Stories 4 Your Heart

Nyakabungo Business Plan Competition 
by Amy Schulz

June 21, 2014

Nyakabungo, Uganda

 

A savvy businesswoman who has owned her own hair salon for 23 years pitches a panel of judges why she should receive a low interest loan to help expand her business. This could be a scene out of Shark Tank or a local business plan competition in any U.S. city. But this competition is in a tiny and remote village in southwestern Uganda. Most villagers have no electricity or indoor plumbing. In fact the restroom facilities for the church where the business plan competition was being held is a pit latrine out back. The level of poverty is overwhelming—children wear the same threadbare clothes days in a row, malnutrition is a major concern, and the rates of HIV/AIDS, malaria and typhoid are among the highest in Uganda.  The woman speaks in Rikiga, the local language, and a local judge interprets in English for the two American judges.  This is not your ordinary business plan competition, but the competition is fierce for loans of $100-$200. This amount to Americans is trivial, but it could mean business expansion, creating jobs and increasing local economic development. When wealth can be created locally, the other health and social issues have a fighting chance to be sustainably resolved.

 

With so little access to capital within the village, responsible borrowing behavior has not been developed, and there was apprehension from community leaders that individuals would not be able to repay loans. There was an inclination to revert to the comfort of the group, either through cooperatives or savings groups.  As Americans, we trust in the market and individuals incentive to comply. We stuck to our original plan of individual microloans (although we did allow a couple of savings groups to compete). We developed clear language about the expectations that they were competing for loans  (not grants) that will have collateral attached, and we grilled candidates relentlessly on their ability to repay in the case that revenue was interrupted.

 

Nineteen entrepreneurs and two savings groups completed the rigorous written application process, and 19 of the entrants pitched their businesses in front of a panel of judges. To our delight, these were resourceful, experienced entrepreneurs. We determined that based on individual capacity that nine of the 19 would be able to repay the loan, and then we ranked those nine to determine loan awards. The top six were awarded loans. The loans are revolving so as soon enough payments are made to fund a loan, the next candidate in line will be funded. This will put on a unique kind of pressure to the original borrowers to repay on time. In addition to signed contracts and collateral attached to loans, there is social expectation backing the loan from the next borrowers in line.

Judging the 2014 Nyakabungo Business Plan Competition, judges from Feather River College Enactus, Great Lakes Regional College and RUMISO based in Nyakabungo
Winners of the 2014 Nyakabungo Business Plan Competition.
This small bit of new capital in a basically closed economy will help to expand businesses and open new markets. Two separate beekeepers were awarded loans to purchase additional hives and respond to the burgeoning demand for honey beyond the village. A coffee broker will use his loan to purchase four drying tarps and update processing equipment.  He buys coffee cherries from local small-scale farmers to process and resell to exporters. A soften-spoken mother is going to expand her brick making business in which she employs eight people. A successful tomato seller who owns a shop in the village and another shop in a larger neighboring village will purchase more tomato crops to harvest and will purchase a couple of goats to shore up her capital to be able to invest in the next round of tomato crops—hedging Uganda-style.  Finally, the veteran salon owner will increase her beauty supply inventory and market to clients in neighboring villages. She runs her own beauty school, training up to 10 women at a time. She also owns a small hotel/restaurant and a 2nd hand-clothing store. We were so impressed with business acumen that she was first in the competition.

 

The nature of the businesses and some of the strategies were quite different from what we would have seen in a U.S. competition. One thing is the same across continents, the enterprising spirit of entrepreneurs. Like at home, these Ugandan entrepreneurs were passionate, resourceful, and resilient. Like at home, they care deeply about providing for their families. In the pursuit of their business success, the community benefits immensely through valuable goods and services provided, jobs created and new wealth brought into the community that can be directed to address other issues in the community. One of the best ways to address development, economic and otherwise, is to find the entrepreneurs and support them.

 

 

 

 

 

 

                 

Uganda Development Initiative (UDI)

a 501(c)(3) Los Angeles, CA Organization

  11693 San Vicente Blvd., Suite 251

  Los Angeles, CA 90049

    (New Business Address)

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