, cites numerous examples of companies that have generated wealth for the poor and profits for themselves by focusing on underserved rural markets.

Hindustan Lever has long recognized the potential of rural India, where even now only 15 percent of the population uses shampoo -- leaving 85 percent as potential customers, said Sehgal, the company official. The market had languished because the company could not figure out a way to profitably distribute its products in small villages.

That changed with the proliferation of women's self-help groups that use microloans to buy such items as mobile phones that can be used to do business in villages without landlines. Reasoning that a similar model could apply to selling soap and face powder, the company launched Project Shakti, which recruits its sales force from the groups.

"We are not too fussed about whether they are educated," Sehgal said, "because the inputs we give them are things they can learn," such as simple bookkeeping.

Women are considered a better bet than men, he added, because "they are far more honest." The company plans to employ about 100,000 women by 2010, enough to sell its products in about 500,000 Indian villages.

One of the early proving grounds for the program was a poverty-stricken cluster of villages in the southern Indian state of Andhra Pradesh. One was Cholleru, where Kadem, known as the local "Shakti entrepreneur," lives with her husband, 11-year-old daughter and 14-year-old son in a simple house off a courtyard of packed earth.

Married at 15, Kadem pulled weeds for 60 cents a day before she was recruited to the program three years ago. During two months of training, she said, she was schooled in the alphabet of her native Telugu, which she had forgotten, as well as in the rudiments of sales and bookkeeping.

Kadem initially built her customer base by holding night classes for village women. She taught them how to sign their names -- instead of the thumbprint they normally used -- and instructed them on the hygienic benefits of Lever products.

Kadem now covers four villages, traveling by bus or three-wheeled motor-taxi. She earns about $26 a month, almost as much as her husband brings home as a machine operator at an explosives factory, she said. The extra money covers installments on a new television set and means that the family can afford to send both children to private English-language schools.

"We should not distinguish between male and female," said Kadem, who hopes her daughter will become a doctor. "I want my children to be better than me."

With sales on the increase, Kadem hopes to buy a motor scooter, but for now, she makes the rounds of Cholleru on foot. In an hour and a half the other day, she visited 11 households, selling Rexona deodorant, Rin laundry detergent and other products in transactions that rarely exceeded 40 cents.

She returned home with her bag noticeably lighter -- and a broad smile. "I am feeling very happy," she said. "When I sell something, why wouldn't I be happy?"

Special correspondent Muneeza Naqvi contributed to this report.