For most people in rural Africa there are few opportunities for formal employment and the best chance they have to escape poverty is to start some kind of income generating project. Many people try to start projects which fail due to a lack of basic business skills and it is for this reason that The Africa Trust has stepped in to help.
The success rate for this programme has been remarkably high with around one third of the people who attend the training managing to set up or dramatically expand a business within six to nine months. Each business typically employs 1-3 people and pays salaries of around £100 a month. While this may not sound much, such amounts are very significant in rural economies. If we calculate the return on investment for the money spent on training we can see that an investment of £12 per person generates new wealth of over £30 per person per month by the second year, and this benefit is expected to be maintained in the long term.
At the start of 2012 The Africa Trust visited a centre in Namisu which was partly funded by AquAid. The centre contains a school, orphanage as well as a disability centre. The people within the surrounding areas are continuously confronted with severe poverty, with lack of employment opportunities being the fundamental cause to their problems. The Africa Trust decided to invite members of the local community to undertake the business training course with the aim to improve their basic understandings of business.
Several weeks later we received business plans from candidates that required capital in order to kick start their companies. After analysing these plans we decided to support selected businesses with the money they needed to begin the first month of trading.
In order to ensure that the candidates did not spend their loan on family related issues or tuition fees we constructed loan repayment contracts for each individual. Our goal was to ensure that any money generated from the business would be reinvested back into the company to enable growth and guarantee a brighter future for their families. The loan repayment would be paid at the end of each month, once the full sum of the loan is repaid the contract expires.