Business loans – no magic bullet

Small business loans can help the poorest to overcome extreme poverty. But giving money alone can not ensure a sustainable economic success.

For more than seven years we have been successfully conducting our microcredit project in Ghana’s Central Region. Every year several hundreds of women, mainly single mothers, some infected with HIV, benefit from this project. To counteract the dramatic emigration of young men from our Baddibu Project in The Gambia, we have started the so called Small Business Projects last year. Fourteen business loans, designed for individuals as well as for groups, shall enable the development of small businesses.

Nene from our Small Business Project Gambia sells her homemade peanut butter.

Full of hope, the beneficiaries are moving on unfamiliar ground – sometimes losing courage, sometimes ambition. To guide these young entrepreneur closely is a great challenge for us, too. Commonly, a high level improvisational skills are expected to be found in many African countries. One could suppose that courage and ambition are sufficient in order to act in an innovative way and to work towards solutions. But knowing how to improvise on a practical level, isn´t enough to manage and plan a business. Market analysis, production- and sales planning, and a reflective view of idea against reality is difficult. Setbacks restrain the power of endurance. If the participants were left alone with these challenges, they would fall back into their traditional roles and dream of a better life elsewhere.

Through our accompanying support, specially during the first steps of entrepreneurship, we promote not only a successful start into business, but also train so called soft skills: stamina, toughness, adaptability, a realistic vision and strategical approach, ect. These are skills the beneficiaries can fall back on when expanding their business.

Iddrisu from Nansoni in North Ghana wants to open a filling station.

But why – if they absolutely want to escape the poverty trap – do they not implement their own ideas in order to achieve independence? On the one hand starting capital is missing. On the other hand there is a lack of entrepreneurial experience, well-proven solutions and their adaptation towards imagination. To them the future has mostly been their next meal, at the most the next harvest. Thoughtful, foresighted planning – a self-evident part of our education system – has to be learned from scratch. In that process we accompany them.

Business loans are no magic bullet per se. Entrepreneurial action is work. This is what we stand for with our approach “Creating Jobs Together”. Follow our work and our young entrepreneur on our blog.

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