||Like it? PLEASE +1 it! Thanks!|
5.7 Meeting the needs of the entrepreneur: Enterprise solutions to poverty
Simply making finance available in the $10,000 to
$500,000 deal size was crucial to attracting the
interest of Ugandan and South African SMEs since
it had never been available before. But other
features were also designed into the model to
provide tailor-made support to entrepreneurs.
First, finance is offered in local currency rather than
US dollars – a feature of other SME funds that in
effect puts them out of reach of most SMEs.
Second, we try to offer finance in a form that suits
the particular needs of the SME client. Third,
collateral requirements are kept low by the ability
of the fund managers to lend against the business
plan as opposed to only lending to the value of the
assets the entrepreneur can pledge as security.
All together now: finance, business
support and risk assessment
But perhaps the most important and innovative
feature of the Foundation’s SME investment funds
is that appropriate finance and BDA are jointly
provided to clients via the fund manager.
Elsewhere, these are provided separately with
entrepreneurs picking up business advice where
they can from people usually not experienced in
business and in a form that is not useful to their
specific needs and interests.
The concept embedded in our funds, is that the
managers work first with the entrepreneur to
develop a robust business plan. During this, the
managers develop an understanding not just of
the competence of the entrepreneur but of the
particular package of finance and ongoing
technical and BDA that will be required to ensure
the profitable operation of the enterprise.
So the manager, while applying rigorous financial
criteria, can base his risk assessment not just on the
value of the collateral but on empirical insight into
the prospects for success of the business. So in
effect, lending decisions are based on the business
plan rather than the value of recoverable assets. And
once the deal is completed this means there is a
plan of ongoing assistance, tailored to the needs of
the entrepreneur as he/she enters the most difficult
stage of any business – start-up and early operation.
As our results show, this aspect of the model –
though it has had to undergo adaptation to get it
‘right’ – lowers risk considerably in the portfolio,
imparts valuable training even to those SMEs that
don’t get offered finance, and provides a useful
vehicle for local banks to learn about the SME
sector, thus changing their own perception of risk
regarding the sector.
Related Articles1.9 Building local development through cooperatives: Working Out of Poverty
6.0 Propositions and conclusion: Enterprise solutions to poverty
6.3 Come Together: Enterprise solutions to poverty
1.15 Building an employment agenda: Working Out of Poverty
Microfanchising and Economic Self-Reliance
Labels That Mean Nothing
1.19 Building trust: Working Out of Poverty
2.0 Introduction: Enterprise solutions to poverty
Home Business Expert: How To Overcome Poverty Consciousness
6.3 Limitations of Enterprise Survey data for gender analysis: Gender Entrepreneurship and Competitiveness in Africa 2007
1.0 Executive Summary: Enterprise solutions to poverty
The Way of the Guerrilla
4.0 Sustainable pro-poor growth and the governance of the labour market: Working Out of Poverty
1.1 Our mandate: Working Out of Poverty
Introduction - Microfinance:A Platform for Social Change
1.8 Making money work for poverty reduction: Working Out of Poverty
III. BACKGROUND - Microfinance in Africa
IV. Module II: Linking Microfinance to Poverty Eradication
1.0 Overview: Working Out of Poverty
Home > African-Accounts > Shell Foundation > 57 Meeting the needs of the entrepreneur Enterprise solutions to poverty > Google +
Free PDF Download
6.3 Come Together: Enterprise solutions to poverty
By Shell Foundation
About the Author: Shell Foundation
RSS for Shell's articles - Visit Shell's website
The Shell Foundation is established to support efforts to achieve a balance between economic growth, care for the environment and equitable social development - the goal of sustainable development. The Foundation's focus on sustainable development is based upon the Shell Group's belief that the long-term health and prosperity of societies of which it is part, and its own future, depends on the ability of all stakeholders, worldwide, to attain such balance. However, as one of the most significant international oil and energy groups, Shell recognises the global dimension of many sustainability issues related to its activities. It believes it has a responsibility and an opportunity to play its part in addressing these issues.
Click here to visit Shell's website.
More from Shell Foundation
59 Applying lessons learned from Uganda in South Africa Enterprise solutions to poverty
30 The case for putting propoor enterprise at the heart of the war on poverty Enterprise solutions to poverty
63 Come Together Enterprise solutions to poverty
40 Learning by doing Enterprise solutions to poverty
56 Deciding on the right approach Enterprise solutions to poverty
Related Forum PostsRe: What or Who Sparks Your Business Interest
Re: How do you budget your life?
Entrepreneurs come up with "The Big Idea"
Re: Does it help to join business groups?
Share this article. Fund someone's dream.
Share this post and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
||Like this page? PLEASE +1 it!|