Micro-credit is not sufficient for the success of micro-enterprises at the bottom of the pyramid

Abstract

This study examines the factors affecting the successful provision of micro-credit to people at the bottom of the pyramid and discusses the activities required to support entrepreneurial activities in a peri-urban African setting. The findings enable us to better understand why micro-credit, though useful, is only part of the solution in a setting characterized by extreme resource constraints with an institutional fabric lacking the infrastructure that assists market development. We depict the crafting of new entrepreneurial activity as an ongoing process and present an emerging research agenda for future developments.

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Micro-credit is not sufficient for the success of micro-enterprises at the
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MICRO-CREDIT IS NOT SUFFICIENT FOR THE SUCCESS OF MICRO-
ENTERPRISES AT THE BOTTOM OF THE PYRAMID
ABSTRACT
This study examines the factors affecting the successful provision of micro-credit to people at
the bottom of the pyramid and discusses the activities required to support entrepreneurial
activities in a peri-urban African setting. The findings enable us to better understand why
micro-credit, though useful, is only part of the solution, in a setting characterized by extreme
resource constraints with an institutional fabric lacking the infrastructure that assists market
development. We depict the crafting of new entrepreneurial activity as an ongoing process
and present an emerging research agenda for future developments.
Key words: micro-credit; developing economy; entrepreneurship; micro enterprises, bottom of
pyramid, social capital.
INTRODUCTION
Micro-credit has often been used as a poverty alleviation strategy. However, there is little
evidence to suggest that micro-credit alone can promote economic activities because micro-
credit does not teach anything (Brett, 2006; Mayoux, 1999; Sievers and Vandenberg, 2007).
The focus of micro-credit has been the alleviation of immediate poverty rather than the
development of economic activity that would provide a long term solution. Paraphrasing the
age old saying, “Give a man a fish and you feed him for a day, teach him to fish and you will
feed him for a life time”, micro-credit enables the fisherman to buy a net, but in many cases
does nothing to ensure that he knows how to use it to benefit his family and the community.
If the borrower doesn’t know how to use the net, he will return to his old way of doing things
– but with the added burden of having to pay back the debt.

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As a result, given the state of extreme poverty under which the vast majority of the
population lives in, borrowed money is often used for purposes other than creating the
foundations for a sustainable economic growth. Typical examples of how micro-credit is
generally used include covering funeral costs, buying food, medicines, and other similarly
important necessities. The main problem that derives from spending money to meet personal
and social responsibilities is that borrowers are also exposed to the risk of over-indebtedness,
with its subsequent human and social implications.
One way of using the money that has been repeatedly identified as having a potentially huge
impact in helping to achieve a sustainable elevation from extreme poverty is through
entrepreneurial activities (Global Entrepreneurship Monitor, 2005; Baumol, 1996). The
World Bank suggests that micro-credit as part of an entrepreneurial development approach
that also focuses on education, skills improvements and innovation (Acs and Virgill, 2010)
can indeed have a lasting effect not only on economic growth, but also on economic
development and poverty. As a result, some Community Driven Development (CDD)
initiatives are set up as entrepreneurial development programs and provide micro-credit to
survival entrepreneurs (Rogerson, 1996) as part of their strategies. In doing so they aim at
supporting the creation of viable micro businesses that can sustainably support the improved
living conditions of borrowers once loans are repaid.
This paper responds to recent calls for more studies to understand microcredit and its effects
on enterprise development for people living in extreme poverty. It is our hope that this study
will not only stimulate future research, but also suggest new ideas and structures for
development agencies and institutions to further improve entrepreneurial development
programs. We asked the question: What are the factors needed for the successful
implementation of micro-credit in developing entrepreneurs in desperate poverty settings?

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Given the research context, the term micro-credit in this paper refers to the lending of small
sums of money to the poor for the establishment or growth of micro-enterprises, without
traditional collateral (Charitonenko and Campion, 2003, Mwenda and Muuka, 2004). With
regard to entrepreneurship there are many definitions. In this paper the definition by Hisrich
and Peters is used which allows for a wide range of cultural contexts and stages of
development describing entrepreneurship as: “the process of creating something new with
value by devoting the necessary time and effort, assuming the accompanying financial,
psychic and social risks and receiving the resulting rewards of money and personal
satisfaction and independence” (1998:9).
Our analysis will consider a sample of survival entrepreneurs who benefited from the
delivery of micro-credit to help them take down one of the main barriers to entrepreneurial
activity (i.e. finance). Data analysis will also identify the other problems usually faced by
survival entrepreneurs and an examination of each will follow with suggested solutions.
Finally, an entrepreneurship framework for desperate poverty settings is proposed.
BACKGROUND LITERATURE
First we examine various schemes of micro-credit delivery to identify the strengths and
weaknesses of this service so widely used in settings of poverty. Next we discuss
entrepreneurship in the context of developing countries and particularly with regard to the
desperate poor, who are classified as ‘survival’ entrepreneurs because driven to it by
necessity. Finally, we broaden our lens to consider the conditions that are generally believed
to mostly influence entrepreneurial activity.
Sources of financial assistance in Sub-Saharan Africa

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The terms micro-credit and micro-finance are often used interchangeably. Micro-credit
focuses on overcoming the structural barriers to the poor accessing credit. These barriers
include: lack of information, lack of collateral, high cost, high risk and systemic market bias
against the poor. Micro–finance on the other hand can be defined as a development approach
that provides, credit, savings and insurance services (Elahi and Rahman, 2006).
When exploring the role of micro-credit it is important to understand the population served.
Particularly in Africa, many countries have 80% or more of their population below the $2 a
day poverty line. There is no significant middle class to service as occurs in many Asian
economies, illiteracy rates are often high, infrastructure inadequate and the health and
wellbeing of most of the population plagued by diseases no longer existent in the developed
world.
While the word micro-credit did not exist before the seventies (Yunus, 2003), it has now
become a ‘buzz’ word, often simplistically seen as the answer to all development issues.
Some of the conflicting findings concerning the impact of micro-credit may reflect not a
weakness in the idea, but in the delivery mode. Three different types of entities generally
provide micro-credit to the poor: formal (banks) and informal (money lenders) profit-oriented
institutions; development banks and semi-formal institutions such as NGOs specialized in the
offering of preferential loans; and community development initiatives. Issues arising from
lending practices in lending institutions are summarised in Table 1.
-----------------------
Insert TABLE 1 here
------------------------

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Profit-oriented institutions
Profit-based institutions sit within familiar banking frameworks and as registered financial
institutions must apply the rules and procedures of their industry, without regard to the nature
of the customer. Lending institutions show excellent results with regard to micro-credit by
measuring only two variables: the number of people served, and the repayment rate (Buckley,
1997; Karim, 2008; Weber, 2002). On both counts the results are impressive. The third
element that contributes to their financial returns is the interest rate applied to the loans. As a
result, lending success is measured in terms of: ‘number of loans’ X ‘repayment rate’ X
‘interest rate’.
Apart from the questionable practices adopted in delivering credit to the poor, such as
charging high interest rates (Brett, 2006; Byiers, Rand, Tarp and Bentzen, 2009; Maimbo,
2002; Rugimbana and Spring, 2009; Yunus, 1994), tacit encouragement of over indebtedness
(Hudon 2009, Chamlee-Wright 2005), use of ‘social’ collateral to guarantee repayment (Brett
2006, Cuong 2008, Karim 2008, Weber 2002), and the potential disempowerment of women
(Rugimbana & Spring 2009, Brett 2006, Mayoux 1999, Qudir 2003), there is also a second
important consideration to be made when servicing the very poor. Many banks do not target
the real bottom of the pyramid because of the prospect of lower successful repayments. This
strategy is in line with Robinson’s argument (2001) that commercial micro-finance is not
appropriate for extremely poor people who are badly malnourished, ill and without skills or
employment opportunities. For these people micro-finance is the next step – after they are
able to work.
Of course, this approach, begs the question: How do people in developing economies, with
little or no education get their foot on the first step of the economic ladder? How do they
move into a position where they could access commercial micro-finance?

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Development banks and NGOs
The majority of NGOs and Development Banks do not offer a valid answer to the question
above because they provide micro-credit as a form of assistance. But simply receiving
assistance to feed themselves does not facilitate the growth process required to access
commercial micro-finance.
Micro-credit programmes, especially with regard to reaching poor women in rural areas
successfully drew the attention of the international donor community. In 1997 the Micro
credit summit was attended by 2900 delegates from 137 countries, representing 1500
organisations (Micro credit summit, 1997).
Historically, western interests in international development followed the independence of
third world countries after WWII. Early international aid projects took a top–down approach
and were seen to be largely unsuccessful. This failure was attributed to the lack of
participation by the intended beneficiaries (Rahnema, 1992). The top-down approach was
replaced by the still popular bottom-up approach which views participatory methods of
interaction with the local population as essential. This new approach accorded a greater role
for NGOs in the distribution of international aid (MacNamara, 1973), given their
independence from governments, non profit status and motivation to serve humanitarian,
social or cultural interests.
As emphasized by Hudon (2008), the means by which credit is provided is important, and the
vast majority of NGOs that provide financial services to the poor have systematically failed
on three key dimensions: group lending, high interests, and a pressure on employees to
achieve results or lose their jobs.
Many of the existing micro-credit schemes lend money on a group basis, that is, the group is
liable for the debts of each member. “Shame” is the collateral, as Karim puts it (2008). There

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are many variations on a theme when it comes to the mechanism of micro-credit but all the
investigated models of micro-credit (Brett, 2006; Cuong, 2008; Karim, 2008; Weber, 2002)
appear to target rural areas and villages and operate a group model where social capital is the
collateral.
Micro-credit differs significantly from other targeted poverty reduction strategies (health care
and schooling) in that it has become embedded in a commercial framework (Weber, 2002). In
different locations across the world NGOs are charging the poor anything between 20% and
60% interest per annum with the justifications that their rates are less than traditional money
lenders, where those exist, and they cover the cost of servicing small loans across long
distances (Maimbo, 2002).
Finally, NGOs are sources of employment in countries that have few employment
opportunities. This puts pressure on the staff to deliver against the criteria that will secure
their jobs: large numbers of borrowers and high repayment rates (i.e. the same criteria used
by profit-oriented institutions). Delays with repayments have led in some circumstances to ill
treatment of borrowers and high levels of competition between the organisations that are
supposedly there to help the poor (Pless and Maak, 2009).
Community Focused Development Micro-credit Initiatives
Micro-credit has become a global strategy despite warnings from the World Bank (Pless and
Maak, 2009) and the Asian Development Bank that micro-credit alone may not result in
poverty reduction. The basic argument is that access to financial resources may not in itself
address the challenges facing the very poor, who also has to overcome other limitations, such
as limited access to education and training, poor support and infrastructure when trying to put
money to good use (Danida, 2002; Naude, Gries, Wood and Meintjies, 2008; Sachs, 2005;
Van Stel, Carree and Thurik, 2005).

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The Community Driven Development (CDD) approach is part of the bottom-up development
strategy. Rather than viewing poor people as the target of poverty reduction efforts, CDD
tries to treat poor people and their institutions as assets and partners in development. The
CDD initiative is embedded in the idea of social capital, which refers to institutions,
relationships and norms that shape the quality and quantity of social interactions. Evidence
suggests that social cohesion is critical for economic prosperity and sustainable development
(Honig, 1988). According to the World Bank, social capital is not just the sum of society’s
institutions it is the glue that holds them together (World Bank, 2004).
Honig’s (1998) research found that enterprises benefit from human, social and financial
capital. Honig contends that “developing and promoting community cohesion may prove as
instrumental to entrepreneurial success as any other sort of educational or institutional
intervention” (Honig, 1998: 391).
So, while CDDs often provide loans to support the poor, their emphasis is more towards
empowering the individual not to rely exclusively on external support, but to gradually
become financially independent. Apart from using the uppermost ethical model of credit
delivery to address the previously identified issues of group lending and high interests,
thriving CCD initiatives also pay significant attention to properly measuring success, not
through the usual large numbers of borrowers and high repayment rates, but by evaluating the
impact of micro-credit for long term financial stability. As shown in figure 1, it is only this
type of lender that has the potential of addressing all needs of the borrower: loan repayment,
improved living conditions, and financial sustainability.
Borrowers may borrow money to spend on their current or future business and most also need
to carry out their family and social responsibilities, as well as meet the demands of current of
future enterprises (Takyi-Asiedu, 1993).

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ENTREPRENEURSHIP
Small and micro-enterprises play a significant part in the process of economic development
of every country (Mayrhofer and Hendriks, 2003; Kuratko, 2005).. “The World Bank in its
efforts to target entrepreneurship has focused on both the small business and the informal
sectors, and their research suggests that the informal sector in developing countries is an
important source of economic activity” (Acs and Virgill, 2010:25).
However studies in developing countries, where most small businesses are better classified as
‘survival’ micro-enterprises given that they are driven by necessity rather than inspiration,
show a low success rate and an apparent inability to grow (Bloom et al., 2010; Roy and
Wheeler, 2006). This is despite numerous initiatives having been executed over the last few
decades to promote small business development as a means of alleviating poverty (Brett
2006; Mayoux 1999; Sievers and Vandenberg, 2007). To understand what is happening at the
bottom of the pyramid, the voice of the micro-entrepreneurs can provide a valuable insight.
So, apart from micro-credit, what else can a proper CDD initiative provide to help borrowers
overcome the various obstacles they face? The most recent GEM Global Report (2010) found
entry regulations, physical infrastructure, commercial infrastructure, post-school education,
cultural and social norms to be the most important conditions that drive entrepreneurial
attitudes, activity, and aspirations in factor-driven economies. Of the Sub-Saharan nations
(Angola, Ghana, Uganda and Zambia), all four reported internal market dynamics as
essential; two emphasized the importance of education, commercial infrastructure, cultural
and social norms and only one identified physical infrastructure as significant.
Regardless of whether we consider only the findings from the selected literature of survival
entrepreneurs in developing countries, or we also account for the broader perspective offered

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by the GEM, it is clear that micro-credit alone cannot be sufficient in developing
entrepreneurs. Therefore, lending institutions aiming at providing micro-credit to the bottom
of the pyramid in devastated economies, where governments cannot be expected to play the
welfare role experienced in developed countries (Mair & Marti, 2009) can support the
aspiring entrepreneurs in dealing with the flawed framework conditions either directly or
through alternative strategies. This research program responds to research studies of nascent
entrepreneurs (Davidson & Gordon 2009) - the catching of a sample of emerging ventures
early in the process and following over time, arguably providing a better sample of the reality
of entrepreneurship at the bottom of the pyramid
RESEARCH SITE, METHODS, AND DATA ANALYSIS
The research context for this paper is the city of Beira, the second largest city in
Mozambique. Mozambique is among the poorest countries in the world (Dana, 1996; World
Bank, 2006). Whilst Beira offers a unique research context, many of the problems faced there
are found elsewhere in Africa and therefore workable solutions could be replicated in other
peri-urban contexts.
A close working relationship with Despertai Mozambique, a local community development
organisation set up as an entrepreneurial development program, guaranteed access to the
social network required to do the research. The organization is well integrated with the
grassroots religious movements and this allowed for:
- the borrowers being survival entrepreneurs who represent the bottom of the pyramid,
- ability to repeatedly reach the interviewees over multiple waves of data collection,
- the researchers being welcomed not as complete strangers by the interviewees.

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There have been three stages of data collection over a period of seven years. This data
collection has been supported by regular annual visits by the researchers to observe. Data
collection is currently ongoing through a fourth stage.
In the first stage micro entrepreneurs were interviewed twice in a period of two years, to
identify the nature of their businesses, gain demographic information and look at the impact
that micro-credit had on their businesses and their self confidence. This led to a second stage
which directly involved the community establishing an organisation to provide micro-credit
and other services locally. This research project has become an action research endeavour as
the organisation has grown and changed over the succeeding years through a process of
reflection and action.
The third stage of research consisted of two surveys distributed to 20 entrepreneurs who had
received micro credit under this new scheme. This stage sought to explore the impact that the
loans had on the families and businesses, as well as to identify the issues that the
entrepreneurs believed were hindering the growth of their businesses. Similar reviews will be
conducted annually. Stage three started in April 2010, with a group of 20 micro entrepreneurs
who had recently received micro-funding and training from Despertai Mozambique. It is the
results of this third stage that are reported here.
The data gathering for this study involved several sources. Two surveys were used: i) a loan
application which gathered demographics and business plan information and ii) a review
distributed 8 months after the loan was given to gain information about how the money was
spent, the health of the business and the self development of the entrepreneur. In addition,
semi-structured interviews with the borrowers and field observation followed.

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The surveys were administered by local staff in their own language (i.e. Portuguese) and
assistance in writing was provided to the illiterate ones. Interviews were conducted with the
support of an interpreter, with the majority of the questions being open ended. On average,
interviews were between 30-45 minutes duration. Finally, field observations were conducted
by the researchers who also played a participative role in the life of the community.
The first part of the analysis consisted in identifying the demographics of the urban poor
borrowers. The average household comprised 7 people with an income of $25US per month,
below the absolute poverty threshold estimated by the World Bank in 2008 of $1.25/day
(Ravallion et al., 2009) Households size varied between 2 and 14 individuals while the per
capita income varied between $10-$78 a month. Given the situation of despair in which most
applicants were at the time of the loan being issued, it is not surprising that they identified “to
fight poverty in the family’ as their primary reason for seeking funds.
The second phase of data analysis involved examining the reviews to identify how the
borrowers and their businesses had benefitted from the loan, what they had learned and the
factors that impacted on their success or otherwise. 16 borrowers significantly improved their
lives, with 7 also reporting growth in their businesses. Of the 4 who failed to repay their loan
within the agreed time, one was the result of thieves breaking into his house, one chose an
unsuitable business model and two simply failed. Five of the 20 businesses reviewed were
start-ups. The remaining fifteen borrowers wanted to enhance existing businesses.
.The final phase of data analysis consisted in drawing together the results of the surveys,
interviews and the field observations to create themes. The analysis centred on the results of
the businesses as well as the perceptions of the process that the entrepreneurs were engaged
in. As a result, data referred to attitudes, activities, and aspirations. Perhaps most interesting

13
among the results was the value the participants put on training and support. This was a
requirement of the program if they wanted a loan, initial scepticism changed to appreciation.
FINDINGS AND DISCUSSION
This research enhances our understanding of the issues confronting micro-entrepreneurs at
the bottom of the pyramid and the strategies required to enable them to be successful in the
short and long term.
Having a local support system (i.e. access to social capital) provides resources and
confidence. Most of the borrowers have found their way into the Despertai network through
the pastors from the various churches and as a result of community meetings conducted by
local staff. With limited education and access to official networks, most of these borrowers
would not have had access to financial support without the local community networks.
The networks of local expertise among the very poor are initially insufficient to support the
growth of entrepreneurs. Building individual and community capacity becomes critical.
Foreign supporters must involve local people in the decision-making processes and help build
a problem solving attitude (Yunus, 1994). Confidence in the entrepreneur also results from
knowing that the locally operated organization is well established and durable. This means
not only being financially supported by international partners, but also regularly visited by
foreigners who can advise on (without imposing) proper business procedures, train the local
staff, and interact with the borrowers. Table 2 presents the voice of borrower and their views
of the training and support provided.
--------------------
Insert TABLE 2 here
----------------------

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From the point of view of the institution, it has to be recognized that granting loans in this
way is a costly process, in both time and energy, but the personalization and fine-grained
nature of this service increases the chance of success for new entrepreneurs and reduces the
risk of over-indebtedness.
One of the outcomes of the entrepreneurial development program has been increased
cohesiveness in the community. The cohesiveness is generated by at least three influences:
the cooperation among entrepreneurs which was sometimes required to overcome challenges,
the group activities organized by the NGO, such as group information giving and discussion,
and a true effort by several borrowers to have a social impact on the community (e.g. leading
by example). Community cohesiveness is in a way the force that makes support systems
stronger.
I am proud of having been able to fully repay the loan on time and to have achieved
so much over the last ten months. I will definitely recommend Despertai to others,
explaining to them how the program works, and helping them with my experience.
The process of learning from business training activities and the experience of rethinking old
business ideas were described differently by the 20 entrepreneurs, but similarities among the
responses allowed for the grouping in two almost equal sets:
1. The first group emphasized improvements in one or more specific skills (e.g. budgeting)
and explained how that benefited their businesses.
Training helps me a lot in doing the business as now I do understand how to properly
pay myself a wage.
2. The second group wanted to convey the more holistic transformation they had
experienced, without focusing exclusively on what was learnt.

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I used to do business blindly, but now my eyes are open.
This second group talked about a new experience that opened their eyes, resulting in better
management of the business, but also in greater confidence in one’s abilities and potential.
So, apart from a change in understanding how a business needs to operate, there is also strong
evidence of a self-development process that started a transformation from passive individuals
into entrepreneurs.
Future aspirations were examined across both groups to determine how significant the
transformation process – acknowledged or not – had been. Instead of seeking loans to
maintain their existing micro-businesses alive, three quarters of the entrepreneurs were now
borrowing to expand their businesses with the aims of employing others, diversifying their
activities, increasing their degree of innovation, and furthering their professional
development. These are recognized entrepreneurial behaviours that deviate sharply from the
previously observed more passive behaviour.
The self-feeding development loop of action learning was confirmed by new ways of
thinking about possibilities and opportunities among necessity-driven entrepreneurs: from
surviving without aiming to improve their status in a sustainable and structured manner to
starting to imagine and plan the next growth stage after just 6-8 months of informal training,
applying many of the concepts learnt.
The training helped more than I thought at the beginning. The principles taught when
put into practice generate money. Due to this today I have 4 workers and 3 shops.
We find that entrepreneurship as an approach can be encouraged and taught even in the
poorest contexts, although both the ‘what’ and ‘how’ might have to be significantly adapted
from what is generally used in developed countries. We identified elementary accounting and

16
basic business planning as the specific business skills mostly required by poor aspiring
entrepreneurs.
With regard to advice on implementing similar educational strategies, developing countries
like Mozambique have very low levels of literacy, so even when specialised training is
available, it is often not in a form that is easily accessible. They participate in both relatively
unstructured training at the community level as well as more structured instruction when the
material is meaningful to their lives and interests. To encourage attendance by the borrowers,
recipients of loans can be obliged to undertake training during the period of their repayment,
providing opportunities for both group learning as well as personalized to the specific needs
of the individuals.
Entrepreneurship Framework
Findings from our research differ from the expert opinion in the GEM studies in sub-Saharan
African countries. Access to affordable finance remains one of the most important conditions,
yet finance is not reported as being one of the top three conditions in the GEM data.
Entrepreneurs in this study were very interested in information about business practices and
reported applying their new knowledge in their business. In general, entrepreneurship
‘education’ is highly regarded, as well as the commercial and legal infrastructure to support
or promote SMEs. Other conditions not considered by the GEM study, identified as highly
important include community ownership, local grassroots networks and access to a broad
range of expertise.
Research Limitations

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There are a number of constraints that could have impacted on the research project and data
collection. The people whose opinions and ideas we report are often not literate in any
language, and none of the entrepreneurs speak English. Relying on an interpreter and
translations leaves the process open to potential misunderstanding as result of both language
and cultural differences. However, the surveys were carried out by local people only after
receiving preliminary training.
The interviewers and interpreters were staff members and therefore known to the borrowers.
This relationship could have biased some of the responses if the borrowers felt the need to
portray an idea of success in order to obtain subsequent loans. However the results of the
review are particularly interesting as they recorded failure as well as success and borrowers
have been willing to share their difficulties and frustrations as well as their achievements.
One of the strengths of using local interviewers who have the trust of the borrowers is that it
is a way of doing justice to the voice of the people (Knibbe and Versteeg 2008). This voice is
often lacking in the large studies of micro-finance as a way of poverty alleviation. Desjarlais
(1997) advocates that human experience should be central to the research agenda and the
participative, community based method used allows for that. The action research approach
captures both the thoughts and participation of local entrepreneurs as they engage in new
processes and enterprises.
CONCLUDING REMARKS AND FUTURE RESEARCH AGENDA
This study investigates the factors necessary for the effective support of entrepreneurs who
use micro-loans to start new ventures or extend an existing business at the bottom of the
pyramid in peri-urban sub-Saharan Africa and contributes to our knowledge about
entrepreneurs in this context.

18
This paper contributes to our understanding by bringing the voice of the desperately poor
entrepreneur to the debate on poverty alleviation, by developing mechanisms that grow the
self efficacy of the poor and provide the skills and confidence to find solutions to their own
problems and inform development practice.
The research also leaves many questions about micro entrepreneurship at the bottom of the
pyramid unanswered, with a potentially long list of areas for further research. Some
questions that arise include identifying what are the best practices to develop the capabilities
of illiterate or semi-literate entrepreneurs. What do borrowers need to know and how can the
learning be provided? What are some successful practices to move entrepreneurs from a
survival orientation to a future or growth orientation? To what extent can the particular model
of community development that emerged here be replicated in different cultural contexts to
support entrepreneurs?
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24
TABLE.1 Issues from lending practices and lending institutions offering micro-credit
Themes
Authors
Not traditional collateral
Charitenenko and Campion, 2003; Mwenda and Muuka, 2004
Group collateral to
lending
Brett, 2006; Cuong ,2008; Karim, 2008; Weber, 2002
Measurement of success
Buckley, 1997; Karim 2008; Weber, 2002
Insufficient on its own
Brett, 2006; Mayoux, 1999; Sievers and Vanderberg, 2007
Embedded in commercial
framework
Weber, 2002
High interest rates
Brett, 2006; Byiers et al 2009, Maimbo, 2002; Rugimbana and Spring,
2009; Yunus, 1994
Over indebtedness
Chamlee-Wright, 2005; Hudon, 2008;
Disempowerment of
women
Brett, 2006; Rugimbana and Spring, 2009; Mayoux, 1999; Oudir,
2003
Not appropriate for the
desperately poor
Robinson, 2001
Impact of external factors
Danida, 2002; Naude,Gries, Wood and Meintjies, 2008; Sachs,
2005; Van Stel, Carree and Thurik, 2005

25
TABLE 2. Data from Borrowers -Views of Training
No.
M/F
2 Age
3. Existing
business
Maximum
Seminars?
~8
What did you learn from training and experience?
How did the training help your business?
Did you seek support
from staff?
1
M
44
yes
4
I learnt to do business properly and paying myself a salary at the end of each month.
----------------------
How to manage a business.
How to work a budget
The importance of paying back the loan.
Yes a lot more in managing my finances
and to know how to separate money
increase sales.
Yes. I had a
problem with
money.
2
M
69
yes
8, I have
never
missed a
seminar
How to manage a business
How to save money
How to work with budget
How to market
The importance of paying back the loan
Yes. It opened my eyes to how I could pay
myself a salary and how to market my
products. Financial management and
recording was good for me.
No. But I came to
report why I was
late with a loan
repayment.
3
M
45
yes
4
How to manage a business
How to work with a budget
How to separate money for its purpose
The importance of paying back the loan
Yes. It gave me a new vision of doing
things hence up to now still doing the same
business.
No
4
M
70
yes
8, I attend
all the
seminars
that I hear
about
I learn how to budget money and use it to what it was budgeted for.
------------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. It helps me a lot in doing business as I
do understand now that only by business
can we improve.
Yes. When the
thieves stole my
business.
5
M
54
no
8, I never
missed a
seminar.
I learnt to put in the bank the balance I had left.
------------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. Because next time I will do better than
this time around. As Now I have
experience.
Yes I did go to
explain to the staff
about the collapse
of business.
6
M
43
yes
6
I learnt how to do business properly and manage finances.
----------------------
How to manage a business
How budget – family expenses and work
The importance of paying back the loan.
Yes. A lot more in managing my finances
and in how to separate money aside.
Yes. I do come to
let the staff know
that I delay payment
because my clients
paid me later than
agreed.
7
M &
F
32
no
many
I learnt a lot but my problems did not help me at all.
------------------------
How to manage a business
The importance of paying back the loan.
-
No

26
8
F
34
yes
8, She
never
missed a
seminar
I learnt how to budget money and use it for what it was budgeted for.
----------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes, a lot more than I thought in the
beginning. The principle thought when put
into practice they generate money that I
never thought possible.
No I had no
problem that
required staff
attention because
the training has
been good for me.
9
F
34
no
3
How to manage a business
How to work within a budget
The importance of paying back the loan.
Yes. When the salon didn’t work out as I
thought I was able to start a new business.
No yet.
10
M
54
yes
8, Never
missed a
seminar
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. I learnt to respect the business profits
and to take a salary for me at the end of the
month.
no
11
F
49
no
8, Never
missed a
seminar
How to do business as work and take salary at the end of each month.
------------------------
How to manage a business
How to save money
How to work within a budget
How to separate money for its purpose
The importance of paying back the loan.
Yes. It gave me a new vision of doing
things.
Not yet.
12
M
79
yes
8,
Attended
all
seminars
I learnt how to manage business and to put money apart according to its purpose.
------------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. It helps me a lot in doing business as I
do understand now that only by business we
can improve, and the business can pay
wage.
Not yet
13
M
37
yes
8, Never
missed a
seminar
I learnt how to raise my standard of living.
------------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes, a lot more than I thought in the
beginning. The principle thought when put
into practice they generate money that I
never thought possible/ there due to this,
today I have two workers.
Yes because the
amount I borrowed
was very small.
14
F
28
no
5
I learnt a lot to do business as a job and therefore I have profited much better than ever.
------------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the money.
Yes, a lot more than I thought in the
beginning. The principle thought when put
into practice they generate money that you
never thought could. It also makes the
business run better.
No. I had no
problem, the
teaching was great.

27
15
M)
42
yes
8, He
never
missed a
seminar
I learnt how to budget money and use it for what it was budgeted for Paying myself a
salary.
-----------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. A lot more in managing my finances
and to know how to separate money and
use it for the purpose intended.
Yes –I had a
problem with loan
repayment and
came for advice.
16
F
47
yes
Many
times
I learnt how to do business properly and manage it.
-----------------------
How to manage a business
How to work within a budget
The importance of paying back the loan.
Yes. A lot more in managing my finances
and to know how to separate money to
increase sale.
Yes
17
IF
52
yes
8, She
never
missed a
seminar
Bookkeeping and separating the books.
-----------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes a lot more that I thought in the
beginning. The principle taught by
Kathleen when put into practice it generates
money. Therefore due to this today I have
3 worker and 2 shops.
Not yet.
18
M &
F)
46
yes
8, Never
missed a
seminar
I learnt that without money initiatives die and I also learnt to define priorities for money.
-----------------------
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan
Yes Exchange experience in order to
develop activities. Learning from others
who are putting in practice and see them
succeed.
No.
19
F
32
yes
8, Never
missed a
seminar
How to manage a business
How to save money
How to work within a budget
How to market
The importance of paying back the loan.
Yes. My life has changed for the better.
Yes. I did when my
father passed away.
I asked permission
to pay later than
normal time.
20
F
52
no
8, Never
missed a
seminar
Management skills
------------------------
How to manage a business and money
How to save money
How to work within a budget
The importance of paying back the loan.
Yes. Because I use to do business blindly
but now my eyes are open.
Not yet
21
M
59
yes
8, Never
missed a
seminar
I learnt many things and it has opened my eyes so, now I want to start a chicken farm.
------------------------
How to manage a business
How to save money
Yes a lot more than I thought in the
beginning. So I am seriously thinking of
farming chickens.
Yes. Generally
when I am late in
paying the loan, I go
there and explain

28
Notes: Trainers included local and international trainers. Jonas, Kathleen, Carol and Francis.
What did you learn is in two parts – before the line answer to an open ended question. The rest what was taught at the seminar.
Impact seems to have come greatly from budgeting session run by Kathleen who also provided training materials for the local staff to use. We need to do more of this to broaden and increase the impact.
How to work within a budget
How to market
The importance of paying back the loan
the reason.
22
F
30
no
7
With business life can be lighter.
-----------------------
How to manage a business
How to work with a budget
How to market
The importance of paying back the loan.
Yes. A lot more in managing my finances.
Budgeting finances for different purposes,
school, transport, clothes etc.
No