Starting a Microfinance Business at age 19

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Best Ayiorwoth, winner of the 2013 Anzisha Prize

When Ugandan Best Ayiorwoth had to cut short her high school education because her family could not afford to pay her tuition, it broke her heart. However, this became the driving force that inspired her to start an award-winning microcredit business, at just 19 years old, that would go on to help hundreds of women and young girls in Uganda.
 
“Personally, I love being educated. I always wished to go to high standards in my education if it was possible. But unfortunately I did not have the chance to go to the level of education I wanted and I stopped at Secondary Four in Uganda,” Ayiorwoth said.
Having lost her father at the age of eight, Ayiorwoth’s mother strained to look after a family of seven in the Nebbi District in northern Uganda.

“My mother pushed me up to Primary Seven and she died while I was desperately waiting to join high school. I was 13 years old then. My two older sisters and brother struggled to push me to Secondary Four,” she explained.

“I never wanted to stop at that point in my education so it angered me… I would always remind myself that someday when I could, I would ensure that every girl child in my community received the best education they could.”

Start-up capital from her first salary
At the age of 17, Ayiorwoth moved to Kampala and joined vocational training schools that offered courses such as catering, graphics and web design. She later joined S7 Project, a skills empowerment centre, and got trained in catering and entrepreneurship. Through S7 she got a job working in a Mexican restaurant, where she received her first salary and the startup capital she would later use to follow her dream.

“I wanted to prevent what happened to me from happening to other girls because I knew it was a social injustice. So the first salary I got from the restaurant is what I used to open my organisation,” explained Ayiorwoth.

She realised that if she could empower mothers financially, they would support the education of their children, especially young girls. “I have seen that when families can’t maintain all their children at school and have to make a choice, they would often choose a boy over a girl,” she highlighted.

In early 2011 Ayiorwoth went back to the Nebbi District – where she had witnessed many girls, like herself, drop out of school – and started the Girls Power Micro-Lending Organisation (GIPOMO).

Using her savings of USh 100,000 (US$40), Ayiorwoth started slowly by giving monthly micro loans to enable women to grow their small businesses. With a 10% interest rate, she kept reinvesting her profit back into GIPOMO. It wasn’t long before her initiative caught the attention of her mentor at S7, who loaned her an additional USh 800,000 ($322) to boost her enterprise.

“My organisation has a unique twist in microfinance by providing tied loans to women who make a commitment to grow businesses while keeping their girl children in school,” added Ayiorwoth.

Today GIPOMO has helped 64 women start their own businesses, 111 women expand their existing businesses, and kept 168 girls in school by supporting their mothers.

At the beginning of 2013, Ayiorwoth won USh 1m ($400) at the FINA Africa Enterprise Business Challenge. In August she won first place and US$25,000 at the Anzisha Prize, a competition that recognises and celebrates African entrepreneurs under the age of 22 who are using entrepreneurship to solve problems in their communities.

Using a portion of the prize money, GIPOMO has already scaled up its operations four-fold, expanding to four different sub-counties in northern Uganda.

Innovative thinking to overcome challenges
Ayiorwoth started off providing credit to individual women but after two did not repay their loans, she changed her business strategy. She decided that in order for women to access finance, they needed to belong to a group of at least three. The strategic thinking behind this was that the women in a community knew each other and could group themselves with people they trusted to become guarantors for each other’s loans.

“We give them the freedom to choose who they want to be with in a group so that loans are secured. So if one woman has a problem of paying then the two others can always figure it out and stand in for that person,” explained Ayiorwoth. “This makes it easy for women without formal collateral to access financing in an easy way.”

Another challenge Ayiorwoth faced was that many of the women she worked with were illiterate, and the use of multiple languages made communication a challenge. To reduce this problem she collaborates with local government women representatives in communities to assist with communication.

Furthermore, Ayiorwoth explained that if she discovers that the mothers are not investing in their daughters’ schooling through income earned in their business, they will be disqualified from accessing finance from GIPOMO.

“That is the reason why we sometimes talk to those girls personally and we enquire exactly what is happening,” she added.

GIPOMO has also launched a Women in Agriculture fund, in collaboration with the Ugandan government, to provide microfinance to women interested in commercial agriculture and value addition.

Ambitious plans for the future
At the moment, GIPOMO only operates in one district in northern Uganda but Ayiorwoth, who has just turned 22, has big plans for her organisation.

“Right now I’m just trying to lay a good foundation so we can achieve real impact in one district. But in five years I see my organisation directly reaching 5,000 women in northern Uganda; and in 10 years, launching similar initiatives in different parts of the country. And we can even go further ahead and say that I see my model being replicated in various African countries because I know that the same problems are faced elsewhere,” she emphasised.

“For me, this is a new movement that redefines microfinance; to provide for specific needs in specific communities. Microfinance can never be relevant if it has one model. In one community, it should provide affordable finance for girl education and in another, it should provide affordable finance for land ownership – whatever the challenge a community faces.”
According to Ayiorwoth, GIPOMO is also launching an Education for Girls fund that will focus on providing no-interest loans to households interested in enrolling out-of-school girls into a skills development programme.

“I believe that once the girls possess practical skills, the chances that they will establish enterprises that apply these skills are high,” said Ayiorwoth. “In this way, my organisation would be developing a new generation of mothers that are skilled, entrepreneurial and financially empowered to contribute to family welfare and the education of their daughters.”

Advice to other young entrepreneurs
Ayiorwoth accredits a lot of her success to her mentor at S7, which she said continuously encouraged and challenged her to utilise her full potential.

She also wants to tell other young entrepreneurs that, no matter what their background, they have the potential to make a difference in their lives and the lives of others.

“They have to actually do something that they feel strongly passionate about, and in most cases they should seek inspiration from their own experience… If you had a terrible experience, you should despise the experience to the extent that you are continuously seeking a solution for it,” she concluded.

Source: How We Made It in Africa

Youth Entrepreneurship -- a Pivotal Engine of Growth and Sustainable Development

By: Njideka U. Harry, Founder and Chief Executive, Youth for Technology Foundation (YTF), Nigeria; Schwab 

                                 Social Entrepreneur of the Year 2013

Africa has an unprecedented opportunity to invest in its youth, the continent's largest population, if it wants to create a future for herself. Timing is critical to harness the demographic dividend the "youth bulge" brings. There is, however, only a small window of opportunity.

The World Bank Youth Summit in Washington, D.C. last month provided a forum to highlight the importance of youth's role in the global development agenda. It proposed knowledge exchanges between development practitioners, change-makers and opinion leaders. All players are engaged in three primary sub-themes: education, entrepreneurship and millennial communication.

There is inadequate focus and a lack of an innovation culture within schools and tertiary institutions on the practical skills required to start, manage or work in entrepreneurial ventures. A recent report from the Omidyar Network noted that among colleges and universities in sub-Saharan Africa, only seven percent have an entrepreneurship center dedicated to entrepreneurial development, 28 percent offer courses specializing in entrepreneurship and 10 percent offer courses in innovation and technology. Compare this to Singapore, a country that provides mandatory entrepreneurship education for one year within the primary school system.

If youth are provided with the right skills, they can reap the benefits of employment from digital outsourcing. The most successful nations, i. e. the competitive advantage societies, create wealth by exporting complex products and services. The right investments will drive economic gains created by highly skilled people. As labor in China becomes more expensive, for example, companies are using more upstream local entrepreneurs. In a similar vein, European companies are setting up overseas sales networks and establishing offices abroad, moving their businesses from China to Ethiopia for instance.

Micro entrepreneurs on the street of Accra. ©EnterpriseAfrik

Creating a society that encourages youth-led entrepreneurship and makes it easy to start and grow a business requires more than just money and a good idea. It requires a whole network of interlocking institutions, polities and cultural attitudes, collectively known as the "entrepreneurship ecosystem." The question then becomes, "How do we deliver a democracy that delivers for entrepreneurs?" The environment, financing opportunities, culture and mentoring are instrumental.

In many African countries, the cost of capital is often so high that it impedes the entrepreneur's profitability. For young entrepreneurs, government funding is viewed as difficult, if not impossible to access due to bureaucracy and nepotism. The summit was an opportunity to entice Africa to step out of their "survival trap" mindset, reacting to urgent symptoms instead of addressing the root causes. While short-term actions often bring some relief, they also perpetuate this vicious cycle by ignoring the root causes. In Nigeria, the Subsidy Reinvestment and Empowerment Program (SURE-P) and the Graduate Internship Scheme (GIS) were initiated in 2012 by the Federal Government to reduce youth unemployment. It is a little too early to fully understand the fate of these programs, however.

Few avenues of support are available to help youth identify their passion, and build the confidence required to convert that passion into a viable business. Networks of support services can be set up where local business professionals are identified, documented, mobilized and incentivized.

Within the limitations of these constraints, in environments far from enabling, it is difficult for youth-led businesses. The road to entrepreneurship is long, it is rough, it is hard. We must keep trekking as it is only then that change will come.

Africa’s Development will come not from Oil but from its People

Eddah Gachukia

In 1974, Dr Eddah Gachukia and her husband Dan took over a small kindergarten in Nairobi that schooled 20 pupils. The acquisition was driven by their passion for education. Gachukia, who is a teacher, was fascinated by how children learn.

“What I was interested in as a curriculum developer is how children learn to read and how they learn numbers from scratch. When they come to kindergarten they are very fresh. I find that really exciting,” she says.

The couple opened the school to African and Asian children and by the 1980s there was a demand for high levels of schooling.

“It became very interesting. Parents forced us to start a primary school with three students only. We divided up our living room to create a classroom and started teaching them. Eventually, two more students joined, so, the whole year we had five students in primary school,” says Gachukia.

Today, Gachukia runs the Riara Group of Schools which operates two kindergartens, two primary schools, a girl’s secondary school and a university in Nairobi.

Gachukia says the Riara Group of Schools has grown organically as demand for quality education increased. The Riara University, which is the group’s latest addition, was inspired by her desire to improve higher learning in Kenya.

“Look at the demand. As an entrepreneur you will be foolish not to look at the demand. The statistics show that the demand for university education in Kenya is very high,” she says. “As an educator I have that nagging feeling that perhaps I can improve the education offered at university level.”

However, establishing and running the university has been challenging.
“To go to a bank and borrow money to establish a university, I call it economic suicide. But entrepreneurship is always a risk. Every day is a risk. You can call it some level of craziness. It is an obsession. Building a university is really crazy.”

Women face challenges
According to Gachukia, running the business as a woman has been challenging and her husband’s support has been crucial in the success of Riara.

“Banks wouldn’t lend any woman money. The banks were purely prejudiced. They couldn’t understand that a home could belong to two people. Even the law then made women dependents. Women were not paying tax [and] did not exist as far as the Kenya Revenue Authority was concerned,” she says.

Gachukia advises African women to go for their dreams and take advantage of the gains made in empowerment for women.

“Many institutions still favour men; there is no doubt about it. But look at what we have achieved in the last 40 years. The world has become a much better place for women. A lot of restrictions have been removed and women today can afford to think bigger than we did. I would say start small and then grow gradually.”

Gachukia is passionate about the power of education to transform communities. For Africa to develop, she says countries need to prioritise education.

“Unless all our children are in school, we can’t talk about development. Development will not come from minerals and oil; it will come from the people themselves. It is the way they think and how productive they are in whatever they do,” says Gachukia. “We need to train thinkers and innovators. These are people who can make it wherever they go.”

Education is highly relevant
At a time when youth unemployment on the continent is high and stories of school drop-outs who have made their fortunes such as Bill Gates and Mark Zuckerberg make the rounds, Gachukia maintains that education is still relevant.

“Any wealth you have created or earned faithfully requires some intelligence. To me that is education. Education is an engagement, it is not an event or certificates. It is a process that gives you knowledge and enables you to think. Even entrepreneurship is something we need to teach in school.”

One of Gachukia’s sons quit his broadcasting job to go into farming.
“He is utilising every piece of that land beautifully, yet he has never studied agriculture. I am looking at education that leaves you with something, not with geography and history, but with that capacity to utilise whatever resources you have.”

Moving forward, the 77-year-old educator is focusing on growing the Riara University.
“We are being called to build satellite schools in towns neighbouring Nairobi. To manage that, for a person of my age, I don’t think I can. Old age requires that I sit back, meditate, grow the university and see to it that it turns out to be what we dreamt [it could be].”

To be a successful entrepreneur, Gachukia believes one ought to have passion, a compelling dream and a never say die attitude.

“If things go bad, you go back, recoup what you have lost and get on with it. Perseverance is very critical. That capacity for survival needs to be higher. Don’t be wobbly. If you are committed to that dream, you will see a lot of possibilities coming in.”

Source: How We Made It in Africa