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The Benefits of Hosting Refugees

Benefits of Hosting RefugeesIn 2019, the U.N. Refugee Agency reported that there were about 26 million refugees globally. An estimated 68% of refugees come from just five countries: Syria, Venezuela, Afghanistan, South Sudan and Myanmar. Refugees exist in a state of flux, with their futures and fates in the hands of potential host countries. Refugees are one of the world’s most vulnerable groups yet the idea of hosting refugees comes with hesitancies due to misinformation and misconceptions. There are several benefits of hosting refugees.

Refugees Bring Productivity

There is a misconception that refugees come into a host country and subsist on benefits instead of working. Though not every country allows refugees to work, those that do allow this, see just how productive refugees are. Often unable to use their credentials in other countries, refugees are known for starting from the ground up and they are effective at it. Economic advisor, Phillipe Legrain, estimates that 1,000 refugee businesses could generate $100 million each year. If host countries loosen restrictions and allow refugees to expand their job opportunities, it could significantly improve the economies in host countries.

This would also mean making language learning classes and integration courses more accessible, but in the long run, the fiscal rewards outweigh the cost. Countries that allow refugees to work and open up businesses know that the influx of productivity is one of the major benefits of taking in refugees.

Refugees Enrich Culture

Some fear that accepting refugees means that the native culture will disappear. According to Anna Crosslin of the International Institute in St. Louis, cross-cultural understanding is vital for integration. Events like the annual Festival of Nations, which is run by the International Institute, not only help expose St. Louis residents to other global cultures but also help immigrants feel more at home. Even though there are differences between each culture, most cultures are incredibly similar at their core. Refugees are fleeing the same things ordinary citizens fear: families being torn apart, the right to vote being taken away, lack of education and more.

Refugees do not aim to disrupt the culture of their host countries but enrich it. They may bring with them different practices, foods and religions, but in the end, most people have similar ideals.

Refugees Stimulate the Economy

The more people participating in a country’s economy the better. Economic activity alone is one of the many benefits of taking in refugees. There is an initial investment required when allowing refugees into a country. Housing, language classes, healthcare, sustenance. All of these things cost a significant amount of money to provide, but once refugees are established in their host country, the initial investment pays off.

Refugees start businesses that employ locals, pay taxes and generate wealth. In countries with an aging workforce, young refugees entering the workforce complement their work and allow them to retire, while also contributing to social security or pension funds. Being able to work and make money, in general, allows refugees to stimulate the economy of their host country. Refugees allowed to work and enterprise are great for an economy, much more so than refugees that are not allowed in or not allowed to work.

Refugees Complement the Job Market

There is a misassumption that refugees take jobs away from their host country’s job market. Most studies conclude that refugees have very little effect on the job market at all. The U.S. State Department’s analysis of the labor market over a 30-year period showed that not only did refugees not negatively impact the job market, but they had no effect when compared to regions with no refugee population.

The work migrants do actually fill in the job market. In the United States, it is migrants doing much of the hard, physically demanding work like farming and cleaning meat and fish for consumption. These are jobs that not many native citizens want to do. The economic benefits of taking in refugees are also seen in areas with low domestic migration. In these places, migrants offer an economic boost that native citizens do not.

Refugees Bring Novel Skillsets and Knowledge

Many cultures make rugs, but who makes them like the Persians? Who can delicately remove the meat from a poisonous pufferfish like a Japanese sushi chef? Every country and culture has something that makes them stand out, something that they can teach and share with others.

Refugees offer language skills that natives might not. Many already have professional qualifications from their home countries. Most refugees exhibit a high degree of adaptability, a skill that is important in every industry. To top it off, organizations benefit greatly from diversity, experiencing greater profits, collaboration and retention than organizations that are not as diverse. Though refugees are not the only way an organization can become more diverse, the experiences, skills and perspectives gained are some of the greatest benefits of hosting refugees.

Welcoming Refugees

Resistance to accepting refugees is often due to misconceptions. Native citizens fear a disruption in their economy and culture. But in actuality, refugees stimulate the economy, enrich culture and supplement the job market. Better understanding the benefits of hosting refugees will hopefully mean that countries globally will be more accepting of this vulnerable group, realizing that benefits are provided on both sides.

– Maddey Bussmann
Photo: Flickr

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The Tony Elumelu Foundation Helps Africa

Tony Elumelu FoundationThe ongoing COVID-19 pandemic is affecting nations around the world, including the nations of Africa. Many African nations responded to the pandemic with strict lockdowns and social distancing initiatives, often stronger than that of European nations. However, the people of Africa face a much more severe economic impact. Although poverty reduction measures have been met with success across the continent, roughly 500 million Africans still live in extreme poverty. The sub-Saharan areas of Africa have the highest rates of poverty in the world, estimated at 55% in 2014. Foreign direct investment is down by 40% and 49 million more Africans could fall into extreme poverty in the world’s first global poverty increase since 1988. The Tony Elumelu Foundation hopes to reduce poverty in Africa through entrepreneurship.

The Tony Elumelu Foundation

A nonprofit operating since 2010, the Tony Elumelu Foundation (TEF) fights global poverty in Africa through the funding of entrepreneurs and small enterprises, These are the very types of businesses that the pandemic impacted most, both across the world and in Africa. With an endowment of $100 million, the organization has already had significant success propagating what it terms “Africapitalism,” which is the use of the private sector for economic growth and development.

The EU Partnership

In December 2020, the European Union (EU) announced a formal partnership with the Tony Elumelu Foundation. The plan comes as part of two broader EU strategies: the EU External Investment Plan and the EU Gender Action Plan. It involves technical training and financial support for 2,500 female African entrepreneurs in 2021 across all 54 African countries through 20 million euros in increased capital. Speaking on the partnership, Tony Elumelu, the founder of the TEF, expressed delight in being able to partner with the EU and said the partnership will create great opportunities for African women who have “endured systemic obstacles to starting, growing and sustaining their businesses.” The Commissioner for EU International Partnerships, Jutta Urpilainen, stated that empowering female entrepreneurs is an integral part of creating sustainable jobs and growth.

How Entrepreneurship Helps

In Central Africa, approximately 71% of jobs are in the informal sector. These jobs are particularly vulnerable to lockdowns. The strict measures put in place as responses to COVID-19 have left many of these people jobless. Entrepreneurship creates more stable jobs and allows a country to be more self-sufficient and can be just as effective as foreign or philanthropic aid in fighting poverty.

Even after the effects of the pandemic subside, Africa still has much to do to eradicate poverty. Fostering entrepreneurship is an innovative approach to this economic problem, one that the Tony Elumelu Foundation has seen significant results with, with more than 9,000 entrepreneurs mentored before the partnership with the EU. The full impact of these endeavors remains to be seen but the potential exists for African entrepreneurs to have a major impact on poverty in Africa. The TEF’s partnership with the EU will only intensify these positive impacts.

– Bradley Cisternino
Photo: Flickr

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Paulownia Trees Reduce Poverty in Uzbekistan

Paulownia TreesThe Central Asian nation, Uzbekistan, has a population of just over 33.6 million. Recently, President Shavkat Mirziyovev made history, becoming the first Uzbekistani President to acknowledge the poverty epidemic in the nation. Mirziyovev announced that somewhere between four to five million people currently live in poverty in Uzbekistan. The administration subsequently constructed anti-poverty measures and efforts to boost the economy. One woman in Uzbekistan took initiative, investigating how Paulownia trees can aid in poverty reduction.

A Proactive Mission

Sojida Jabborova, a Uzbekistani woman, observed both the poverty crisis within her country and the successful poverty reduction measures taken in China to create a plan. Under Mirziyovev’s reform campaign and insistence to study Chinese practices, Jabborova found the versatile Paulownia trees and entered the business world.

Each part of the Paulownia tree can be utilized to lift communities out of poverty. They are capable of adapting to poor soil, fertilizing it and purifying the air of harmful gases. Paulownia leaves can be used to feed livestock, they contain nectar for bees and other insects and their wood is sturdy enough to be used for houses and furniture. In 2018, Jabborova negotiated with Chinese business partners to deliver seeds and seedlings to Uzbekistan where they are now grown in experimental fields in four different regions. She has not stopped the investigation into how Paulownia trees can aid poverty reduction, continuing presentations and experiments on various products.

Uzbekistan Reform Campaign

Once in office in 2017, President Mirziyovev began multiple reforms to lift Uzbekistan out of economic depravity and better the livelihoods of its citizens. Poverty reduction has moved to top priority in Uzbekistan as the government granted $700 million to be spent on anti-poverty efforts in 2020. The administration believes to reduce poverty in Uzbekistan, they must first address unemployment and bolster entrepreneurship. This includes improving the tourism industry, improved training for essential trades and heightening economic literacy for citizens, particularly women.

Uzbekistan established a partnership with China to investigate and solve issues of unemployment, gender inequality and poverty in early October 2020. The Institute for Tourism Development in Uzbekistan has engaged in a joint research project to link tourism and poverty reduction. The plan for Uzbekistan is to increase the production of exports, expand the industry, boost small businesses, and in the long-term, improve government regulations and education regarding these fields.

Innovative Entrepreneurship Leading to Solutions

Sojida Jabborova was once a dentist in Uzbekistan, however, she was driven by the critical state of poverty in her country to find a solution. The reform campaign created the perfect atmosphere for Jabbarova to begin her work as the nation honed in on entrepreneurship and financial literacy in women especially. The partnership between China and Uzbekistan, with Beijing as the model for Uzbekistan’s progress, provided Jabbarova with the knowledge and support to begin experimentation with Paulownia trees. In the beginning, Paulownia trees were only grown on 19 acres and now they are grown in fields in Fergana, Bukhara, Samarkand and Tashkent.

Poverty Reduction in a Global Pandemic

Sojida Jabbarova’s efforts in exploring how Paulownia trees can aid in poverty reduction is crucial. Her spirit along with the dedication of the Uzbekistani administration to place poverty reduction at the top of the to-do list will surely mean progress. These efforts have been constrained by the global pandemic where the administration focused on protecting lives and businesses and maintaining headway in the fight against poverty. The administration has centered on healthcare, financial support and social assistance in the fight against COVID-19.

The administration’s efforts for poverty reduction are substantial and the alliance with China has brought great insight on how to best lift citizens from poverty and kickstart a downtrodden economy. Jabbarova and her Paulownia tree fields are a success story for poverty reduction efforts and the overall reform campaign begun by President Mirziyovev.

– Lizzie Herestofa
Photo: Flickr

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Supporting Entrepreneurs in Developing Countries

Supporting Entrepreneurs in Developing CountriesFrom 2002 to 2012, the World Bank invested around 9 billion dollars in skills training programs for aspiring entrepreneurs in developing countries. The hope was to counteract the shortage of schools worldwide. However, because these programs suffered from low participation and high dropout rates, they seldom lasted long enough to make any real impact. After doing a cost and benefits analysis of these programs, the World Bank found that they were not successful in increasing participant income. Consequently, the World Bank has started to withdraw its support from these programs, citing that there are several problems with the initiatives.

With the failure of such programs, aspiring entrepreneurs in developing countries need a more efficient system to support them. Currently, more than two billion workers in these countries are unable to meet the requirements of possible employers, including necessary literacy skills. There are now about 420 million incapable workers below the age of 25. As a country’s economy evolves, locals need to adapt to changing needs. However, an overwhelming amount of people do not have the skill sets to do so.

Possible Solutions

One solution to this problem has been introducing programs that cultivate entrepreneurship in Africa’s youth and women. There have been several programs already instituted to work towards this goal, including the Pan-African Youth Entrepreneur Development (paid), BeniBiz, Apoio e Geração e Incremento de Renda (AGIR), Impulsa Tu Empresa 2.0 (ITE 2.0) and Crece Tu Empresa (CRECE). 

These programs offer content and training in creating and maintaining businesses. They also offer lessons on accounting, management and finance. Some cater to individuals, while others cater to business owners. Graduation programs, which are now in the works, also intend to provide entrepreneurship learning services for lower prices. Overall, there are many options for aspiring entrepreneurs in developing countries. Two programs that especially stand out are the Start and Improve Your Business (SIYB) graduation program and Business Lab Africa (BLA).

Start and Improve Your Business (SIYB)

The International Labor Organization created Start and Improve Your Business (SIYB) in 1977. It offers vocational training that has shown concrete results. People can use the locally relevant knowledge they gain from this program to work jobs that are in-demand and make a living for themselves and their families. The program also offers business management training. It teaches skills in accounting, finance, creating and maintaining business and management practices. Thus far, this program has more than 15 million users and is still growing. 

SIYB has been able to change the lives of many of its users. In 2011, the program conducted a SIYB Global Tracer Study that examined the effects of the program on users’ lives. About one-third of users who had no prior experience in business before receiving SIYB training were able to generate an average of three new jobs following its curriculum. SIYB is continuing to update its technology. In fact, a new version of its web-based monitoring platform (SIYB Gateway) is expected to launch in 2020.

Business Lab Africa (BLA)

The Business Lab Africa program (BLA) works to help African entrepreneurs succeed in business areas. The program itself is subscription-based and provides quality entrepreneurship training at inexpensive price points. This makes it easily accessible to entrepreneurs in developing countries. The program’s services can be accessed via mobile or web.

BLA “offers practical, qualitative and locally relevant” knowledge around marketing, sales, global expansion, business structure, processes and business models. Teachers in this program are distinguished business experts who teach relevant skills that entrepreneurs in developing countries can use to support themselves. Thus far, it has trained more than one million entrepreneurs both online and in person. By 2022, BLA estimates that its user base will increase to at least 100,000 people.

These programs are generally tailored to fit the needs of underprivileged individuals, offering both asset transfer and training. Additionally, they do not require repayment of initial grants, which would usually create an insurmountable barrier to student success and self-sustainability. With these programs, people living in underdeveloped countries will have the opportunity to access the educational tools needed to succeed despite staggering economic situations. 

– Nyssa Jordan
Photo: Flickr

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Mercy Corps Provides Humanitarian Aid in Mali

Progress in Mali
With a poverty rate of 42.7 percent, Mali is one of the poorest countries in the world. Its arid climate also makes Mali one of the hottest countries and armed conflict, famine, weak infrastructure and food insecurity are widespread. Mercy Corps, a non-governmental organization (NGO), has provided humanitarian aid in Mali since 2012. Their efforts have reduced food insecurity, built resilience to armed conflict and natural disasters and assisted in infrastructure development.

Goals of Mercy Corps

Mercy Corps believes conflict prevention and long-term food security programs are important to the livelihoods of Malians. Supporting agriculture, pastoralism and other professions leads to reduced conflict over sparse water and land. Since 2012, more than 250,000 women, children and men have benefited from approximately 20 programs created by Mercy Corps.

According to the U.N., more than 3.2 million Malians need humanitarian assistance, 70 percent of whom live in the Mopti and Segou regions. About 2.7 million are food insecure and malnutrition affects more than 600,000 children. Mercy Corps’ goals are wide-reaching, yet its focus is on long-term stability. The conflict over land and water and overpopulation are two major issues that Mercy Corps and other NGOs are combating by providing humanitarian aid in Mali.

Progress in Mali

Since 2012, Mercy Corps has assisted 98,000 Malians affected by food insecurity. Agricultural support, entrepreneurship and apprentice programs and business development support are three major focus areas. In 2018 alone, the NGO helped 41,000 people through agricultural programs. More than 80 percent of Malians are farmers and fishers, which is one reason Mercy Corps prioritizes agricultural productivity. Seed distribution, technical training and infrastructure rehabilitation were all emphasized during 2018. Improving agricultural productivity and resilience to droughts is essential to helping those affected by food shortages.

Mercy Corps also made progress in Mali by assisting more than 1,112 pastoralists in 2018 with the provision of livestock feed, distribution of goats and animal care from local veterinarians. Livestock and agriculture comprise 80 percent of Mali’s exports, and the assistance from Mercy Corps and other NGOs helps to not only increase food security but also increase income. Mercy Corps provided financial assistance to 25,600 people for basic needs and in support of economic recovery.

Individual Success Stories

Mercy Corps is a major supporter of youth entrepreneurship in Mali, as 60 percent of Malians are less than 25 years old. The NGO assists young entrepreneurs by providing financial assistance and teaching better business practices.

Bibata is a 25-year-old Malian who sells paddy rice and grilled potatoes from her home. Most of her income comes from her business. With her grant money, she was able to buy more paddy rice, spices and vegetables, doubling her profit within months. She stated that the grant money helped her expand and she hopes to grow further into raising cattle.

Hassan is another Malian that benefitted from Mercy Corps’ support. He barely made enough money to care for his nine children, but after a Mercy Corps’ professional training course he understood how to get reimbursed by clients and access services from microfinance institutions. He received a grant, opened up his own shop and now earns twice the income he had earned before.

The Future of Mali

In response to violence in Mali, the United Nations launched a Humanitarian Response Plan in 2019 to assist with food, shelter, nutrition, protection, education and hygiene. Alongside continued efforts by the United Nations, United States government and NGOs, Mercy Corps is set to advance its mission of providing humanitarian aid in Mali. Conflict and high population growth are ongoing in 2019, yet progress is currently being made.

– Lucas Schmidt
Photo: USAID

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The Role and Scope of Microenterprise in Developing Countries

The Role and Scope of Microenterprise in Developing Countries
Microenterprises — businesses with fewer than ten employees and often a sole proprietor — might not ordinarily come to mind when thinking of what drives an economy. However, in places where opportunity is most lacking, innovation abounds. In her course syllabus for a class entitled “Entrepreneurship in Developing Countries”, Stockholm University associate professor Birgitta Schwartz calls entrepreneurship fundamental to the organization of societies. She asserts that microenterprise in developing countries mobilizes people, resources and innovation. “It is about generating ideas, organizing and hands-on action that can have many different effects,” says Schwartz.

How Is Microenterprise in Developing Countries Unique?

The answer to this lies partly in motivation. For many Western societies, entrepreneurship eyes opportunity, while in developing countries, it is borne out of necessity. According to a 2017 report by the Global Entrepreneurship Monitor (GEM), 76.2 percent of Africans see entrepreneurship as a good career choice, as opposed to around 65 percent for developed nations like the United States.

What is the reason for this? Well, with factors like extreme population growth and an increasing life expectancy, keeping the working age constant means having to create many additional jobs. As a result, microenterprise in developing countries represents a large percentage of employment. In Ghana, for example, household or micro-businesses tally 57 percent of the country’s total workforce.

Added Challenges

While entrepreneurship presents challenges enough, the added factors associated with living in poverty create a special dynamic all its own. These challenges may include:

  • Adequate access to financing
  • The risk involved with political and economic imbalance, and
  • A lack of the skill set necessary to create a successful market

Lacking alternative sources of financing, the successful entrepreneur living in poverty may use internally generated cash flow from one business to fund his or her other businesses. Perhaps surprisingly though, research suggests that countries that have experienced economic instability are more likely to have higher rates of private saving. In a manner of speaking, crisis provokes a necessity to save.

Microenterprise may play more of a role in poverty alleviation than was previously thought. Entrepreneurs in developing countries look at risk differently. Whereas Western business strategy sees a competitive threat from the well-established incumbent businesses, such a threat doesn’t exist in developing countries. And while urbanization threatens this advantage, entrepreneurs look to the more rural areas of their country to start and grow their businesses.

Microenterprise in developing countries can be made even more difficult without the added benefits of mentorship and apprenticeship. Many of these emerging markets have few people with the necessary skills to effect the kind of change that can be the impetus for large-scale economic strides. With a lack of accountability, trust becomes even more important. Micro-businesses in these countries are often family-owned and much more attuned to the local market environment, which results in higher returns to capital and a larger potential for growth.

Success in Spite of Circumstances

An example of microenterprise at its finest is Hanan Odah, a Palestinian refugee whose husband died in the civil war in Syria. She rebuilt her micro-business, selling stationery and perfume and now helps her new community and her family of three to survive. Despite conflict and economic collapse, Odah continues to build her brand, thanks in part to a steely will and in part to microfinance programs that loan small amounts of money at low interest rates.

This is the kind of presence that microenterprises can have in developing countries. Whereas external forces may cause economic instabilities, small startups with low overhead and little opposition, like Odah’s, continue to thrive and grow.

Entrepreneurship in developing markets depends not necessarily on the traditional tenets of opportunity and vision, but rather on necessity and provision. For every stereotype of countless roadside stands selling nearly-identical wares, there is a provocative truth lurking beneath the surface of this dormant economic volcano.

– Daniel Staesser
Photo: Flickr

Increasing Employment Opportunities in Serbia

Increasing Employment Opportunities in SerbiaUnemployment remains a growing concern for many Serbians. The country’s statistical office reports that Serbia’s unemployment rate rose to 19 percent in June 2016. The Belgrade region had the highest unemployment rate of 20.5 percent, and southern and eastern Serbia had an unemployment rate of 20.2 percent. However, work is being done to increase employment opportunities in Serbia.

New Jobs Opening in Serbia

In March 2017, Prime Minister Aleksandar Vucic attended the signing of an agreement with the U.S. company NCR that plans to create 1,500 new jobs in Serbia. NCR will have more than 3,600 permanent employees in Serbia once the new jobs are created. This will be a significant increase from the 300 employees that NCR hired when the company arrived in Serbia in 2011.

In September 2017, Turkish investors expressed interest in opening 3,500 jobs in southern Serbia within the next three years. Zoran Djordjevic, Serbia’s labor minister, says talks will be held with the investors to explore all potential opportunities for cooperation. Djordjevic also presented the investors with Serbia’s new laws that will have an impact on their business activities.

Investing in Serbia’s Youth

The Center for Advanced Economic Studies presented a study entitled “Mapping Barriers to Youth Entrepreneurship in Serbia” to the Serbian Chamber of Commerce (SCC) at a panel discussion on April 25, 2017. Marko Čadež, the SCC president, mentioned that entrepreneurship is a key solution for increasing employment opportunities in Serbia. Čadež added that the SCC is continuously working to encourage and support business start-ups.

Axel Dittmann, Serbia’s German ambassador, noted that youth unemployment is an important segment to be addressed. Dittmann also said that Serbia’s youth have the greatest potential to boost the country’s economic growth. Snežana Klašnja, Serbia’s assistant minister of youth, says that while only 817 young Serbians have been employed through her ministry’s initiatives, there is still much work to be done.

Serbia’s Increasing Employment Rate

In October 2017, there were 622,000 unemployed people in Serbia, a slight decrease from the 55,000 additional Serbians unemployed in 2016. “We expect for the annual unemployment rate to further drop,” says Zoran Martinovic, the director of the National Employment Office. Martinovic also revealed that 206,000 Serbians found employment in the first nine months of 2017.

Martinovic added that IT professionals, engineers and financial experts are most in demand for Serbia. A few unemployed Serbians expressed interest to participate in retraining programs as well. Serbia’s government is implementing a retraining program for 900 IT professionals who are preparing for more complex IT jobs.

ICT Hub’s Success in Serbia

Decreasing job opportunities have also caused many Serbians to leave their country. However, a program known as ICT Hub is working to increase employment opportunities in Serbia. Launched as part of a partnership with USAID in 2014, ICT Hub mentors Serbia’s entrepreneurs, helping them avoid the risks and costs of pursuing innovative ideas.

“Many of my friends left Serbia, but I believe one can succeed here just as anywhere else,” says Uroš Mijalković, a Serbian entrepreneur who managed to create a mobile gaming application with ICT Hub’s help. Mijalković’s gaming application Karate DO is now played by 12,000 people in 162 countries. “So far, 25 businesses with market potential have gotten off the ground at the ITC Hub,” says Kosta Andri, the ICT Hub’s director.

While these efforts are helping Serbian citizens find more job opportunities, there is still much work to be done. The growing rate of Serbians leaving their country can still decrease based on the help of Serbia’s government, ITC Hub and other entities. For now, the main goal of these projects and efforts is to increase employment opportunities in Serbia.

– Rhondjé Singh Tanwar

Photo: Flickr

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Entrepreneurs May Be the Solution to Rural Poverty in Africa

AfricaRural Africa is one of the most poverty-stricken regions of the world. Half of the global poor live in Sub-Saharan Africa and 389 million in this region live on less than $1.90. While other regions in the world have seen drastic reductions in poverty, progress in Sub-Saharan Africa has been slow. Even though the persistence of rural poverty in Africa is a multi-faceted problem, certain primary factors can be addressed. The extreme poor lack access to resources to achieve economic empowerment. Thankfully, organizations like Village Enterprise have stepped up to the plate to introduce new opportunities.

Village Enterprise provides a graduation program on entrepreneurship and innovation for those living in extreme poverty in Uganda and Kenya. The organization hopes that its simple and cost-effective model can help bring an end to extreme rural poverty in Africa. Village Enterprise stands out from other organizations by using a group-based approach. Each business is started by a group of three people and usually provides support for 20 people in the community. When individuals join the program, they can’t pay for their family’s needs and have no business experience. The program includes training, a $150 grant and mentorship for the aspiring entrepreneurs.

81 percent of the businesses started through Village Enterprise were founded by female entrepreneurs. This is especially important, since women reinvest 90 percent of their income on average to their families and communities, while men only reinvest 30 to 40 percent.

Lucy Wurtz, Development and Communications Director for Village Enterprise, told The Borgen Project that the employees on the ground have tools, including Grameen’s Progress Out of Poverty Index, to determine the level of poverty in a community and who could use their services. Then, every household in the community is invited to join the program. While only 30 entrepreneurs can be working and training in a group at a time, Village Enterprise can reach 90 to 100 households in a community a year.

“The idea is everyone who wants to has a chance to participate,” says Wurtz, “so you are lifting up the whole area.”

When the program is finished, Village Enterprise is able to move on. Once the entrepreneurs learn the skills, they are empowered and able to continue improving their economic standing. The business owners are also able to work together as a group, as each member can pick up different skills. Some become especially adept at finance and can help their fellow entrepreneurs with book-keeping. Others may specialize in marketing or leadership.

“Once you give a number of skills to a group of people,” says Wurtz, “that group starts acting as a support body to disperse the skills within the group members and take on the attributes of what you’re teaching.”

Village Enterprise measures the impact of the program by the increase in the standard of living. The organization recently conducted a randomized trial involving 6,000 households and 138 villages in Uganda. Researchers returned to the communities a year after the program was finished to see if there were still significant improvements. The study will soon be available to view on the Village Enterprise website.

The organization is expanding in several ways. It continues to grow in the countries in which it already works, Kenya and Uganda, and is also looking into expanding into other African countries, with the Democratic Republic of Congo being one potential target. One of the factors driving expansion is a new opportunity for donors. Village Enterprise is now participating in an innovative way to finance development: development impact bonds. These bonds get investors to pay up front for the costs of an intervention that can be measured by predetermined metrics. If the goals are met, then an outcome payor, usually a donor agency or foundation, will pay back the investor based on this performance.

Village Enterprise has started over 39,000 businesses and trained over 156,000 entrepreneurs. With hope, this approach can go on to empower and lift up the over 40 percent of Sub-Saharan Africans living in extreme poverty.

– Brock Hall

Photo: Flickr

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Zidisha: A Model for Virtual Microfinance

Virtual MicrofinanceFounded in 2009 by Julia Kurnia, Zidisha is a virtual microfinance platform that seeks to combat poverty in developing countries by directly connecting lenders to entrepreneurs. To date, Zidisha has raised more than $10 million in microloans.

Zidisha, which means “grow” or “expand” in Swahili, is the first virtual microfinance service to eliminate the use of local intermediaries to disburse loans to companies in need. The Virginia-based nonprofit follows a platform similar to that of eBay, in which entrepreneurs post public loan requests for lenders across the world to access. This streamlined process is both cost-effective and convenient for emerging entrepreneurs who seek capital to accelerate their businesses.

Zidisha is not the pioneer of virtual microfinance. However, its distinctive feature is its commitment to lower fees and rates for entrepreneurs. Similar organizations such as Kiva make use of “field partners” who often distribute loans at interest rates of more than 35 percent to pay for administrative costs. Zidisha’s flat interest rate of five percent means that borrowers can retain more money to reinvest in their ventures.

The nonprofit has been a highly successful means of growing businesses in 11 developing nations. According to its website, lenders on Zidisha have fully funded more than 70,000 unique projects.

Developing countries are quickly adopting recent technological advances and joining an increasingly interdependent world. According to a Pew Research study, 54 percent of adults in emerging and developing nations described themselves as “Internet users” in 2015, a rise from 45 percent in 2013. However, in the same countries, formal job markets are inadequate and local banks are seldom financially helpful.

Thus, the use of cheap and effective microfinance is critical to spurring economic growth in emerging countries. Developing economies inevitably benefit from microfinance because entrepreneurs can use loans to pay for expansions, renovations, inventory and, most importantly, new employees.

Other virtual microfinance platforms could follow Zidisha’s cost-effective system of lending. If these platforms truly value charity and philanthropy through the form of financial support, they should recognize that the use of third parties to disburse loans poses a financial burden on emerging companies that cannot afford to accumulate thousands of dollars in unpaid interest.

People in developed nations should embrace the unique power of virtual microfinance. It is a viable, even profitable, form of philanthropy that has tangible effects on the crisis of world poverty. Using microfinance as a means of alleviating global economic distress will directly result in more jobs, profit and prosperity for those in need.

– Henry Emanuel

Photo: Flickr

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Supporting Female Entrepreneurship to Alleviate Poverty

Female Entrepreneurship
In emerging markets, women reinvest 90% of their income back into their local economies. The money they earn pays for their children’s education and their family’s food and medical needs. When women are working, not only is their family lifted up but their community and their country also feel the economic impact. That is why supporting female entrepreneurship helps alleviate poverty.

Female entrepreneurs employ one or more people, and in a survey of 112 million entrepreneurs by the Global Entrepreneurship Monitor (GEM), 12 million entrepreneurs expect to employ up to six people over the next five years. This translates to 72 million jobs. In 2012, 126 million women were starting or running new businesses in 67 economies globally. In sub-Saharan Africa, female entrepreneurship engaged 27% of women. In Zambia, 40% of women are entrepreneurs.

The World Bank announced The Women Entrepreneurs Finance Initiative in July 2017. It is a program that will support loans, mentoring programs and gender equality advocacy for women in emerging countries. Individuals, companies and foreign governments supply the funding for the program. The United States, Saudi Arabia and Germany among other countries pledged an initial $325 million. The goal is to raise $1 billion.

The World Bank has a long history of supporting the success of female entrepreneur programs. The International Finance Corporation (IFC), the private arm of the World Bank, partnered with Goldman Sachs’ 10,000 Women Program in 2014 and set up a $600 million fund that provided training and access to capital to women starting small and medium-sized companies.

The World Bank also partnered with the United States Agency for International Development (USAID) in 2011 to create the Women’s Leadership in Small and Medium Enterprises (WLSME) trust fund. WLSME supports fostering new enterprises and the growth of businesses in developing countries. The grants offered by WLSME test and rigorously evaluate the programs to understand what works best in the 12 countries involved.

There are approximately 9.34 million small and medium-sized businesses globally. The programs developed by the World Bank and other institutions will help women receive money to start and grow their businesses. It will also provide financial education and the mentoring necessary for female entrepreneurs to be successful.

Women entrepreneurs are instrumental in powering economic growth in developing nations. And as the emerging nations grow, world poverty will become closer to eradication.

– Jene Cates

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