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Help Yemeni WomenOn top of the constant violence occurring in Yemen, almost 13% of the population face unemployment. Most women in Yemen work as homemakers, but a 2012 study, Measuring Women’s Status in Yemen, shows that almost one in two women (47%) would like to start their own business. Initiatives in Yemen offer women free business training, skills training and loans to help Yemeni women generate an income.

The Small and Micro Enterprises Promotion Service Agency (SMEPS)

SMEPS came to Yemen in 2005 and works to enhance the lives of Yemeni citizens through the creation of jobs and skills training. SMEPS has taught Yemeni women the best growing, harvesting and post-harvesting techniques for coffee beans. Yemeni women helped create a coffee that entered the gourmet market at a premium price. SMEPS also helped coffee farmers in Yemen. The aim was to create business resilience by expanding the production of farmers through improving the value chain by using modern technologies and better farming methods.

In 2010, SMEPS partnered with The International Labour Organization (ILO) to provide business training for women entrepreneurs. ILO came to Yemen in 1965 and has created opportunities for citizens to rise out of poverty. In one year, the workshops targeted around 500 Yemeni women who had taken out a loan to either start a small business or expand their existing businesses. The second phase of the program aims to reach 2,000 more women. Results indicate that after the training courses, the women had a higher level of business knowledge and competence to start or improve their own businesses. Overall, the women improved their quality of life with the income they earned.

SPARK’s Agri-Business Creation Programme (ABC)

SPARK came to Yemen around 2012 to assist citizens in agriculture, helping them earn an income from their crops. SPARK created a program called Agri-Business Creation (ABC) to help agri-entrepreneurs through training, mentoring and business plans. The program has notably assisted Yemeni women in developing agricultural businesses. Four female-run businesses were awarded microloans to expand their business after the training they received in business skills from SPARK’s ABC program. The loans help Yemeni women to generate more products and expand their businesses. Besides seeing an increase in income, the success of their work contributed to a boost in confidence and a sense of independence in the women.

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

GIZ came to Yemen in 1965 and assisted citizens with basic necessities and the provision of educational opportunities. First, GIZ helped Yemeni women develop businesses. Nearly 200 women attended training on how to develop a successful business idea and how to establish a business. Many women found prosperity in their new businesses and employed other women to assist them in their work. Secondly, around 300 women with existing businesses received additional business training via coaching. After the training, many women tripled their income and hired more women to work for them. Lastly, GIZ created opportunities for homemakers to sell handmade goods overseas. GIZ took handmade baskets made by Yemeni women to Germany and showed off their goods in exhibitions. This strategy helped 300 women in rural areas earn a steady income.

Although the raging war in Yemen has resulted in high unemployment, organizations like SMEPS, SPARK and GIZ offer programs and strategies to help  Yemeni women earn an income by developing entrepreneurial businesses.

– Samantha Rodriguez-Silva
Photo: Flickr

Women’s rights in TunisiaFor neighboring countries, Tunisia is a model of women’s rights. Although women’s rights in Tunisia are lacking in some areas, activists and lawyers have consistently worked to dismantle patriarchal social structures.

Poverty in Tunisia

The national poverty rate consistently fell between 2005 and 2015. In 2005, the poverty rate in Tunisia was 23.1%, and in 2015, the poverty rate was 15.2%. Poverty tends to disproportionately affect inland regions in Tunisia.

Inland regions register higher rates of poverty than coastal regions. This difference is often stark. In Centre West, a landlocked region, the rate of poverty was 30.8%, whereas, in Centre Est, a coastal region, the poverty rate was 11.4%. The national poverty rate for men and women, however, was nearly identical.

Role of Women in the Economy

By 2005 the number of female entrepreneurs in Tunisia was nearly 5000 and had impressively doubled to 10,000 by 2008. Despite the expansion of women’s rights in Tunisia, which has played out through a legal process, deferral to traditional gender roles continues to hold women back from pursuing entrepreneurial roles in society. A 2010 study found that this may be explained by an “inadequate support system” for women in Tunisia who aspire to develop careers in the business world.

Mowgli Mentoring

The development of a strong support system for women entrepreneurs in Tunisia is the goal of Mowgli’s partnership with the European Bank for Reconstruction and Development (EBRD). The initiative partnered 12 Tunisian businesswomen with Mowgli mentors for a year. Its goal was to create a new culture of support and sustainability that will foster “economic and societal development throughout Tunisia.”

This approach is fundamental to shift the business culture in Tunisia. Institutional support for women entrepreneurs is tantamount to their success. Women entrepreneurs generally receive less institutional support than their male counterparts receive upon starting a new business. This includes a lack of financial support from financial institutions. Women entrepreneurs are also less likely to be offered opportunities to participate in business training, courses or schooling.

Women Entrepreneurs in Tunisia

Despite these obstacles, women entrepreneurs in Tunisia have developed innovative ways to improve support for women in business. Raja Hamdi is the director of the Sidi Bouzid Business Center. The center supports startups by providing mentors to evaluate business and market trends.

The Sidi Bouzid Business Center works closely with the Mashrou3i program, which is a partner of Go Market, a research and marketing firm located in the Kairouan region of Tunisia. Go Market was founded by female entrepreneur, Hayfa Ben Fraj. It works strategically in market analysis to support a “wide range of sectors and diverse fields such as technology, crafts and agriculture.”

Working Toward an Inclusive Economy

Although patriarchal structures of repression endure in Tunisia, the overall attitude is one of progress, equality and inclusion. Constituting one half of the population in Tunisia, women represent a latent workforce with the potential to reshape Tunisia’s economy through a series of innovative programs based on a culture of mutual support. Women’s rights in Tunisia will continue to increase as entrepreneurial opportunities for women flourish.

– Taylor Pangman
Photo: Flickr

solar microgridsThe United Nations Development Programme (UNDP) helped establish three solar microgrids in rural Yemeni communities. Earlier this year, the British charity Ashden honored the scheme as one of 11 recipients of its prestigious Ashden Awards. These annual awards recognize initiatives whose efforts to deliver sustainable energy have produced important social and economic advantages.

Solving a Fuel Shortage and Economic Crisis

Yemen’s energy infrastructure cannot transport power to rural towns and villages. Thus, many of these communities depend upon highly-polluting diesel generators. However, longstanding conflict and crippling embargoes have made fossil fuels scarce and expensive. Moreover, oil prices have fluctuated in recent years, and poverty has skyrocketed. This crisis has affected approximately three-quarters of Yemen’s population. Current estimates indicate that more than two out of five households have been deprived of their primary source of income. It’s also been found that women are more acutely impacted than men.

Now, the energy situation is shifting. The UNDP has provided funding and support to three different groups of entrepreneurs that own and operate solar microgrids. The three are located in Abs in the district of Bani Qais in the northwest and in Lahij Governate in the south. Their stations provide clean, sustainable energy to local residents and at a much lower price. The solar microgrids charge only $0.02 per hour as opposed to the $0.42 per hour that diesel costs.

Such savings for households and businesses have greatly impacted the local economies. Not only can people work after sunset, they also possess more disposable income. According to Al Jazeera, approximately 2,100 people have been able to save money and put it toward creating their own small businesses. These include services for welding, sewing, grocery stores and other shops. So far, a total of 10,000 Yemenis have benefitted from the energy provided by the three solar microgrids.

Empowering New Leaders in Business

The entrepreneurs who founded and now run the microgrid facilities in Bani Qais and Lahij Governate are young men. However, the power station in Abs is completely owned and operated by women. These Abs women receive training in necessary technical skills and study business and finance.

Some expected the scheme to fail due to the sophisticated knowledge it required and the relative inexperience of the facilities’ operators. Well, one year has passed, and the solar microgrids are running at full capacity. The project thus offers a valuable model for creating jobs in a country where civil war has shattered the economy and hobbled basic infrastructure.

Specifically for the women in Abs, though, a steady income and the ability to provide a much-needed service have increased their self-confidence. These women can feed their families and use the university educations they each worked for to a great extent. As the station’s director explained, their work has even earned them the respect and admiration of those who used to ridicule them for taking on what was once considered a man’s job.

Looking to the Future

The success of the UNDP’s project’s first stage shows a possible solution to Yemen’s problem of energy scarcity. The UNDP now works to find funding for an additional 100 solar microgrids. Since civil war began in 2015, both sides have tried to limit each other’s access to the fossil fuels that Yemen depends upon. Pro-government coalition forces have prevented ships cleared by the U.N. from unloading their cargoes in the north. On the other side, Houthi-led rebels have recently suspended humanitarian flights to Sanaa, the country’s largest city and its capital. This is all in the midst of hospitals struggling to care for patients during the pandemic.

The UNDP’s solar microgrids are a source of hope among the many conflicts plaguing Yemen. More still, it is likely others will soon follow in the footsteps of the three initial young entrepreneurs. These solar microgrids stations have empowered Yemeni communities to build better and more sustainable futures and will for years to come.

Angie Grigsby
Photo: Flickr

Indonesian Sea SaltSea salt farming almost always occurs in warm climates with little precipitation, such as in Indonesia. Sea salt is harvested from shallow ponds called salterns through natural solar evaporation. As water evaporates from the shallow ponds, the salt in the water becomes more concentrated. When the water reaches about 25 percent salinity, the salt starts to crystallize and it can be harvested.

Indonesian Sea Salt Farmers

Wealthier sea salt farmers have access to technology that reduces the need for manual labor but most Indonesian sea salt farmers have to do everything themselves. Just getting seawater to the salterns requires Indonesian farmers to spend days carrying the water by hand from the sea.

Farmers with access to technology use trucks with rake attachments to break up the salt beds but many Indonesian farmers have to rake the salt beds manually. Indonesian farmers then have to scoop up the salt and carry it to washing facilities. After the sea salt is washed, farmers have to boil it to produce pure salt. To boil the sea salt, Indonesian farmers have to carry large containers of salt on their heads to open, smoky stoves.

Sea salt farming has a long history in Indonesia but other agricultural economies such as cashews, cacao and coconut palms took precedence and stalled the sea salt economy. Indonesian sea salt saw a revival in 2005 as demand for gourmet salt rose.

The Millennium Challenge Corporation

With the rise in demand for sea salt but little improvement in the technology available for Indonesian sea salt farmers, the Millennium Challenge Corporation (MCC) made an Indonesia Compact. The MCC is an independent U.S. foreign aid agency that partners with countries worldwide to promote economic growth and lift people out of poverty. With strong bipartisan support, the U.S. Congress created the MCC in 2004 and the MCC signed the five-year Indonesia Compact in 2011.

The MCC’s Indonesia Compact went into force in 2013 and ended in April 2018. The Compact’s three initiatives were:

  1. The Community-Based Health and Nutrition to Reduce Stunting Project
  2. The Green Prosperity Project
  3. The Procurement Modernization Project

Aid for Indonesian sea salt farmers fell under the Green Prosperity Project which sought to increase agricultural productivity and to improve land use practices and management of natural resources.

The MCC worked closely with the Indonesia-based NGO Panca Karsa to communicate with sea salt farmers on the ground. By introducing piping to get seawater to salterns, improving filtering techniques and even just providing farmers with wheelbarrows, the MCC and Panca Karsa have helped sea salt farmers increase the quantity and quality of their salt production, boosting the farmers’ incomes and making their businesses more sustainable.

Panca Karsa reports that salt yields have tripled in the last couple of years and prices have doubled due to improved quality. In the past, most of the farmers were only able to sell their salt in bulk at local markets or trade their salt for rice. The MCC and Panca Karsa also helped farmers improve packaging, labeling and marketing and now farmers’ salt is competitive in artisanal and niche markets globally.

Sea Salt Farming and Female Empowerment

Most of the labor-intensive work of sea salt farming in Indonesia is done by poor women. These women do not generally own the land they work on and many only take home about $2 per day. Before the MCC and Panca Karsa intervened, these women only retained about 50 percent of their hard-earned production. Now, these farmers report that they retain about 60 percent.

Besides training programs for salt-making, financial management, business planning, quality control and marketing, the MCC and Panca Karsa also offered monthly community meetings to raise awareness for maternal and child health and nutrition. The organizations helped get families access to health and other services and worked to improve gender relations by engaging households in task-sharing between men and women.

In just a few years, the MCC and Panca Karsa have helped train over 400 female sea salt farmers and entrepreneurs in Indonesia, making it possible for these women to expand their businesses and support their families.

– Kathryn Quelle
Photo: Flickr

South Africa's Growing Business Landscape
South Africa‘s business landscape can be challenging. Many businesses have become successful nationally as well as internationally in some cases, but it can be difficult for new businesses to get off the ground. These are a few of the difficulties faced by businesses in South Africa as well as some opportunities to overcome.

The Brain Drain

The large number of skilled workers leaving South Africa for other countries has led to the term “brain drain.” The Global Innovation Index estimates that South Africa has lost 5 percent of its researchers and entrepreneurs to other countries, which has taken away up to 20 percent of innovative production. By September 2015, 47,000 skilled South Africans had left the country, with 70 percent happy with their choice. This brain drain has led researchers to wonder why so many citizens are leaving and how to increase enthusiasm for staying in South Africa.

The Challenges of Owning a Business

Part of the challenge for entrepreneurs is simply the time required to open a business in South Africa, which hurts small businesses that cannot afford to wait. The main positive of opening a business is that the rules seem to be followed and there is a clear path to take. However, the time involved is lengthy. Construction permits can take up to 127 days to complete, but getting electricity for a building can take up to 226 days. It is estimated that it takes an average business owner 200 hours a year to complete their taxes. If someone breaks a contract, it may not be worth the time to try to recover the costs, because it takes an average of 500 days for cases like these to go through the court system.

Many Changes in the Last 25 Years

Other difficulties for many South Africans may be systemic ones. South Africa has seen a lot of change in the last 25 years in overcoming the aftermath of South Africa’s apartheid system. Like most major system changes, there are improvements and also growing pains. Many neighborhoods in South Africa still reflect separations in races and ethnic groups, which dates back to when this was required by apartheid law. In addition, there is still a significant wage gap between black and white citizens, with white citizens earning more.

However, improvements such as the murder rate being halved, access to better housing and the growing availability of electricity (50.9 percent in 1994 to 85.3 percent in 2012) show the country is invested in a better future. While these changes and challenges do not directly relate to businesses in South Africa, they illustrate the environment businesses are operating in. More than ever, it is clear that businesses are needed to help with some of these issues, particularly with the unemployment rate, which is at 26.7 percent, higher than it was in 1994, but lower than when it hit its peak of 31.2 percent in 2004.

Successful Businesses in South Africa

There are still challenges facing businesses in South Africa and a large number of citizens are finding opportunities elsewhere, but there are those that have stayed and been successful. When South African entrepreneurs were asked what lessons they learned, they cited the importance of building a loyal consumer base, a willingness to be gutsy and a readiness to try new things.

Some successful entrepreneurs that have changed the face of South Africa are Pam Golding, who founded Pam Golding Properties in 1976 as an estate agency, but has since moved into the luxury residential space. Or Richard Maponya, who started successful businesses involving retail and property despite apartheid laws and recently helped open Maponya Mall. Or Adrian Gore, who founded Discovery Health, which has had such a huge impact on health insurance that many other companies are duplicating his model.

While not all of South Africa’s challenges will be cured through business, developing a healthy business base will create more opportunities for citizens, increase employment opportunities and help fill in other voids, such as infrastructure or bridging gaps between groups of people. All of this together will help to create a healthy work and business environment, consequently reducing the brain drain in South Africa.

-Natasha Komen

Photo: Flickr

Best Careers for Fighting Poverty
Many people are looking to make a difference these days through volunteer work, making donations and voting, but there are also many careers that can make a huge impact. The best careers for fighting poverty may be surprising to some, but each makes a difference in the lives of others.

Working in these fields makes the world a better place and improves the lives of the poor:

  1. Teachers
    Kids spend approximately 1,200 hours annually in the classroom. A teacher’s influence is vast and encompasses the education, mental health and safety of the children they teach. Education is vital in the fight against poverty and provides students with the tools necessary to make a living and gain the schooling needed to avoid poverty.
    It is important more than ever that female teachers gain employment in developing areas. This allows girls in culturally strict regions to be able to attend school, feel safe and receive gender equality in the classroom.
  2. Social Workers
    Those in vulnerable situations are able to receive support through their social workers, such as family counselors. Social workers work to improve the mental health of those seeking counsel, and help diagnose emotional issues, so that they can receive treatment and progress professionally.
  3. Doctors and Nurses
    Working in one of the best careers for fighting poverty, those in the medical field have the power to affect the health of people in poorer communities. They can even opt to go abroad with volunteer groups or Doctors Without Borders during seasons they choose.
    Doctors and nurses can also help vaccinate those in developing countries, provide health counsel and improve the health conditions of the community they work in. Citizens in good health are less likely to remain or fall into poverty in the first place. With good health, they are able to work full time, participate in the economy and attend school.
  4. Entrepreneurs
    People who start their own businesses are able to address issues that may not have already been addressed by their communities or nations yet. Entrepreneurs have the power to not only create jobs and positively impact their local economies, but are also able to create influential movements and businesses.
  5. Lawyers
    Lawyers are able to participate in pro-bono work, providing legal assistance to those who would not otherwise be able to afford the help. They are also able to prevent those wrongly accused from going to prison, which stimulates the economy and keeps people in the work force and out of crime.

There are many influential jobs that can reduce poverty in communities, but these are the best careers for fighting poverty that have the widest reach. The average person spends 90,000 hours at work in their lifetime and to be able to make those hours count is an impactful feat, accomplished by those who care enough to make a career out of making a difference.

– Emily Degn

Photo: Flickr

Why Is Trinidad and Tobago PoorThe island nation of Trinidad and Tobago lies in the Caribbean Ocean off the coast of Venezuela. Built primarily around the oil and gas industries, Trinidad and Tobago‘s economy is one of the strongest in the Caribbean. Despite this, several factors have led to economic stagnation as well as relatively prevalent poverty. So, why is Trinidad and Tobago poor?

A lack of economic diversification and overdependence on petroleum and natural gas are some of the most important factors holding back Trinidad and Tobago‘s economy. With oil and gas constituting 80 percent of exports and about 40 percent of the gross domestic product (GDP), the island nation has clearly devoted much of its economy to the sale and manufacturing of these natural resources. This leads to several problems.

Oil and gas prices have been in an overall decline over the past several years, so Trinidad and Tobago’s economy has suffered from job loss, reduced tax revenue and reduced development in human capital. These natural resources are also nonrenewable, meaning that they will eventually run out. Trinidad and Tobago’s government has done little to ensure that the country is ready to expand its economy beyond oil and gas once the underground reserves run dry. The overall lack of a business environment to stimulate entrepreneurs is one of the main answers to the question of why Trinidad and Tobago is poor.

Furthermore, the non-energy areas of the economy remain severely underdeveloped and continue to heavily depend on government subsidies. This lack of economic success in non-energy areas discourages potential foreign investors from investing in Trinidad and Tobago, despite the oil and gas sector’s success. Direct foreign investment is undeniably crucial for a country seeking economic diversification, as the inflow of money can help build a strong foundation for new sectors in the economy.

According to a review conducted by the Commonwealth Foundation, a nonpartisan think tank focused on public policy, over 20 percent of Trinidad and Tobago’s citizens currently live below the poverty line. The report also states that 11 percent of the population is undernourished. These unexpectedly high rates of poverty and malnutrition may be partly due to the considerable gender-wage gap present in Trinidad and Tobago.

A study conducted by the Central Bank of Trinidad and Tobago shows that women, on average, earn a staggering 35.3 percent less than men. While this may be partially due to a large portion of women taking low-income jobs, there is certainly a serious amount of gender-based discrimination in wages. It is easy to fall into complacency after the increase in the average woman’s wage – from $9,000 in 2012 to $12,000 in 2014. Despite this rise in pay, however, the wage gap has only been increasing. The average male wage was $18,000 in 2012, but has disproportionately increased to $30,000 in 2014.

Another issue presented by the gender-wage gap affects families with single parents. In Trinidad and Tobago, the children of single parents are six times more likely to live under the poverty line. With about 75 percent of single families headed by the mother, the issue of the gender-wage gap becomes truly alarming. It is illogical to expect single mothers to not only care for her children but also provide for them if she is working for significantly reduced wages and has no supplemental income.

This economic disparity between men and women has led to efforts in increasing the resources dedicated to educating and training women. With the number of women in the workforce steadily increasing over the past few years, women in Trinidad and Tobago have definitely seen improvements in their social and economic standing. Nevertheless, there is still much progress to be made. Passing legislation to eliminate the wage gap would be a substantial step toward promoting economic success in Trinidad and Tobago, in addition to the inherent benefits of working toward gender equality.

Answering the question “Why is Trinidad and Tobago poor?” requires a more convoluted response than expected. The nation of Trinidad and Tobago is undoubtedly one of the wealthiest countries in the Caribbean despite its deeply embedded economic flaws. While the country has made impressive progress by developing social programs to help the vulnerable, nurturing new businesses to encourage private sector growth and eradicating the gender-wage gap must be near the top of Trinidad and Tobago’s priorities for there to be long-term economic improvement.

Akhil Reddy

Photo: Flickr

Code for Good
By harnessing the power of technology, three young men in Rwanda have set out to empower other Rwandan youths. Ildephonse Mungwarakarama, Theogene Niyonsenga and Jerome Habimana launched the Code for Good program to teach Rwandan students, the skills they need for app development for free.

The three entrepreneurs began their partnership in 2014 when they launched House of Technology, a company that provides its clients with web-based solutions ranging from website design to internet portal management. Code for Good is their most recent initiative.

The Code for Good program is aimed at educating youth throughout Rwanda about app development, reaching college students and those that have already graduated from universities, as well as those still in high school and under the age of 18.

For those that may be unemployed after college, Mungwarakarama, Niyonsenga and Habimana hope to provide the opportunity to learn valuable skills and gain work experience. Regardless of age or schooling, the program prepares students to meet industry standards and to enter the workforce, all the while improving academic performance.

Training is completed within the community by volunteers who meet with students after they have registered to complete the program. Once students have completed their training, they are equipped with the skills needed to teach these same skills to others as well as to apply what they have learned to future projects.

This program could be especially impactful in a country where poverty is such a prevalent issue. Of Rwanda’s nearly 13 million people, 62 percent live in poverty. In recent years, there has been an indication of a positive trend away from poverty, as the Rwandan economy has grown rapidly and the poverty rate has dropped. Programs like Code for Good will help to continue this trend.

With organizations like Code for Good that are actively engaged in building Rwanda’s future, it seems as if much can be done to alleviate poverty in Rwanda. By capitalizing on the high-tech world, young Rwandans can enact powerful change within their country.

Jennifer Faulkner

Photo: Flickr

OPIC Makes $5 million Commitmen

With the help of the Overseas Private Investment Corporation’s (OPIC) recent $5 million commitment to support the UCF (Unreasonable Capital Fund), the young venture capital firm will be able to invest in and support what it calls the “greatest entrepreneurs of our time.” These entrepreneurs address the foundations of poverty in emerging countries by creating profitable businesses.

Unreasonable Capital will use the OPIC funds for early-stage investments in businesses in developing countries that will ultimately enable large segments of their populations to rise into the middle class. The focus of the UCF will be on start-up companies in these sectors: energy access, financial technology and mobile phone applications in agriculture and artisan-driven fashion.

The intent of the UCF investments is to develop self-sustaining, profitable businesses that improve the lives of people in Latin America, India, Asia and Africa. Unreasonable Capital works exclusively in emerging markets. It focuses on clean energy, financial technologies, innovations in agriculture and artisan-driven fashion because it believes these business sectors can best make inroads into long-term poverty in those markets.

The firm measures the success of its investments on both financial returns and social impact. It wants to work with entrepreneurs in emerging markets who are intent on solving significant social or environmental problems in a way that their social impact is “baked into their profit model.”

Unreasonable Capital offers start-ups not only financial assistance but also access to best practices and mentors through the firm’s global network of more than 200 partners and 250 mentors. The partners include The World Bank, Google and Nike. Mentors include the founder of WordPress and the chief marketing officer of Unilever.

Unreasonable Capital received its $5 million commitment from OPIC through the institutions’ Innovative Financial Intermediaries Program (IFIP). The program is intended to help small financial vehicles invest with the aim of developing businesses that are innovative and have a social impact.

OPIC, established in 1971, is the development finance institution of the US Government. It marshals private capital to address critical development challenges, especially in emerging markets. By doing that, OPIC advances US foreign policy and national security interests.

OPIC is self-sustaining. Its projects produce no net cost to U.S. taxpayers. In fact, it normally generates income and helps reduce the federal deficit. It does so through supporting projects such as power plants in Sub-Saharan Africa, low-income housing in Latin America and food processing plants in Eastern Europe. OPIC’s $5 million commitment to support the UCF is just one more example of the institution fulfilling its mission.

Robert Cornet

Photo: Flickr

USAID Helps Small Time Farmers Achieve Their Dreams
Although giving aid to countries is a great way to lend support, giving small businesses the chance to grow is the best way to make a lasting impact. When small business owners are able to achieve their aspirations, it only motivates others to follow in their footsteps. Although it is possible for an individual to achieve the dream of sustaining their own company, many require financial assistance in order to make that happen.

In the country of Mozambique, small time farmers and entrepreneurs regularly struggle to expand their businesses because the banks view them as a high risk investments. The local banks do not have copious amounts of money to lend out and that forces them to charge outrageously high interest on their loans.

Carlos João Tovela Sigue, a small time farmer in Maputo, Mozambique, has been able to support his family by growing a variety of different crops. Although he has been able to sustain a healthy lifestyle for his family, Sigue had aspirations of owning and operating a much larger enterprise. The giant hurdle standing between him and his dream was financial support. Sigue stressed the difficulty of expanding production without a bank loan, which is a problem many farmers and small business owners in Mozambique face.

One of the main factors hindering the banks from loaning money to Mozambican entrepreneurs is the country’s struggle with inflation. Statistics reported by the National Statistics Institute (INE) showed that Maputo, Nampula and Beira — the three largest cities in Mozambique — had inflation rates of 11.25 percent from Feb. 1, 2015 to Jan. 31, 2016. Additionally, the Mozambican Bank’s Monetary Policy Committee reported “an increase of 100 base points in the Standing Lending Facility (the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market).”

This caused the interest rate to increase from 9.75 to 10.75 and marked the highest interest charged in Mozambique since September 2012. Even though the interest rate decreased slightly for a whole year, it only took three months for the interest rate to revert back to the 9.75 mark once again.

Thanks to a collaborative effort from United States Agency for International Development (USAID) and the Swedish International Development Cooperation Agency (SIDA), several Mozambican banks obtained the Agency’s Development Credit Authority (DCA). The DCA provided the banks with a partial guarantee on loans and pushed for them to loan money to entrepreneurs and small time farmers such as Sigue. The loan allowed Sigue to add another 12 hectares on to his farm, mechanize his framing methods and make improvements to his irrigation system.

Sigue not only paid back his loan in full, but was able to employ seasonal workers on his farm. Sigue’s prosperity over the first two years enabled him to take out a larger loan to sustain his dream for the long term. Sigue “plans to farm 350 hectares of family land, accumulate 700 cows, and buy a larger truck for taking crops for sale to the market.” The Mozambique government has recognized Sigue’s miraculous success and adorned him with many awards.

Sigue is the epitome of what can happen when small businesses are given enough financial support to better the lives of their families and evidently their communities. Mozambican entrepreneurs have been able to acquire 795 loans through the DCA program and the statistics show promising results as well.

Additional statistics show that over 160 thousand borrowers in 74 countries around the world have been provided with financing through the DCA program. When businesses are able to sustain themselves and better the future of their communities, even small time farmers can make monumental impacts.

Terry J. Halloran

Photo: Flickr