Turning Trash Into Gold: Part 3

By: Chona S. Sandoval

(excerpt from the book for Social Entrepreneurship “For the people, By the people, published in Manila 2010)

Bearing Fruits

From a handful of mothers doing embroidery work in 1984, Kamay Krafts now has 95 dedicated weavers and sewers. Membership in the Cooperative has increased to 300, with the dumpsite collectors becoming members as well. The growth in membership included an expansion to other underprivileged communities. From the initial three communities, Kamay Krafts is now actively present in twelve areas.  They engage communities in New Manila, Project 8, Bagong Silang, Philcoa, and Payatas, all in Quezon City.  They have one community in Caloocan and 3 communities in Cogeo.  They also assist a group of mothers in Norzagaray, Bulacan and recently engaged two communities in Quiapo and Malabon. Initial scepticism was eventually replaced by people’s trust and confidence in the Cooperative. Even Pizaña, who herself had reservations regarding the concept of cooperatives, has learned to appreciate its value.  “It took me 10 years to begin to see the fruits”, said Pizaña when asked about the importance of the Cooperative as a business set-up.  “Yung transformation ng mga tao yun ang pinaka-importante[1] [It is the transformation of the people that is most important]

Indeed, the advancement of the women members of Kamay Krafts attest to how the organization grew and contributed to improving lives.  On the average, the mothers earn Php1,500.00 a week.  This means an additional income of Php 72,000.00 a year.  During peak season, they even earn as much as Php3,000 per week.  The annual dividend and patronage refund is also something to look forward at the end of the fiscal year.   

Susan Crais[2] lives near the Payatas dumpsite in Quezon City.   She has six children.   Her family relies on the meager income of her husband to support their daily needs.    This was until her husband lost his job and became unemployed for three years.  It would have been a difficult time for them had it not been for the Cooperative.  Her income from the cooperative allowed her to send all her children to school.  Her eldest child is now about to graduate from college, the second one has finished high school and the rest are either in high school or grade school.  With some money to spare, Nanay Susan did some repair work on their house.

Remedios Laburdo[3] has been with Kamay Krafts for several years now.  She lives with her husband who suffers from heart ailment.   She is quite weak and finds it difficult to work at her age.  But she has no one else to depend on.   It is through her work in the Cooperative that she is able to pay for the medical needs of her husband. 

Rosalinda Panti is a single mother of four.  Before, she couldn’t afford to feed her children, much more send them to school.  She would go to the office of Kamay Krafts, pleading that she be given work.  The problem was she didn’t know how to sew.  With patience and perseverance, and the assistance of the office staff, Rosalinda is happy to say that she can now provide food for her children and send them to school. “Ngayon marunong na ako manahi.  Napaaral ko na ang mga anak ko.” [I know how to sew now.  I am able to send my children to school.]  narrated Rosalinda. “Ang laki ng tuwa ko. Nakakain na rin kami ng tatlong beses.” [I am very happy. We now eat three times a day].[4] 

The economic flexibility is empowering and life-changing, especially for families that had very little to start with.  Families that lived at subsistence level before can now eat three meals a day.  Children can go to school and medical needs of husband and children are attended to. Some families are even able to build or repair their houses.  

Beyond material improvement, the women also benefit significantly from personal and spiritual development.  Depending on the area supervisors who coordinate activities in the different communities, prayer sessions, reflection sessions and bible studies are conducted on a weekly, bi-monthly or monthly basis.  The Cooperative also sponsors annual retreats.  It is through these retreats that leaders and members build camaraderie.  They develop understanding and concern for each other.  With the help of Servants, Kamay Krafts also provide training and personality development which the members greatly appreciate.

In terms of operations, the Cooperative is now independent from Servants .    It is able to rent its own office and operate autonomously.    Servants does not interfere in the management of the organization but provides assistance in the form of training, marketing and promotion only when requested.  The Cooperative still feels accountable to Servants and attributes much of their success to the latter.  But the Servants sees it otherwise.  Hauser believes that the success of Kamay Krafts rests on the mothers.  Servants considers them as a separate organization capable of running their own business.  “They’re much bigger [now] and they’ve got more money” beams Hauser.  Kamay Krafts is not anymore a livelihood project of Servants.  “We’ve come to see them as partners.”

Creating Ownership

Early in the establishment of the venture, Servants made it clear that it will not be there to manage the livelihood program forever.   It was therefore important that the community learns to operate and sustain it by themselves.   Providing the right environment for the members to learn independence, responsibility and self-reliance was crucial in sustaining the enterprise.  Servants did this by encouraging the establishment of the Cooperative.

Servants believed in the people’s power to make the right decisions.  Giving the members the opportunity to hold the key positions of Board of Directors and Committee Officers provided them the practical experience of managing an organization.  These responsibilities were overwhelming at first for people who do not have much in terms of formal education.  For instance, none of the board members had knowledge on financial management or strategic planning, yet they have to make key decisions on the direction and operations of the Cooperative.  The general manager has a degree in Banking and Finance but admitted to not having any previous experience in running a Cooperative.   Likewise, the administrative staff had to do monitoring and control without the basics of inventory management, record-keeping and general administration.  Kamay Krafts naturally experienced many problems and difficulties as a result of this.   The management and Board were confronted with problems on quality control, inventory control, product development, delivery, and other similar issues.  Dealing with these problems without the technical know-how led to financial losses.

The Servants carefully guided them in the initial phase of the organization. But while they learned many new skills and attitude needed as leaders, there were still much to be desired in terms of developing capacities in planning and management.  The Board members were very much aware that a structured capacity building program needed to be in place.  Financial limitations, however, prevented them from hiring a human resource staff to deal with these problems. 

Another challenge created by the formation of the Cooperative was the shift in decision-making power.  All of a sudden, mothers who simply performed occasional embroidery work were now owners of the cooperative.  Women who were elementary or high school graduates were now decision-makers by virtue of board membership.  This required much consensus-building between and among the members, the board, and the management. 

For the general manager, for instance, treating the women board members as “bosses” required an adjustment on her part. There was also a need for transparency in all aspects of the Cooperative’s operations, including finances, to avoid creating doubts or suspicions from members.  Periodic changes in the membership of the board were also a concern, as incoming board members had to be oriented, and the continuity of decisions was adversely affected. 

Most importantly, this required a paradigm shift from the mothers – from marginal participants to owners.  As owners, they had to take on  greater   responsibility.    As owners, they had to be aware that if the enterprise failed, they all bore equal responsibility and would suffer the consequences in equal measures.  This also meant that their decisions as board members would greatly affect the viability of the Cooperative. This entailed a major shift in mindset and behaviour.

The members also needed to view the Cooperative as a business that needed to succeed, rather than a “welfare agency”.  This meant that the members should not expect doleouts [CSS1] from the Cooperative.  This also meant that those who were engaged by the Cooperative to produce merchandise had to deliver quality output on time, and all those who took out loans had to pay promptly and with interest.  

Overcoming Obstacles

Throughout most of its history, the Cooperative found its way by trial and error and learning by doing.  Thus, it has accumulated a wealth of lessons learned.  The first lesson was the need to be open to learning new skills.  When market conditions changed, the mothers had to learn how to sew when they had previously been doing embroidery.  The Cooperative had to set up a skills development program to teach the mothers, and the initial product quality was substandard.  However, the Cooperative’s perseverance eventually paid off.

Kamay Krafts was also aware that the shift from embroidery to recycling was important in that it brought the organization into a more viable and stable financial condition.   Key to this was the realization that export of embroidery will not sustain their operation in the long term.  Recycling, on the other hand, is supported by the international market because of growing concern for the environment.  Because of the increasing interest in environment-friendly products, particularly in the West, Kamay Krafts found its niche and capitalized on the opportunity.   

A second, related lesson was the importance of product quality.  The mothers had to understand that they were producing products for the international market. Although initially it was difficult for the mothers to adhere to internationally-accepted quality standards, their perseverance was ultimately rewarded with continuous orders from foreign buyers.  Feedback, especially complaints from re-sellers was a major driving force in the improvement of product quality.   Being in business and not charity, re-sellers were quick to inform Kamay Krafts of any defects or poor workmanship in merchandise. 

Aside from quality, another lesson was the importance of continuous innovation.  Because bags and household accessories are “lifestyle items”, there is a need to constantly come up with new designs and products to suit fickle and ever-evolving preferences and fashions. If the Cooperative’s products failed to evolve with the changing tastes and preferences, orders would have started to taper off. 

Fourth, there was also the need to develop new markets for the products, as some older markets will naturally get saturated over time.  In this regard, the network of Servants in Europe was a major asset.  Also indispensable were the commercial sellers and buyers who believed in the cause of Kamay Krafts and helped market the products in the western countries.

Showing Resilience

Having been in operation since 1991, Kamay Kraft has shown resilience.  Several factors contribute to the sustainability of the cooperative.  The first factor is cost control – the cooperative is constantly finding ways to reduce costs.  For instance, the office premises remain spartan, despite the organization’s success.  Collections supervisors for their microfinance program are not paid regular salary; rather, they are paid half of the interest collected on loans.

The second factor is continuous product development and quality improvement.  The Cooperative is aware of the need to constantly come up with new designs and products, and to constantly maintain or improve quality standards.  This is especially important since bags and home accessories are “lifestyle products” where tastes and fashion change continually.  If the Cooperative intends to expand successfully in the context of a highly competitive international market, it must examine the possibility of hiring professional artists and designers or invest in training the mothers in product design.

The Cooperative is also aware that it cannot rely on the international market alone.   Plans are underway to penetrate the class A domestic market through potential outlets such as the upscale Glorietta Mall in Makati City. 

Third, Kamay Krafts expands its membership using a “relationship –based” strategy.  Current members recommend expansion areas in places where they have relatives, friends and acquaintances.  Based on these initial, informal contacts, cooperative members would immerse themselves in the proposed new area and get to know the people better.  It is only after getting to know them that the Cooperative sends a team of trainers to teach the mothers, which in effect becomes the start of the engagement with the new community.   Currently, the Cooperative has approximately 300 members, but the goal is to expand to 500 members in 5 years.  Effectiveness of the current strategy needs to be examined relative to this goal.

Fourth, diversification helps the Cooperative ensure its sustainability.  Kamay Krafts has its own micro-finance facility, a “Study Now Pay Later Program” for selected children of members, and a drug store that sells generic drugs at reduced prices.  The cooperative also buys basic commodities like rice and milk in bulk, and then re-sells these to members at reduced prices.   The cooperative intends to expand these initiatives while continuously thinking of other ways to assists the members. 

Other important factors to consider in their development are democratic style of leadership, transparent and accountable management of resources, and  shared values among its members.  Kamay Krafts places importance not only on providing skills and technical training for the members but also on facilitating personal and spiritual development.  While members have different religious affiliations, they come together for fellowship as members of the Christian faith. 

Looking forward however, the cooperative realizes that it must begin to manage its growth more proactively in order to sustain its progress.  At the strategic level, there is a need for clearer goals with defined time frames and performance measures.  There is also a need for deliberate capacity building for the board and management.  The board members, the members of the committees (credit committee, audit committee, etc), as well as the paid staff, all come from slum communities.  Many of them have no formal training in management.  Everything they learned was on-the-job, with much trial and error along the way.  Given the cooperative’s expanding membership and capital, this ad hoc approach needs to be replaced by a more deliberate program to acquire the needed technical skills.

With faith, perseverance and a “learning by doing” approach, Kamay Krafts has grown from a small enterprise in the slums to an organized cooperative.  Reaching the next level, that of a stable, fully diversified organization, will require a more deliberate, programmatic management approach.

[1] Quoted from a personal interview with Venus Pinzaña

[2] Susan Crais is a participant in a Focused Group Discussion (FGD) conducted

[3] Remedios Laburdo is a participant in an FGD conducted

[4] Quoted from the FGD

 [CSS1]I suggest we retain doles to refer to charity or material help from the coop

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