Easing access to finance

Access to low-cost, flexible business start-up loans: In a recent PCI survey, 91% of youth mentioned the difficulty of getting a loan as the major obstacle to starting an enterprise. Though traditionally a big problem, there is now a proliferation of online, NGO, and other sources for low interest, start-up loans such as Kiva.org, Lendwithcare.org, Lending Hive, the Vision Fund, the Sparkasse Foundation etc. These + supplier credit, leasing arrangements and a myriad of other mechanisms are now sidelining the mainstream banks and MFIs where a 25% pa interest rate is considered low and rates of 60 to 100% pa are commonplace.

Case Studies

Youth Business International:

Tusshar Munoat ‘s Indian construction company has increased its turnover 60 times in five years to US$6 million in 2016, generating thousands of jobs. “My enterprise contributes to the development of country’s rural infrastructure by building dams and laying pipelines to connect and channelize water for providing irrigation and drinking water to villages.”

Commonwealth Youth Division:

Darecha: a Tanzanian micro-venture capital firm founded by Julius Shirima while he was still at school. The 2015 winner of the coveted Commonwealth Youth Award, Julius has already helped thousands of young people into business, and created tens of thousands of jobs.



Gender Issues

Enable women to borrow for their businesses:  Women are also beneficiaries of the online crowdsourced loans for start-ups, but cultural attitudes towards women’s economic empowerment means specialist programmes are often required.  Goldman Sachs 10,000 women started in 2008 to provide women entrepreneurs around the world with business management education, mentoring and networking skills, and access to capital. The initiative has reached more than 10,000 women in 56 countries, resulting in immediate and sustained business growth for its graduates.  Partnering with IFC, it has also raised US$600m in capital for 100,000 women around the world.

Women’s World Banking (WWB) has, over the course of more than 35 years, helped nearly 3 million women access the financial tools and resources they require to build security and prosperity. Women are typically good clients who reinvest in their families and communities, but they remain an underserved market. WWB does market research to learn what financial products low-income women need, then develops new and practical ways for institutions to do business with women designing sustainable financial products.

Sudokkho is a five-year DFID-funded skills training and employment programme in Bangladesh that aims to ensure the employment of 100,000 poor people, chiefly women and young people, in the ready-made garments sector. It also aims to employ women in the male-dominated construction sector doing jobs such as house-wiring. The initiative involves the private sector to ensure skills training is relevant and of high quality, thus increasing post-training job opportunities.

Making the informal sector a bit more formal…

The ILO’s Syndicoop programme has changed approaches to informal work in East Africa by encouraging informal traders into co-operatives. For example, the Assetamorwa motor-cycle co-operative in Rwanda obtains better deals for its members by training riders, negotiating with city authorities and traffic police etc. A similar cooperative helps traders in the Gikombo market in Nairobi. Given that the ‘informal’ will remain normal for millions of workers for many years, interventions aimed at improving informal working conditions – rather than attempting to formalize their work – need to be encouraged.

Leasing equipment not lending cash

Equity for Tanzania(EFTA): EFTA enables farmers and small businesses to acquire machinery to improve productivity. As the equipment serves as the underlying collateral, entrepreneurs can obtain the equipment they need without having to risk everything as security for a bank loan. To date, EFTA has advanced $8 million creating or safeguarding over 1,000 jobs, with 20% of these going to female employees. In many companies, staff wages have doubled post investment. EFTA has also provided training and networking events to over 1,400 small businesses.

  • James Rikoyan, 27, runs a brickmaking business in Tanzania. EFTA leased him high-quality vibrating block machines, cement mixers and moulds to improve brick quality and expand his business. He said: “EFTA empowered me to reach my goals and to become my own boss.”
  • Anna Martin Mengor’iki, 29, wanted to start a business providing private medical care to Arusha’s growing population. EFTA leased her modern laboratory equipment to support her business plan and catalyse her business’



Franchises attract inward investment at low risk and measurably improve the management skills of a country’s young entrepreneurs with free, experiential training. This could be a promising area of growth in LEDC economies and organisations such as the International Franchising Association seek to promote such opportunities worldwide, adopting the slogan, “Owning a franchise allows you to go into business for yourself, but not by yourself.”

Paying for it

Some policy ideas: Enabling successful youth business start-ups is not a one-off project: to succeed, it has to be available to every child everywhere. Governments – local, national and international – can do this in several ways: they can require banks to invest a percentage of their profits in their future clients (youth)or invest in arms-length instruments like Start-up Loan companies, VSLAs or MFIs for youth such as YouthBank International or those started by Julius Shirima in Tanzania, or Alpha Bacar Barry in Guinea. Online crowdsourced funding is a promising growth area, while list over fifty funding sources for youth start-ups.

“Loans and returnable capital have to be the finest and fairest form of development aid because, unlike grant aid which casts the recipient in the role of a mendicant, a loan is a contract between equals. Loans empower. Grants disempower.”

David Woollcombe, Chair of Trustees, Peace Child International (Mission: ‘Empowering Young People’)

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