SIA’s pay-it-forward model in the news

SIA’s pay-it-forward model in the news

In January 2013, Lackson Lungu bought two piglets with a Spirit in Action Small Business Fund grant. We gave the $150 as a grant, without the high interest rates and short repayment schedule that so often come with microfinance loans.

However, there was a string attached. We asked Lackson to pay-it-forward to help someone else in need, once his business was successful. Lackson was happy to comply and in May 2014 he gave one of the piglets from his successful piggery to Tiwonenji, one of the widows in his village of Manyamula, Malawi. (Read more of his story here.)

This pay-it-forward aspect of the Small Business Fund means that each grant sets off a ripple of change. Sharing the Gift can take the form of sharing piglets, teaching other women to bake and sell donuts in the market, teaching sustainable agriculture skills, and sharing seeds or food with more vulnerable members of the community.

Yesterday, Humanosphere, a news agency that focuses on stories of the fight against poverty, gave a shout-out to Spirit in Action for our pay-it-forward model. In her article, “Pay-it-forward model shows potential for microfinance in developing nations,” Lisa Nikolau notes that we are part of a movement that is looking at new ways to help people thrive, without getting them trapped in cycles of debt.

Nikolau quotes Muhammad Yunus, the man who helped develop and popularize micro-credit around the world, who said“Poverty should be eradicated, not seen as a money-making opportunity.” And we whole-heartedly agree!

I encourage you to read the full Humanosphere article here.

The ripple of change continues with Tionenji paying-it-forward to Msumba.

The ripple of change continues with Tionenji paying-it-forward to Msumba.

4 photos, 4 stories

4 photos, 4 stories

These are the faces of Spirit in Action. Each photo captures just one moment and represents a much larger story of struggle, success, and joy.

Passionate Volunteer. (Pictured above) Dennis Kiprop with his wife, Nancy, and their son, Timo. Dennis volunteers with SIA as a Small Business Fund Coordinators in Eldoret, Kenya. He has a degree in business administration and is passionate about helping people prepare their business plans and start a successful small business. He assisted me in developing a opportunity and risk assessment for new business groups to use in their planning.

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Bridging Spiritual and Economic Barriers. Madina sells shoes with her sister and mother along the roadside in Nairobi, Kenya. With the profit, her sister was able to go see the eye doctor. They are one of several Muslim families in the Small Business Fund program in Nairobi. Christian and Muslim Small Business Fund groups have formed a savings cooperative together and they meet weekly to contribute savings and give small loans to members. (Read more about the SBF groups in Nairobi.)

DSC04515_1024Building a Dream. Before connecting with SIA, Paul, a shoemaker in rural Malawi, took a loan from micro-lending institutions in Mzuzu, about 15 miles away. With the high interest rate and short loan period, he was unable to repay the loan and he lost his collateral to the lender. Since receiving a Small Business Fund $150 grant in 2006, I have witnessed Paul go from one success to another. When I visited in 2011, Paul showed me his shoe repair stall in the local market. He told me of his dream to build a house and showed me the few iron sheets he had already purchased. In 2014, I visited him at his house! It was complete with cement floors, a tin roof, and sturdy brick walls. In his smile, I see the joy and pride of a dream fulfilled. (Read more about Paul’s journey here.)

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Long-lasting Impact. Steria Lungu, a widow in Manyamula Village, Malawi, used her $150 Small Business Fund grant to start a donut shop. She started her business in 2010 and it is still thriving! In 2011, Steria began saving her profits to buy iron roofing sheets to replace her leaky thatch. Today she has a new roof and when I visited, she was so proud to show me her family’s store of maize, “We now have no problem with food.”

Choosing new business groups in Uganda

Choosing new business groups in Uganda

The training started with the chairperson describing how the word TEAM is an abbreviation. It really stands for Together Everybody Achieves More. “He therefore strongly advocated for the spirit of ‘Each for All and All for Each’ if we are to succeed in any event,” read the meeting minutes. And so the group gathered agreed to be a support for each other to make their businesses successful.

This meeting, held in January, is part of the recent expansion of the Spirit in Action Small Business Fund in Uganda. The chairperson is one of the local leaders who will help with training and mentorship. And he is working together with our new coordinator team there – Naomi and Santa.

So far three families in the remote village of Amukugungu have received their $150 grants from SIA. They all decided to use their grants to start piggeries and they are now building the shelters, which will help keep the pigs healthy.

Naomi (in green) goes through the small business training manual with the new business groups.

Naomi (in green) goes through the small business training manual with the new business groups.

 

How were the families chosen?

Santa and Naomi select the grant recipients using a method called the Poverty and Opportunity Assessment. It helps identify families in need who are also in a position to leverage the grant to start a successful endeavor. If a family is currently facing immediate financial needs and illness, then they may be better served with food and care to address those pressing needs rather than receive the SBF grant, which is designed to be an investment.

When identifying household poverty, Santa and Naomi assess the quality of household utensils. Are the plates and cups broken? Is there a proper saucepan for cooking? They also look at the diet and the variety of food that the family eats. Since this is a rural village, the third assessment criteria is the family’s ability to purchase high-quality seeds. Finally they review the sleeping facilities. Does the family have have a mattress or do they sleep on the ground with a mat?

When looking for opportunities, Santa and Naomi noted when families had plots of land that they could use to build a pig shelter or use for small-scale farming. If families are near the stream they may be able to make bricks or create a fish pond. Sometimes a family has a bicycle, which could be used for selling things door-to-door or at a farther marketplace. 

These three families were chosen because they are both in great need and ready to take on the challenge. They are eager to start and to keep working together to create the best possible future for everyone!

For more about how we choose: http://spiritinaction.org/choose/

On

How does the Small Business Fund work?

How does the Small Business Fund work?

I talk a lot about our Small Business Fund program. Today I’m reposting my (updated) FAQs about how it actually works!

1. What is the SIA Small Business Fund (SBF) and how does it work?

The Small Business Fund (SBF) is SIA’s program to support economic development in developing countries. SIA has supported 660 small businesses in Kenya, Malawi, DR Congo, Rwanda, Nigeria, Uganda, India, and Philippines since the program started in 2003.

Groups (often family groups) of 3-5 people receive business training and a $100 initial grant to start or expand their business. After three months, if the group is successful, they receive an additional reinvestment grant of $50.

The SIA office receives a copy of the business plan, a 3-month Business Report and a One Year report, so that we can follow the group’s successes and challenges.

2. So it’s a grant, not a micro-loan?

Our grants are the first step out of poverty and can eventually lead to micro-loans once the businesses are established. Micro-finance institutions, even ones that claim to help the poor, often require high collaterals and have crippling interest rates – we heard countless stories about families losing their belongings and being charged as much as 48% interest on a two week loan. SIA works with people and in areas that are often ignored or exploited by micro-finance institutions.

It is rarely acknowledged that no company in the United States begins without start-up capital from outside investors. These investors are known as “angel investors” because they believe in the business model and they are willing provide the entrepreneurs with the capital needed to get their idea off the ground.  SIA follows the same principle; SIA donors are effectively Angel Investors for people in developing countries.

3. Who are the SBF Coordinators?

We currently work with six SBF Coordinators who serve in their local communities. They are dedicated volunteers with experience in community development, who work with our SBF Guidelines and send us reports and stories of the businesses. Before people become SBF Coordinators, we get to know them over the course of many months to establish a relationship of mutual trust. Through this process, we also come to better understand the specific needs and challenges in their community.

SBF Coordinators canaan Gondwe (Malawi) and Dennis Kiprop (Kenya) at our conference in Uganda in 2014.

SBF Coordinators canaan Gondwe (Malawi) and Dennis Kiprop (Kenya) at our conference in Uganda in 2014.

4. How do you decide who receives the grants?

Our SBF Coordinators develop location-specific criteria to identify the poorest households in their community. They visit families to ask how many meals they eat and if children can attend school, and to detect the opportunities and skills that the family could use to start a new business.

5. What do you provide in addition to the grant?

Before anyone receives a SBF grant, they receive business training from our Coordinators. They learn about record keeping, accounting, decision-making, marketing, and budgeting.

After receiving the grant, the Coordinators continue to check-in with the group, offering tips to help them improve their business and giving words of encouragement. Many people we met in Kenya and Malawi appreciated this individual support and saw this as a crucial part of their success.

6. Is $150 really enough to start a business?

Yes! Without capital, capable business people cannot get the start-up supplies needed to open a business. The initial $100 grant can enable them to buy materials for repairing bikes or items for their new store.

To ensure that the businesses continue to thrive, our SBF program also requires reinvestment. Members often reinvest 25-50% of their profits to expanding their business.

7. What kinds of businesses do people start?

People start businesses to fill the needs and wants in their community.

Some typical businesses are:

  • Farms (maize, vegetables, tomatoes, cassava, etc.)
  • Bakeries and restaurants
  • Brick making
  • Basketry and other handicrafts
  • Buying items in bulk and reselling in the market
  • Small grocery stores
  • Read more about typical businesses here.
This woman and her husband started a pottery business in Uganda. He forms the pots and she fires and paints them.

This woman and her husband started a pottery business in Uganda. He forms the pots and she fires and paints them.

8. What do people do with their business profits?

SBF members use their profits to expand their businesses and improve their lives. After receiving the small SBF grant, their businesses can generate enough profit to:

  • Send a child to school
  • Buy roofing for their house
  • Buy new clothes and shoes for their families
  • Provide better food
  • Buy a bicycle, so that they don’t have to walk everywhere
  • Buy more items to sell in their stores
  • Read more here.

9. Shouldn’t people have to pay back the grant with their profits?

Rather than ask people to pay back the funds to SIA, we ask them to pay it forward, through our Sharing The Gift initiative.

Once a business has been successful they give back to help someone else. For example:

  • Winkly in Malawi received the gift of a piglet from a successful SBF piggery
  • 5 groups in Nigeria saved $150 from their business profits so that someone else could start a business.
  • Mary in Kenya trained another woman to make wedding cakes, so that she could open a new business.
  • Read more Sharing the Gift Stories here.

10. How do your Christian principles enter into the SBF program?

Most of the people we work with come from a Christian faith tradition and people from many different churches and denominations come together through the SBF program. Our training guidelines teach about listening prayer and starting prayer groups to help group members share their problems and pray together for solutions. However, SIA is not evangelical and does not require anyone to declare his or her faith to participate.

Your donation of any amount helps people start small businesses and live up to their potential! We invite you to become an Angel Investor and take a chance on these worthy business-people. You can donate online or find more information here.

Welcome another Small Business Fund coordinator team!

Spirit in Action is expanding and strengthening our Small Business Fund network!

I met Naomi Ayot when I was visiting Kampala, Uganda in 2014. She was working for Raising the Village at the time and I met with her to hear about an update on the Bucece sustainable agriculture grant. She also safely delivered me from a sketchy bus stop to my hotel, for which I will be forever grateful!

I was impressed with Naomi’s professionalism and passion for helping others, and so I am extremely pleased to be able to welcome her to the SIA SBF team! When I talked to Naomi, she knew immediately a village that could really benefit from our $150 grants and business training. Better still, she knew a local leader there that would work with her.

Naomi and Santa Enume reviewing the Small Business Fund materials.

Naomi and Santa Enume reviewing the Small Business Fund materials.

Santa Enume is a respected leader in the Akwiridiri village in northern Uganda, a midwife and community elder. This very rural village was heavily affected by the violence of the Lord’s Resistance Army in the last 20 years and as a result there are a lot of female-led households, widows, people living with HIV/AIDS, and orphaned children. Santa Enume is eager to work with these women and their families to help them start small businesses and improve their lives and the community in general.

This SBF Team model has been very successful in Nairobi, with Wambui and Josephine. Wambui is my direct contact and she works with Josephine who lives in the Koch slum where we give the grants. Josephine provides the hyper-local knowledge necessary to make the SBF work for the women, and Wambui helps prepare the reports and keep me updated.

Women from 8 SBF groups in Korogocho slum. Wambui, the local coordinator stands behind Tanya. Josephine is pictured left of Tanya.

Women from 8 SBF groups in Korogocho slum. Wambui, the local coordinator stands behind Tanya. Josephine is pictured left of Tanya.

The closest computer to Santa Enume is about 20 miles away. Clearly, it would be difficult for me to communicate directly with her. However, with cell phones ubiquitous throughout Africa, Naomi can easily keep in touch with her and relay information to me. Del would be impressed with all that is possible with technology these days!

In December, Santa Enume made the long journey to be with Naomi, so that they could review the SBF materials, report forms, and training tools. They also took time for prayer together. Last month we sent the funds for the first three new small businesses to a newly established SBF bank account. I’ll keep you updated as these new businesses get off the ground! In the meantime, please give Naomi and Santa Enuma a warm welcome!

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