Let me tell you about Chris…

About 1 year ago Chris was sponsored to attend one of the African Inland Church’s (AIC) Vocational Training programs. He chose to take catering (this includes food preparation, hygiene, serving, laundry, etc). At the end of his year long training and three month attachment (unpaid internship) he began looking for work. Unfortunatelyfor him, there was no meaningful work to be found.

Not to be deterred, he approached the AIC with a plan to set up his own food stall in the Toy Market in Nairobi. He needed 20,000 Kenyan Shillings ($1 CDN = 70 Ksh) to rent and fix up a stall for cooking and he hoped to make 200 ksh a day after paying back all expenses, wages for 3 employees and loan repayments of1,000 ksh a month. Not bad considering just over a year ago this young manwas without a future of any kind, living in one of the world’s largestslums.

As it is with most stories, it does not end there. Just one month after setting up this business, Chris got a job making cakes that paid 7,000 ksh a month. A true entrepreneur he decided to take the job while continuing to run his business. Unfortunately, businesses require time and careful attention, especially in the beginning stages. He is now down to only 1 employee, but still is making his loan payments and developing his customer base. We took a look at his books and found that after he shrunk the business down, he is still able to make 300-700 ksh a day (not including wages and loan repayment). His hope is that he can he can quit the job and focus on growing the business until he can leave it in the care of others and move on to the next oppportunity… a true entrepreneur!

This story should sound remarkably familiar, much like every other microfinance story you hear nowadays. However, it is fundamentally different. Mirco-finance (MF) has evolved and is now very institutionalized. MF groups are more like banks than non-profits and, as such, have fairly strict loan criteria. While they still focus on the poor, they really are only set up to help the reasonably poor. You must have savings, or collateral, or must put a % of the loan into an account in order to qualify. While MF has helped raise people up the economic ladder, it cannot fully address the bottom rungs as it currently is done.

Something to think about is the question posed earlier, “How can the micro-finance concept be expanded to help those who cannot even cover their own basic necessities?”

This entry was posted on Thursday, July 24th, 2008 at 9:25 am