Reality Television Teaches Business Skills in Sudan

Learning how to thrive in a market economy does not necessarily come naturally. But for young people who have grown up under a different economic system or known nothing but economic chaos, learning business skills can give them the tools to get on in life.

With youth unemployment rates high around the world, it is clear many young people may never get the jobs they expect unless they start businesses themselves.

In 2013, 73.4 million young people were out of work, an increase of 3.5 million from 2007. A report by the International Labour Organization (ilo.org) found persistent unemployment around the world in the wake of the global economic crisis, a proliferation of temporary jobs and growing youth discouragement in advanced economies; and poor quality, informal, subsistence jobs in developing countries. School-to-work transition surveys of developing countries showed that youth are far more likely to land low-quality jobs in the informal economy than jobs paying decent wages and offering benefits.

High youth unemployment often has nothing to do with poor educational achievement (many unemployed youth have high school educations or university degrees), but is often caused by other factors, including lack of access to capital, rigid labour markets, skills mismatched to demand in the economy (for example construction and building trades), or a gap between personal aspirations and the true state of the country’s economic development.

But rather than despair, it is possible to show youth how to turn things around and use business skills to re-shape economies in their favor. Youth tend to bring to the economy energy and drive combined with new ideas and experiences calibrated to the demands of the 21st century. By harnessing this, youth can find a unique space in the marketplace. In turn, young people can lead in reviving damaged economies and making their countries wealthier and healthier. Many youth have grown up around the emerging digital economy and the use of mobile phones. Being comfortable with the 21st century digital economy will unleash many economic opportunities that favor youth.

The British Council says that “creative entrepreneurship is considered the most efficient model for youth in the developing world who are facing huge difficulties in finding employment”. The entrepreneurship or creative investment industry is one of the fastest-growing sectors in the world.

Understanding what works for youth business entrepreneurship has become a specialty in its own right. Using the media to teach skills and inspire youth to action is one proven approach.

One recent example is a successful television programme from the Republic of the Sudan. Called Mashrouy (mashrouy.com), it is modeled on reality TV programmes such as The Apprentice, which features serial U.S. entrepreneur Donald Trump (http://www.bbc.co.uk/programmes/b00q3fkq) and the BBC’s Dragon’s Den (http://www.bbc.co.uk/programmes/b006vq92), where contestants pitch their ideas to a panel of judges to see if they can get funding for their business idea.

In Mashrouy, 12 contestants battled it out to see who had the best business idea. They undertook various challenges and the original 12 were whittled down to three contestants. Live on air in December 2013, viewers voted for their favorite contestant and the winner (https://www.facebook.com/Mashrouy) received a prize of 200,000 SDG (US $35,211), while the second prize winner received 150,000 SDG (US $26,408) and the third prize winner received 100,000 SDG (US $17,605). All three were then taken to London in the United Kingdom to meet other creative entrepreneurs and receive valuable business advice.

The Sudanese show (http://sudan.britishcouncil.org/our-work/mashrouy) is supported by the British Embassy and the British Council, and is working with the Sudanese Young Businessmen Association and major Sudanese companies to spread the idea of entrepreneurship among the youth of Sudan.

Sudan suffered a brutal civil war on and off throughout the 2000s, leading to the partition of the original country into the Republic of the Sudan and the new nation of South Sudan in 2011.

Faced with Sudan’s serious youth unemployment – as high as 34 per cent – and a fragile economy, the TV show’s producers wanted to encourage youth to start businesses.

The contest was aimed at youth between 18 and 40 and appeared on the Blue Nile (http://bnile.tv/blue.html) channel.

“At a time of national economic hardship, it has kindled the imagination of Sudanese youth,” wrote journalist Isma’il Kushkush (https://twitter.com/ikushkush) in The New York Times.

For the show, a panel of experts picked 12 projects out of 2,500 applications. Each of the 12 finalists was given a chance to do a “pitch,” giving a quick summary of their business idea and trying to get the panel excited about the idea and its potential. The idea that generated the most excitement won.
The 12 pitches included an idea for an ostrich farm and a plan to export spicy peanut butter. The winner, 32-year-old Samah al-Gadi, wants to use a locally available weed-like river plant to make bags and furniture. She said she got up the courage to be on the show from a supportive mother.

“Amid ululations, screams and clapping, a jubilant Ms. Gadi raised both hands above her scarf-covered head, flashing victory signs,” The New York Times said. “Her mother, sitting at a dinner table, was brought to tears.”

The women-owned social enterprise Making Cents International (makingcents.com), based in Washington, D.C., USA, has been gathering resources on youth entrepreneurship since 1999. It has put together a custom “curricula to develop the mindset, skillset, and toolset that enable entrepreneurs and enterprises to participate in profitable markets; financial institutions to serve new populations; and individuals to obtain meaningful work”.  This is available in 25 languages. It also hosts the Global Youth Economic Opportunities Conference in Washington, DC, held this year from 6 to 8 October 2014 (http://youtheconomicopportunities.org/conference).

By David South, Development Challenges, South-South Solutions

Published: April 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=ohM9BQAAQBAJ&dq=development+challenges+april+2014&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-published-april-2014

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

Venture Capital Surge in Africa to Help Businesses

Africa’s potential economic powerhouse lies in its small and medium enterprises (SMEs). Foreign direct investment (FDI) into Africa ebbs and flows based on the state of the global economy – and most of it is directed towards large enterprises and multinational companies.

Finding ways to support grassroots SMEs has the potential to truly build in sustainable prosperity for the continent and construct stable middle class jobs.

But building a continent-wide network of investors, and directing that investment at the grassroots business entrepreneurs who employ the majority of Africans, is not easy.

Foreign direct investment to Africa rose fivefold from 2000, peaking at US $72 billion in 2008 (African Economic Outlook). A surge in raw material prices fed this boom. FDI is, however, unevenly distributed and much of it goes to extractive industries like mining and oil and gas in a handful of countries. When the global economic crisis hit, FDI inflows to African countries fell by 20 per cent, to US $59 billion in 2009.

Venture Capital for Africa: Connecting Entrepreneurs and Investors (http://vc4africa.biz), is a free service trying to nurture the SME sector and help entrepreneurs overcome the challenges of funding start-ups in Africa. Members are expected to contribute, collaborate and show their seriousness, bringing resources or their ideas and enthusiasm.

It has a detailed website with a mix of resources available. People can register and connect with others, check out venture ideas and the most popular ones in the past day to month, read about featured entrepreneurs, register as an investor looking for investees, and meet-up with others in their city. This includes expatriate communities in places like Oslo, Norway.

VC4Africa believes its mission is to champion entrepreneurship, and particularly SMEs, as the main driver of Africa’s economic growth. These businesses provide the majority of the continent’s employment and income. And as it says on its website, they offer “hope for a better future.” It is estimated SMEs contribute two thirds of national income for many African countries and are a major source of middle class jobs.

VC4Africa believes “that the most meaningful impact will still come from grass roots level i.e. entrepreneurs bold enough to start potentially great companies. It aims to connect these individuals with the additional network,knowledge and capital they need to realize their potential.”

VC4Africa started from a group on the social media and connecting platform Linkedin in 2008. It claims to be the largest online community “dedicated to entrepreneurs and investors building companies on the continent.” It is a free service and was founded by “serial entrepreneurs” Bill Zimmerman, formerly of Microsoft in the USA, and Ben White, founding member of AfriLabs (afrilabs.com), a network of technology incubators. Both have extensive experience founding and investing in technology initiatives in Africa.

VC4Africa is sponsored by a long list of well-known names in supporting African entrepreneurs: Acumen Fund (acumenfund.org), Afribiz (afribiz.info), AfricaNews.com, How We Made It In Africa.com, iHub Nairobi (ihub.co.ke), and others.

Consulting firm McKinsey (mckinsey.com) believes Africa’s more than 1 billion citizens should be seen as consumers and says the continent’s growing number of middle-income consumers now outstrips India’s. It boldly claims consumer spending will reach US $1.4 trillion in Africa by 2020, up from US $860 billion in 2008. Ventures that target these consumers could do very well indeed.

The future is looking good for the venture capital model if VC4Africa continues with its successes. Two of VC4Africa’s ventures – BongoLive and Njorku – were hailed by Forbes Africa magazine in February 2012 as top start-ups in Africa.

Founded in 2010, BongoLive is a mobile and SMS services company in Tanzania. Njorku, founded in 2011, is a Cameroonian career and recruitment services platform focused on Africa.

A long and impressive list of African ventures is being supported by the VC4Africa network. Not all will succeed, and they are in very different stages of development, from embryonic to established. The failure rate for start-ups anywhere is always high. But this doesn’t have to be a bad thing. What tends to happen from experience in other countries is this: a buzz is generated as like-minded people gather around a tech scene. They feed off each others’ideas and when one idea dies, it is often feasted on – like a lion on a wildebeest – and becomes the meal for another start-up. Or, the idea is taken on board by a more established outfit.

The dynamic around tech start-ups can seem strange to more traditional business cultures. Tech start-ups tend to be more forgiving of failure and more willing to see all their labour as part of a bigger thing. It is accepted that some ideas will fly, and others will die. It is not a culture heavily laden with the shame that can be associated with more traditional business failures.

Some of the ventures supported by VC4Africa include:

MXit – Founded in 2003, MXit was one of the first Mobile Instant messaging services in the world and in Africa, and has a user base of about 45 million. (South Africa)

Dropifi – Founded in 2011, Dropifi helps businesses better respond to incoming messages via their websites, and also includes analytics for website owners. (Ghana)

FloCash – Founded in 2010, FloCash allows anyone with an email address and mobile number to send and receive money across Africa simply and easily. (UK)

Bandeka – Founded in 2011, Bandeka is an exclusive social network for building relationships/dating. (Ghana and Nigeria)

Motribe – Founded in 2011, Motribe is a mobile platform enabling users, brands, agencies and publishers across the world to build and manage their own mobile social communities. (South Africa)

Hummba – Founded in 2011, Hummba is a social and travel networking website that lets users download free audio travel guides and share travel experiences directly from mobile phones.

10Layer – Founded in 2011, 10Layer is a CMS (content management) system targeted specifically at newsrooms. (South Africa)

By David South, Development Challenges, South-South Solutions

Published: February 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=5xafMNIQpBcC&dq=development+challenges+february+2012&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsfebruary2012issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

Business Leads on Tackling Violence in Mexican City

The damaging affects of crime and violence can ruin a city. They act as a drag on efforts to increase wealth and improve living conditions, and a city that gets a bad reputation, especially in the age of the Internet, will lose investment opportunities.

The North American nation of Mexico has been struggling against drug and gang-related violence that has left an estimated 47,000 people dead over the past five years. It is a casualty rate worthy of a war.

In Monterrey, the capital of Nuevo Leon state (http://en.wikipedia.org/wiki/Nuevo_Le%C3%B3n), an innovative initiative has brought together local businesses to tackle the root causes of violence and crime. The initiative – called Red SumaRSE, which means ‘joining a network’ – was born from anger and disgust at the situation in the city. And it was ignited by a prominent member of the business community expressing this frustration on the social media outlet Twitter (twitter.com).

The chief executive of the Cemex cement company had had enough one day. Lorenzo Zambrano tweeted a blunt message to other companies in the city: “He who leaves Monterrey is a coward.” It was to be a rallying cry for the campaign to take back the city from the violent gangs.

Monterrey is embroiled in violent drug-related gang crime. Just one incident shows how bad the situation had become. In August 2011 members of the Zetas drug gang torched a casino over a dispute over non-payment of extortion money, killing 52 people.

Law enforcement measures can often only go so far to curb violence in a community. Little impact can be made without addressing the underlying economic causes of much of the violence – poor employment opportunities, drug turf wars between rival gangs, economic instability and more.

“Violence is an expression of social inequality,” Zambrano told The New York Times.

Tragedies like the casino fire provoked the city’s business community to take action. Private companies in the city have stepped up to design and fund a recruitment campaign for the police force and are paying part of the cost for government-backed community redevelopment plans.

Corporate philanthropy in Mexico has a history of being very limited. Apart from distribution of gifts at holiday time,there was little else. But this is changing, with Red SumaRSE showing the way.

“In the last five or 10 years there has been progress both in terms of the quantity of the money and the quality,” Michael Layton, director of the Philanthropy and Civil Society Project at the Autonomous Technological Institute of Mexico, told The New York Times. “But I don’t think Mexico has caught up to Brazil and other countries where the business sector has taken corporate philanthropy to heart.”

The Red SumaRSE alliance of Monterrey’s companies is directing support to non-governmental organizations working on community development. Examples include telephone company Axtel and the tortilla maker Gruma (gruma.com/vEsp) taking charge of 20 other companies to invest in schools, building up infrastructure and reversing drop-out rates.

The Oxxo company (oxxo.com/index.php), Mexico and Latin America’s largest chain store, has started to work at improving conditions in the neighbourhood immediately behind its headquarters. The company is working on building parks, increasing job opportunities and finding ways to prevent teenagers from joining gangs in the first place.

Cemex has also opened a new community centre in a violent neighbourhood where shootings were a regular occurrence. It was based on some Latin American knowledge sharing: inspired by the case of the Colombian city of Medellin, where libraries were strategically located in violent slum areas.

And there is more good work in the pipeline. The business community has drawn up a list of 70 neighbourhoods in the city needing re-development.

Red SumaRSE has not been without its critics. They have attacked the focus on security, education and victims while ignoring corruption, which many believe is the source of many of the city’s problems.

By David South, Development Challenges, South-South Solutions

Published: February 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=5xafMNIQpBcC&dq=development+challenges+february+2012&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsfebruary2012issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

Woman Wants African Farming to be Cool

 

Can farming be cool? Especially on a continent where it has long been associated with hardship and poverty, can agriculture be attractive to a young generation looking for big opportunities? A young woman in Nigeria thinks so and is on a mission to show farming is a great way to get ahead in modern Africa. And she hopes more people attracted to farming will boost the continent’s food security and reduce costly imports.

Cynthia Mosunmola Umoru’s company, Honeysuckle PTL Ventures (http://www.tootoo.com/d-c3015227-Honeysuckles_Ptl_Ventures/), is based in Lagos , the business capital of Nigeria. The West African country has become dependent on food imports, despite many attempts to modernise its agricultural sector.

The country’s heavy dependence on oil exports for its income has led to poor investment in its domestic economy. Over 80 percent of Nigeria’s university graduates struggle to find work. And it is these two problems – food security and high unemployment among the country’s young, educated and ambitious – that Umoru wants to change.

Leading by example, Umoru has set up a successful and modern agribusiness focusing on high-quality food products using modern packaging and fast delivery. She produces meat products, from seafood like shrimps and prawns to snails, beef, chicken, and birds. Her niche is to deliver the product however the customer wishes: fresh, frozen or processed. Her business has its own farms and ponds but also has developed a sophisticated network with other farmers, providing them with standard contracts and benefits. This extra capacity means she can meet the demand and handle large volume orders.

She is proudly self-taught. “I didn’t have a mentor in farming! Though I have other mentors,” Umoru told the Guardian Life Magazine. “My knowledge of agribusiness has been largely from personal education and research. The Internet has served greatly as my resource bank.”

Umoru was initially on the path to study medicine, but had that dream upset by riots in the late 1990s. She then moved on to study zoology at Lagos State University. In her final year, she became interested in agribusiness. Her company was officially registered in 2004, but she had already begun at university providing meat products to fast-food outlets in Lagos.

“It took five years to gain relevance,” she said. “My involvement in the agribusiness sector is really impacting people, particularly young people like me, who I always hear say ‘If you are involved with farming then it is probably not as bad as it seems’. Farming, before now in Nigeria, was termed business of low-lives and with the barrier to entry being so high for young people to actively participate.”

“I have successfully, in my little way, impressed on my generation that farming could be glamorous and cool enough for us to trade places with the business executive in the large conglomerate and also the bank’s middle management cadre, which is the initial attraction for most young graduate(s) in Nigeria.”

She is not shy talking about how rough it was in the beginning: “As a young entrepreneur, in my very early days, I lost a lot of the seed capital I got from financial mentors to poor and bad business decisions I took because there was no one to talk to.”

Overall in sub-Saharan Africa, the long-term prospects for agriculture are good. The Food and Agricultural Organization (FAO) found in a 2009 paper that “the sub-Saharan agricultural sector — 80 percent of which consists of smallholder farmers — grew more than 3.5 percent in 2008, well above the 2 percent rate of population growth.”

Sub-Saharan Africa’s population is predicted to grow from 770 million in 2005 to 1.5 to 2 billion in 2050 (FAO). Despite rapid migration from the countryside to cities and the growth in urban population, the absolute number of rural people is also likely to continue to increase.

Agriculture is the motor for rural development, poverty and hunger reduction in sub-Saharan Africa. The FAO paper said that agricultural growth in sub-Saharan Africa is likely to be led by domestic and intra-African demand for food commodities due to urbanization and the growing population.

African farming has been able to benefit from rising global food prices and demand. The policy environment has also become more favourable, according to the FAO. The paper found “There is a particular need for programmes and policies to increase the capacity of smallholder farmers to enter dynamic sectors of national, regional and international markets.”

African farming can see serious productivity gains if it changes and it takes on new techniques. At the moment only 3 percent of the region’s food crops are produced using irrigation, compared to more than 20 percent globally.

The irony is that Nigeria has already hatched one of the world’s most successful food companies, Olam (www.olamonline.com). A global food supply company in ‘agri-products’ that got its start in Nigeria, it shows Umoru is on to something – a Southern brand can grow and go global, and overcome the difficulties of cross-border trade in Africa.

Olam currently supplies well-known global food brands including Cadbury (chocolate), Nestle, Lavazza (coffee), Mars (chocolate), Tchibo and Planters (peanuts).

With some 218 million people in Africa — around 30 percent of the total population — estimated to be suffering from chronic hunger and malnutrition, a thriving local food sector would bring many gains.

Turning to more sophisticated business models offers solutions to chronic problems. With 80 percent of Africa’s farms less than two hectares in size – and there are 33 million of them – cereal yields have grown little and are still around 1.2 tonnes per hectare in the region, compared to an average of some 3 tonnes per hectare in the developing world as a whole. Fertilizer consumption was only 13 kg per hectare in sub-Saharan Africa in 2002, compared to 73 kg in the Middle East and North Africa and 190 kg in East Asia and the Pacific. The FAO has estimated that the potential additional land area available for cultivation in sub-Saharan Africa amounts to more than 700 million hectares – a boon to the continent’s and the world’s food needs in coming years if handled well.

And the demand is there: Between 2001 and 2007, annual increases in the global consumption of agricultural commodities were larger than during the 1980s and 1990s. The quantity of agri-products harvested in the world is 5.2 billion metric tonnes a year.

“I have been able to reach out to so many people across the nation, preaching the agribusiness development and adoption gospel,” said Umoru. “I have also worked closely with other youth agencies to empower many more young people to aspire in Nigeria.”

One such agency is the Harambe Nigeria Endeavour. Harambe Nigeria (http://www.hendeavor.org/content/bgroups/nigeria.php) is a programme designed to stimulate growth in the agricultural sector and open up opportunities for youth to become leaders and entrepreneurs in this area. And this means future young entrepreneurs going into the agricultural sector will not feel as alone as Umoru once did.

As Obinna Ukwuani, creative director of Harambe Nigeria says: “We wish to rectify the tarnished image of agriculture in Nigeria, making it a viable investment for Nigerian youth from all walks of life.”

By David South, Development Challenges, South-South Solutions

Published: May 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Archive.org: https://archive.org/details/Httpwww.slideshare.netDavidSouth1development-challengessouthsouthsolutionsmay2010issue

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsmay2010issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

Iranian Savings Funds to Tackle Loan Drought

For entrepreneurs around the world, acquiring finance to start or expand a small business has become harder and harder as the global financial crisis has bitten hard. Across the globe, people with good ideas or successful businesses that need funds to expand are finding the door closed by traditional banks.

As banks and governments have focused on reducing debt and building up cash reserves, it is small businesses and small-scale entrepreneurs – often without business or family connections – who suffer the most. Opportunities are being missed to create new jobs and enterprises and lift poor communities out of poverty.

In that climate, the search is on for alternative ways to build up wealth. In Iran, a new phenomenon has arisen to address the lack of bank loans for small businesses brought about by the economic crisis. Iran is suffering under international sanctions as well as outstanding bank loans exceeding US $45 billion, according to the Financial Times.

The domestic banking crisis this has provoked has resulted in a tightening of credit for loans.

But in response, middle class Iranians are forming their own savings clubs to help each other with loans.

The savings clubs work like this: each member buys a share in the club costing around US $2 per day (around US $620 over 10 months). Each share makes the saver eligible for one loan during the year. For example in a club of 30 Tehran taxi drivers, every month four members of the club receive US $600 each in loans. The fund lasts 10 months and each member is guaranteed one loan per share.

“It is a savings fund and doesn’t have the uncertainty of the banking system, which might or might not give you a loan,” club member Ahmad told the Financial Times newspaper. As one of the drivers, he has four shares and is eligible for four loans.

“My mother is also saving money in a fund of housewives among our female relatives.”

The fund is managed by the head of the taxi agency and a driver who is a retired teacher. Both are trusted. “The retired teacher receives the money every day and puts a check mark by the names of those who pay. He is trusted by the head of the taxi agency, while other drivers respect him as an educated, honest man.”

Savings clubs are also good for the local economy, helping people to be able to buy goods on loans they would never be able to purchase otherwise. Another driver used the fund to “buy the things we cannot afford under normal conditions, like a washing machine, for instance, for which we have zero chance to get bank loans.”

Overdue loans by Iran’s banks grew by 66 percent from last year according to Asghar Abolhassani, the deputy economy minister.

The Financial Times reported that an estimated 25 percent of bank loans are outstanding, making Iran’s banking system technically bankrupt. International sanctions are also blocking the country’s banks from accessing global financial markets for support.

“Stagnation has gripped many parts of the economy,” said Hamid Tehranfar, the central bank’s director-general for banking supervision.

Turning to savings clubs can be an excellent alternative saving and loans model, but it requires very specific trust guarantees in place to ensure the holder of the funds doesn’t just take the money. For those who can’t find somebody local they trust, there are a number of online social lending and fundraising alternatives for raising funds and borrowing money. These include Kiva (www.kiva.org), which connects poor people looking for loans with people around the world willing to lend.

As the crisis continues and banks and governments hoard wealth for their own needs to pay down debt, alternative sources of loans will become ever more important for the poor.

By David South, Development Challenges, South-South Solutions

Published: April 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=RR6YBgAAQBAJ&dq=development+challenges+april+2010&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsapril2010issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.