Before I tell you of two hopeful entrepreneurs I live with, let me tell you a little about where I am and what I’m doing. I have been living in Mombasa, Kenya for a little over a month now, doing an internship at an organization that works on community empowerment. The wrapper organization that brought me to Kenya, the Foundation for Sustainable Development, deals with many NGOs around the area, including numerous micro-finance institutions. I live with a family in a low-income area a little ways outside of Mombasa. So far, the experience has been incredible. The world of international development is inspirational, but you cannot understand the frustrations it entails, nor can you understand the massive amount of need that exists until you have had a firsthand experience.
Two of my host-brothers, Abdalla and Socy, are perfect micro-loan candidates.
Socy is currently unemployed, and every time I ask him why he doesn’t look for a job he always tells me the same thing, “I don’t want to work for someone else. I want to have my own business and make my own money.” His fear comes from a wide disregard for labor rights and the widespread exploitation of unemployment. As job demand increases, the poorly regulated labor market has allowed employers to lower wages and have poor working conditions. The most wasteful aspect of a developing economy is idleness. Idleness is widespread. Being idle is perpetuated through strong family support structures where members of a family with jobs are expected to support the rest of the family.
Socy, like most, doesn’t like being unemployed. He wants to work, but can survive doing odd jobs, hosting interns like me, and getting help from his family. Finding a job often means standing somewhere for hours until you get chosen to work that day. Socy started a small fruit and vegetable stand outside the front of the house I am living at when he was younger. After a while he grew tired of the long, slow business hours, and gave Abdalla the shop.
Abdalla is a teacher. He works all day while his wife runs the shop. After work and on weekends, he runs the shop. I was nervous to ask how much he would make a day, but ended up caving into curiosity. He said, “On a good day, maybe 900 Ksh ($12). On a bad day, sometimes you might just sit here sleeping, making nothing.” From the earning, he gives his son 40 Ksh daily for transport to school, and uses his teacher salary to pay school fees and take care of the family. In the end, the store does little, but it is a start.
Abdalla’s dream – expand his shop. His stand is recognized for having quality products, but he does not have enough variety to attract a large client base. He wants to build an extension onto his shop and offer a larger variety of fruits and vegetables, maybe even getting into selling other products.
Socy’s wife has a clothes selling business.
Socy’s dream – open up a store where he can sell the clothes his wife sews. He wants to be able to both sell the products at his shop and walk around the neighborhood selling door to door. To do that, though, he needs a loan. He needs materials to build his shop, fabric to create a product base, and money to live on until his business starts to provide for him and his family.
Living life as these two do isn’t easy and it isn’t flexible. The concept of savings in Kenya is foreign. If you have money, you either spend it or give it to someone else who needs it. Most microfinance institutions begin by forcing their lenders to save a certain percentage of their earnings either weekly or monthly, but some cannot afford that or are scared of those restrictions. Microfinance institutions work with groups more often than with individuals, which leaves a lot of people feeling like getting a loan is out of reach for them.
Talking to both of my host-brothers, I encouraged them to seek out some of the local microfinance institutions to fund their dreams. Both agreed it would be a great idea, but have not done much towards it.
Two final issues come to mind. First, the market is saturated with small businesses here. There are a million and one shops scattered all over cities, towns, and villages, and they often offer the same goods. People with good business ideas are in competition with many others, which lowers their ability to have a truly successful business. Second, microfinance is quite far from being accessible to all. People in impoverished areas do not see it as an avenue available to them. Work needs to be done to advertise microfinance to individuals, and to make systems of monitoring and accountability of microfinance work focus around individuals as well.
I praise the initiatives of microloan sites that do work on an individual basis. They must continue to spread their word and show motivated people that they too could qualify for a loan.
There are people hungry for micro financing. They need to be reassured that it is possible for anyone to have access to a loan so that they too can benefit from the funding of global philanthropists.
Vikram Akula, the founder and CEO of SKS Microfinance, discusses how smaller MFIs are having a hard time getting funding, so SKS is helping out a lot of their recipients:
